At some point or another, every company faces a procurement issue. This could happen due to factors you can’t control such as low-quality suppliers and materials. It might also occur due to higher lead times from the suppliers. Sometimes, the market rates may also play their role in creating issues.
However, these issues can also be caused due to faulty and incompetent tools and processes. Many companies also face issues with internal communication which can result in procurement fraud and data duplication.
The Costs Involved
Poor procurement processes can lead to higher expenditures. In fact, your costs can increase by 5 times due to this reason. However, monetary loss is not the only loss that you may incur.
Businesses across the US and Canada lose nearly 32 million man-hours yearly due to poor procurement processes and tools. As many as 54% of companies still use paper invoicing, which can cause a lot of time wastage.
Such inefficient practices and tools put companies at great risk of becoming victims of procurement fraud. The easiest targets are those companies that may not have a centralized system for tracking accounts payable. That’s perhaps the reason why nearly 29% of small companies have been victims of billing fraud.
The best way to solve procurement issues is by automating things. You can easily automate repetitive tasks and reduce human error through the use of procurement management technology. The processes can also be streamlined through automation.
Automation also ensures that the data is available to multiple members of your team freely. This can increase the transparency in your company and thus make it easier to detect any fraud or data duplication too.
Tasks such as invoice processing can be automated and may reduce errors by up to 40%. Your cost per invoice can also come down by almost 90% and the invoice exception rate can decrease to 10.7% solely through automation.
To understand more about how technology can help with procurement issues, check out the infographic below by PurchaseControl.