e-Procurement

In their market overview Market Overview, ePurchasing And Contract Life-Cycle Management In 2011 to 2012, Forrester describes four forces that are keeping supplier networks dynamic and competitive. They talk a great deal of sense but they forgot the fifth force - the one that's going to make 2012 the year for supplier networks.

Embracing innovation is crucial in the procurement world. Peter Smith's recent series on procurement innovation has produced some fascinating debate, but it's not only innovation in our procurement processes that are important, we need also to be mindful of new products and new way of doing things so that when we don't become blinkered in our sourcing approach. Innovation is great - which is why our patent laws are so bad.

It doesn’t take a mathematical genius to understand the business case for some purchase to pay initiatives. Dynamic discounting - exchanging a discount in return for early payment - can give a return on capital of over 30%. Reverse factoring and other supply chain finance methods can substantially increase DPO and AP automation can reduce costs by 50%. But despite the compelling business case, most organisations remain firmly in the 20th century when it comes to purchase to pay optimisation. If the benefits are so great, why are more businesses not grasping the opportunity?