6 TECHNOLOGICAL DEVELOPMENTS FOR INDIRECT PURCHASING
Since 2011, indirect expenses have increased by 7% per year, according to Mckinsey & Company. Despite this rate, companies find it difficult to determine the necessary strategies for indirect purchases. Companies have to determine a new strategy and perspective to overcome this problem with developing technologies. 6 technological innovations on this subject:
1- Financial P&L
P&L means profit and loss. Financial profit and loss for companies is the income statement. Cost management software provides analysis to improve purchasing and finance connection and process. It monitors the estimated income with algorithms. Companies gain clear visibility into the benefits of improved forecasting and budget planning and how purchasing impacts profit and loss.
2- P2P from Automated Procurement to Pay
P2P means procure to pay. Companies can use automation to provide supplier payment and improve cash flow management. Robotic process automation (RPA) solutions automate routine tasks through existing user interfaces and motorized machines. Supply management, basket or demand, PO, receiving, invoice and payee account management. It has provided companies with 15-25% savings.
3- Zero Based Budgeting ZBB
Zero-based budgeting is a budgeting method in which all expenses must be justified and approved for each new period. It is a software-powered budget building tool that applies zero-based principles. It can detect 10 to 20 percent savings and divert unproductive costs to productive areas.
4- Smart Spending Engine ISE
Blended with machine learning technologies, these digital tools use automated tools to classify and categorize expenses. With analytical solutions, automatic data extraction and automated classification from enterprise resource planning (ERP) systems and databases are provided. For example, it can identify similar maintenance parts used by both companies and consolidate vendors. It has saved companies 10-12%.
5-Advanced Analytical Solutions AAS
It uses an analytics developed with goal setting tools to determine companies' cost savings and process optimization. Goal setting tools include category-specific, intelligent workflows and functionally advanced analysis tools. Functionally advanced analysis tools include network optimization tools, automatic, real-time KPI dashboards, executive scorecards, eSourcing tools. Product and service costs can be reduced by 10 to 25 percent, while supplier management can reduce the manual effort rate by 30 to 50 percent.
Partnerships with business service providers can be used to reduce costs and increase the level of service. Various tools and platforms have been developed. Leading companies offer their B2B catalog in all online marketplaces. Marketplaces that increase the online visibility of companies offer e-offer collection and e-commerce solutions. While price reductions save 6 to 15 percent, it offers solutions such as access to an expanded product range and eliminating a company's dependency on a single supplier.
The procurement process is a chain and digital tools save time and costs here. In order for companies to gain an advantage over their competitors for the years ahead, they must gain a new vision in terms of digitalization.
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