By Orville Bailey, CEO, EqualLevel.
Every year the state, local and education (SLED) procurement market spends a staggering $1.5 trillion dollars annually on goods and services. In 2018, after analyzing more than 700 procurement efforts, management consulting firm McKinsey & Company concluded that at 28 percent, the public sector has the greatest potential for savings of any other sector (How smarter purchasing can improve public-sector performance). In round dollars this adds up to the public sector potentially being able to save $400 billion through optimizing procurement.
According to McKinsey, online tools can reduce administrative burdens. And there’s no question just the streamlining of operations alone could save hundreds of millions in non value-added time. Procure-to-pay automation improves the efficiency and effectiveness of the procurement and payables processes by digitizing manual tasks and leveraging transparency to improve decision-making. The public sector has long been plagued by the inefficiencies and costs associated with manual requisitioning, ordering, invoice reconciliation, and payment processing.
Innovating with a best-of-breed eProcurement and eInvoicing platform optimizes execution across all processes associated with the rec-order-pay transaction. A well-designed solution helps procurement and finance to streamline operations. The benefits of eProcurement and eInvoicing are numerous:
Efficiency: Automating leads to faster cycle times and improved productivity. The elimination of paper and manual steps frees up time for employees to focus on more critical initiatives.
Cost Savings: With all approved vendors housed in one centralized location, best value products can be easily identified.
Compliance: By automating the three-bid process and showing only contracted vendors, an eProcurement marketplace helps organizations comply with state and federal regulations.
Transparency: Robust reporting capabilities help ensure purchases conform to established policies. Real-time visibility into purchasing activities discourages maverick spending and provides leadership with valuable insights.
There is no doubt “the use of modern technology can take a big chunk off of public-sector bills” (Now is the Time for Procurement to Lead Value Capture) and the time to automate procure-to-pay is now. By improving efficiencies, the SLED market has the opportunity to generate savings that can help to offset the impact of COVID-19 and other budget pressures they are facing.