E-Procurement vs Traditional Procurement
Procurement is each and every process involved in acquiring raw materials for your business including but not limited to selecting a supplier, placing your order, paying for it, and getting it delivered. Procurement of raw materials for textile and construction is the most important process for any business in the manufacturing industry and it needs to be efficient and streamlined.
The textile and construction industry in Pakistan is severely lagging in adopting technology leading to low profits and inefficiency. However, with advancements in technology, e-procurement has helped the manufacturing industry to streamline this procurement process. Generally, procurement of raw materials is done either through a traditional method or online i.e. e-procurement.
What is Traditional Procurement of Raw Materials?
Traditional raw material procurement is all about manually managing the entire function, with extreme dependence on paperwork, and constantly calling suppliers for rates, and updates so that raw materials can reach the desired destination in a specific time frame. Not only is this entire process time-consuming, but is also prone to disruptions due to various issues such as lack of transparency, supplier unavailability, and generally inefficient sourcing of raw materials.
The manufacturing industry and its procurement processes have greatly changed over the years. A switch from a traditional system to a digital raw material procurement process is necessary because of the endless benefits of an e-procurement system for your business.
Disadvantages of Traditional Procurement
Traditionally, buyers have to look for verified and trusted vendors by making endless phone calls and the entire process is conversation-based. It all depends greatly on spreadsheets, phone calls, and in a lot of cases done through pen-and-paper. Buyers have to reach out to the construction and building materials partners and purchase raw materials at fixed prices.
For product selection, the buyer has to search through dozens of vendor catalogs with no knowledge of whether they are getting the best price or not. And in most cases in Pakistan, buyers do not have access to any such catalogs and instead have to go on the field and find the raw material seller for their projects.
Once a qualified seller has been found the sales representative for the company will make several calls to check the availability and price of the desired raw materials.
For the order to even go through a purchase order is created with the number of raw materials and prices. This order then has to be approved manually which can take up to 3 days or more.
Once an order is finally confirmed, in traditional raw material procurement, buyers need to contact the suppliers directly via phone call to track the status of their order.
With manual traditional procurement any compliance issues with the order such as quality that come up need to be resolved manually by making several calls to vendors.
Benefits of E-procurement of Raw Materials
Buyers and contractors can get a lot more done by merely switching from a manual approach to raw material sourcing to a more digitized process. In a traditional approach, raw material procurement operations are managed with the help of a lot of paperwork and phone calls. In transitioning to an e-procurement platform, the entire process of S2P is automated and business operations are sped up including faster processing. Overall allowing buyers and sellers to save time.
Traditional procurement is no longer an option if you want efficiency. With the implementation of e-procurement, everything is sped up and much faster and more efficient. A digital platform like Zaraye streamlines each step of the procurement process, enabling sellers and buyers alike to source raw materials in mere days compared to weeks.
Manufacturers can focus on selling their products and running their businesses rather than worrying about the efficient procurement of raw materials.
With e-procurement there is a boost in overall visibility and transparency of all processes, especially offering buyers greater insight into raw material rates. Using just your laptop or phone, buyers can easily compare hundreds of raw material quotes and catalogs from different suppliers in one place. On Zaraye’s app buyers can see multiple quotes for their raw material requests at the same time and communicate with the supplier online instantly to confirm an order. Not just that but order tracking can be done online through an order tracking and management system in the e-procurement platform.
Making the best use of e-procurement is about generating more savings and adding value to your business. The traditional procurement process does not allow the time or space to focus on strategy, turning raw material sourcing into a more short-term process of purchasing, with no significant savings or profit. Using a digital sourcing B2B platform, companies can easily meet their financial goals because of greater options of suppliers, better rates, management, and spending visibility
Overall technology has streamlined manual and labor-intensive raw material procurement processes to make them more efficient and responsive. Even though a traditional procurement system may still be widely used in Pakistan but it is outdated and inefficient and the disadvantages outweigh the benefits which is why a switch to an e-procurement system is the way to go.