Companies use e-procurement software to help internal buyers adhere to guidelines, policies, and contracts while managing vendor relationships.
Such software helps companies automate the numerous procurement-related activities, benefiting both the vendors and buyers through a more streamlined, error-free, and efficient process.
As a supplier, you may be required to work with your customer's e-procurement system.
What does it mean for you?
It certainly involves more than fulfilling an order placed on your eCommerce website. There's often a more extensive integration process between your customer's e-procurement software and your workflow.
Even though initially you may have to adjust your internal process to work with a customer's e-procurement software, in the long run, you'll be able to service the customer more cost-effectively. Think of it as someone just paid for and set you up on a software to help you do business more seamlessly with your customer!
Here's how e-procurement can help you increase sales and profits:
1. Streamlined Procurement Process
An e-procurement application shortens the purchasing cycle by allowing B2B buyers to make their purchasing decisions as long as the order stays within the pre-set guidelines, spending limits, and procedures.
Automation enabled by e-procurement software further streamlines the process, so your sales team can spend less time on pushing paper and more time on building customer relationships that contribute to higher customer lifetime value.
When it's easier for B2B buyers to purchase from your company through their internal system, they're more likely to order from you. Not to mention, you're likely to get paid faster!
2. Increased Customer Loyalty
After your customer has invested the time and effort to get you set up with their system, they're probably going to keep using your business as a vendor.
The increased convenience and ease of doing business mean they're more likely to buy from you. As a customer purchases a higher volume, you'll be able to offer better pricing, which will in turn aid customer retention.
As we all know, the cost of acquiring a new customer is often much higher than retaining one. Not to mention, it's more profitable selling to existing customers because of lower administrative costs. By reducing your customer acquisition cost and increasing sales to current customers, you can significantly improve your profit margin.
3. Reduced Paperwork
Since all transactions are managed online, there is no paperwork or associated labor cost. Such cost-saving is particularly noticeable in orders with low transaction value for which the labor cost of processing the paperwork could significantly eat into the profit margin.
In addition, the improved transparency and ability to share data between departments mean costly errors are less likely to occur.
Automation also frees up your sales reps from having to manually enter customer data and order information so they can spend more time on revenue-generating sales activities and be more productive.
4. Improved Customer Communications
An e-procurement software ensures adherence to a company's purchasing policies so your team doesn't have to spend time on negotiating terms or helping a buyer ensure compliance, so they can spend more time on pursuing other sales opportunities.
This also means there are fewer chances of miscommunications that could lead to frustrations on both sides and endanger your customer relationship.
5. Lower Transaction Costs
Besides eliminating manual, paper-based procedures, you can leverage the larger transaction volume to negotiate and set up payment methods with lower fees so you can reduce cost and keep more of the revenue.
As the transactions are automated, your employees will be spending less time on managing the purchasing process so you can save on labor costs and increase your profit margin.
6. Accurate Reporting And Analytics
E-procurement software allows detail reporting of all transactions, including requisitions, items purchased, orders processes, and payments made.
Not only will this help reduce bookkeeping and accounting costs but you'll also be able to do financial projection and analysis with this information. Some e-procurement software can link up with your inventory and accounting software, helping you further reduce staffing expense and potentially costly mistakes.
Not to mention, understanding your customer's purchasing pattern can help you better project and respond to demands so you don't find yourself in a cash flow jam with too much inventory or missing out on profits when you don't have enough to fulfill orders.
7. Improved Order Management and Consolidation
If you have a customer with multiple buyers placing orders on different products at the same time, an e-procurement software gives you the visibility and transparency to manage shipments so you can consolidate the deliveries and save on shipping and handling cost.