With all the discussion of procurement and how it works in businesses, the biggest question is does it actually save money? After all, that's the real bottom line. One large company that had an annual purchasing expenditure of about $10 billion was able to shave over 15% off that amount annually just by leveraging the buying power of all their worldwide divisions.
Today, procurement strategies are more a part of a business's success than ever before. Not only has technology given companies the opportunity to truly make purchasing more efficient and inexpensive, but companies are now spending a larger percentage of their revenue on products and services than they were thirty years ago.
As e-procurement moves into the mainstream business world and begins to deliver many of the conveniences and cost-saving measures it promised in the late 90's, some companies still continue to avoid implementing this type of system.
Today, many businesses are spread out with branches all over the world and usually most of these branches are given separate responsibility for purchasing the goods and services they require to keep their part of the company moving smoothly, if not cost-effectively.
One of the biggest headaches many businesses face is purchasing management and inventory. Running low on necessary items, placing duplicate orders, or losing placed orders are just some of the problems that companies may face when dealing with purchasing in a traditional sense.
Generally, when businesses think of procurement they often see in terms of a cheaper/better dichotomy, as if one can not be achieved along with the other. The reason for this viewpoint is simply that it is extraordinarily difficult for even a team of human minds to compare and contrast all the variables involved in selecting the absolute best supplier for major purchase a product or service.
When a person goes to buy a car, he or she usually doesn't visit only one dealer and expect to find a great deal on the car they want. They go to several lots and get different prices from all of them, then they choose the one which offers them the best deal and the most extras. Businesses do exactly the same thing when they are trying to fill the needs of their projects.
The term outsourcing seems to be popping up everywhere in business in recent years. Essentially, outsourcing refers to any instance where a company contracts another company to perform work that would traditionally have been done in-house. For decades, business areas such as advertising and payroll, have been outsourced to other companies in order to minimize costs
For years, analysts have been predicting that e-procurement would be the next big thing and that it would significantly alter the way businesses worked in the future. Unfortunately many companies and investors have failed to realize the promise of e-procurement.
Companies from many different industries and geographic locations have seen strong results from implementing a new procurement system. For example, one home appliance manufacturer actually saved several million on the purchase of a single component for products by using a reverse auction.
Many companies that have attempted to implement some type of enterprise management system in order to unite many of the processes that make their businesses processes run more smoothly have been disappointed by the results. These companies simply don't feel that the system has lived to their expectations.