Costly Mistakes Procuring Entities Make in E-procurement

by Nancy W

E-procurement has been seen as one of the best solutions to various procurement hurdles you are experiencing in your supply chain. You definitely want a solution that will solve all the problems you have in the procurement function, don’t you? Implementing e-procurement in your supply chain is the best thing you can consider having.

However, there are some costly mistakes that most procuring entities make in e-procurement, which can cost you a fortune. You need to be cognizant of the mistakes beforehand and plan how to avoid them.

  1. Lack of Adequate Research

Most businesses hastily jump into implementing e-procurement without conducting sufficient research. Consequently, they end up with systems that deliver very little or nothing at all.

To avoid such instances, you need to do comprehensive research. Some of the parameters that you will be looking out for in your research include:

Identifying the software with the suitable features, that is compatible with your existing system, and can be personalized to your operations.

Identifying the potential software providers as well as other entities who are using the software. This will help you know how effective the software is, maintenance costs, and other hidden costs, which no salesman will ever mention to you.

  1. Poor Planning

Planning is an exceptional element of success in e-procurement and in every endeavor in general. Unfortunately, most procuring entities disregard this important step and go straight to implementation. The results? White elephant projects with a dismal performance.

E-procurement is a solution that will require a substantial amount of investment in computer hardware, software, and capacity building. You, therefore, need to plan in advance and also have a budget allocation for the solution.

  1. Lack of stakeholder involvement Results in resistance

Often, the top management forgets or ignores various stakeholders during the planning stage, which in most cases result in resistance during implementation. There was once a procuring entity that spent a lot of money buying the software and hardware, trained the top management, but ignored the technical staff who would eventually use the system. After all that, the system could not run since the technical staff did not have the know-how.

It is advisable that you involve everyone who will be affected by the new dispensation so that they can not only own it, but give their valuable input. Such stakeholders include other departments like the IT, marketing, and suppliers.

  1. Inappropriate Terms of Reference During Procurement of the Software

The e-procurement software is quite costly and you need to ensure you get value for your money. Most procuring entities miss the point when crafting the terms of reference. As a result, they are at the mercy of the service provider for as long as they continue using the software.

You need to be very precise on items like transfer of knowledge, how long you require the provider’s support, when the provider will hand over the operations to your IT department, and when to surrender all the rights to you.

  1. Lack of Backup Options

This is another mistake procuring entities make in e-procurement. Because the system is said to provide an excellent record keeping solution, most businesses stop having data backup and data recovery plans, which can lead to serious grounding in case of any data loss, forgetting that e-procurement is not immune to breakdowns, just like any other IT solution.

To avoid this, you need to have some data recovery options like a cloud-based backup where you can always fall back.

Parting Shot!

It is imperative that you consider automating your supply chain due to the benefits that arise. It is, however, very important that you are aware of some costly mistakes procuring entities make in e-procurement and avoid them so that you do not live to regret having taken the step. With this knowledge, you are good to go and you will definitely have excellent reviews for e-procurement.

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