During an organization’s ordering process, there are typically a plethora of intricate steps and factors to consider before an actual order can be placed. Purchase orders (POs) often involve complex approval workflows, multiple budgets, hundreds if not thousands of suppliers and contracts, endless data, and millions of dollars. Organizations often struggle with how to manage this process without losing both visibility and control. Adding in procurement’s interdependence with other departments makes it even more challenging to determine where improvements, such as reducing cost per invoice, can be made.
In a 2018 study conducted by Levvel Research, over 400 organizations were surveyed to determine the latest trends surrounding procurement management. The following main points were uncovered:
- Inadequate technology
- Procedural differences across departments and/or locations
- Frequent off-contract or off-budget spending
- Too much paperwork
- Disjointed systems
- A lack of visibility and/or control over spending
Firms Benefit from Utilizing Email to Send POs
An organization’s control over spending is significantly impacted by PO format and how it is submitted to suppliers. Fortunately, most organizations surveyed are either using eProcurement software or email to send POs. These methods provide more visibility and greater control compared with those organizations using manual or uncontrolled methods, such as over the phone or ad-hoc online ordering.
Reduced Cycle Time: Greatest Benefit to Procurement Automation
Most mainstream organizations have some kind of automation in place, whether it be a homegrown procurement tool or a built-in tool that is embedded within their ERP system. While these companies have a more efficient way of processing their POs than novice companies, their cost per PO still remains high.
Organizations utilizing cloud-based eProcurement tools on the other hand, have very little manual involvement in their procurement process and can therefore process POs at a much lower cost. In fact, their cost per invoice is almost 200 percent less when compared to that of novice and mainstream companies.
Aside from lowering processing costs, other major improvements and benefits to procurement automation include reduced cycle times, improved visibility and transparency, and enhanced control and security.
Is your firm looking to reduce cost per invoice? Click here to learn more about EqualLevel’s AP automation and eInvoicing services.