It’s no great surprise that one of the impacts of the COVID-19 pandemic has been a rise in online procurement. A recent report from Amazon Business reveals the true extent of this change in customer and business behaviors.
Nine in 10 (91%) of the procurement professionals stated they prefered e-procurement over traditional purchasing. While the pandemic may have necessitated this shift, 96% of respondents said they expected to continue to increase their online purchasing, even after a return to a so-called normal.
The e-commerce giant interviewed 250 US-based B2B buyers from a variety of sectors including government, education, healthcare, and commercial industries. Participants were asked about their approach to procurement, how this has been changed by the pandemic, and whether this had impacted their business priorities, their budget and their journey towards digital transformation.
Unsurprisingly, the survey found that the pandemic has accelerated efforts to digitize procurement with two-fifths 38% of buyers making more than 50% of purchases online in 2020. A slightly lower number (45%) stated they had streamlined their purchasing processes, and 34% had committed to more spending with a specific supplier.
When it comes to business priorities, top of the list for buyers in 2021 was increasing efficiency, (40%) followed closely by cost reductions (34%). It’s no great shock to learn that it was respondents within the education, government, and healthcare sectors who cited the latter as a more pressing priority than those in the commercial industries.
It is encouraging to learn that even in these particularly challenging times, businesses are still keen to do their part to honour their social and environmental responsibilities, albeit in the context of responding to consumer pressure. Nevertheless, 39% of respondents cited improving sustainability in purchasing as a key priority, with supporting local businesses within the community just slightly behind at 37%.
The pandemic has exposed horrifying levels of inequality in the US with the various economic and health impacts disproportionately affecting minority groups. This increased awareness, coupled with the impacts of the Black Lives Matter movement has been reflected in the survey with 83% of businesses stating their firms planned to increase purchasing budgets reserved for black and minority-owned businesses this year, and 48% planning to increase budgets by 20% or more.
So, what are the benefits of e-procurement?
For ambitious businesses, e-procurement can open up a lot of opportunities for growth and improving business processes. Here are some of the key benefits of e-procurement:
Shorter Purchasing Cycles
E-procurement centralizes purchasing transactions which reduces delivery time, simplifies payment processing, order reporting and requisitions. It also helps businesses to ensure they are compliant, particularly when it comes to managing contracts.
E-procurement systems usually include monitoring tools that can help drive down costs and reduce the need for unnecessary admin. An important part of the digital transformation journey, automated e-procurement systems help to streamline processes and create a smoother journey between order and fulfilment.
Improved transparency and risk management
Another benefit of centralized information is that all data access can be stored, controlled and audited quickly and securely. Any risks to the business or the supply chain can be more easily identified and dealt with, and there’s a comprehensive paper trail to support any investigations.
The ability to tackle poor supplier performance
With all your supply chain data at your fingertips, it is easy to see which suppliers are underperforming and/or helps to identify any risks or bottlenecks.
Helps plan for the future
E-procurement systems allow businesses to review metrics such as the cycle time of purchase orders, supplier lead time, item defect rate, and many more. This helps businesses to review supplier performance, ensure the budget is being used most effectively, and identify opportunities for improving the efficiency of procurement processes.
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