16 Reasons Why Investing In eProcurement Is necessary Post Pandemic

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What is procurement and how it fits into real estate business

Procurement is the business to business (B2B) strategic process of sourcing, negotiation of contracts, and acquiring of goods, raw materials, services or work from external sources. An effective procurement strategy typically comprises of a 7-9 stage strategic process to maximise an organisation’s profitability.

When done right, an effective procurement strategy essentially helps the company:

  1. Save money by reducing the cost of raw materials.
  2. Identify a better source of supply.
  3. Certify a supplier’s quality with the hopes of acquiring quality goods and services.

Procurement within the real estate scene

The standard procurement process of getting products or services from requisition to purchase order and invoice approvalis consistent across almost all industries. However, the purpose of a procurement process in an organisation will define the procurement direction. Typically, there are three types of procurement:

  1. Direct procurement

This refers to the acquisition of goods, materials, and/or services such as raw materials and machinery for manufacturing purpose.

  1. Indirect Procurement

Sourcing and purchasing materials, goods, or services such as utilities and facility management for internal use.

  1. Services procurement

Procuring and managing contingent workforce and consulting services such as professional services and software subscriptions.

In the real estate industry, all three procurement types are applicable. However, choosing to focus on direct, indirect or service procurement depends on your business and its objective.

“You can’t buy people the same way you buy products.” Julien, Chief Product Officer at Determine.

Why traditional procurement methods need to evolve within the Real Estate Scene?

Traditionally, the procurement process has been handled through physical paperwork and forms being passed around, by hand, through different departments, lacking coordination and efficiency. Digitalising procurement processes help to reduce such inefficiencies but even more importantly, it ensures that your company is evolving with the rapid digital transformation movement, especially with 5G entering our real estate economy. The introduction of the alphabet of technology adoption shows us how digitalisation is becoming more prevalent in corporate

So, why are real estate businesses slow to adopt e-procurement processes?

Despite the hype and buzz of e-procurement and its benefits, the fear of adopting an electronic procurement solution is real. From the fear of an over-reliance on technology and in turn, neglecting due-diligence, to the fear of the complexity or costs involved, these are just one of the few concerns that prevent property management agencies from digitalising procurement processes.

 

Real estate companies also face reluctance from trade professionals who refuse to move beyond traditional models of procurement processing due to poor understanding of its purpose and utility.

 

Luckily, these challenges can be mitigated through proper research and planning as well as education and training to all stakeholders within and without the organisation.

How can eProcurement #ReallyAddValue to your property management business?

While the cons are real, they are avoidable with detailed research and proper training. Moreover, the pros of e-procurement far outweigh its cons. Here are 16 reasons why electronic procurement (e-procurement) is the future.

Real estate companies also face reluctance from trade professionals who refuse to move beyond traditional models of procurement processing due to poor understanding of its purpose and utility.

Luckily, these challenges can be mitigated through proper research and planning as well as education and training to all stakeholders within and without the organisation.

1. Improved Decision-Making Ability

E-procurement software has forecasting tools that can provide insights about market demand. This helps the organisation prepare for potential fluctuations in demand and generate plans in advance to make informed decisions ahead of time.

2. Improved Agility for Business Pivoting

Often, businesses might need to pivot their business model along with its processes to meet the needs of their intended market. This can be quite time-consuming, especially for organisations that are stuck on analogue record procurement management practices. An e-procurement software automates such procedures and can also assist with the automatic distribution of information across departments.

An individual adapting to business changes on a flexible eprocurement platform

3. Reduce Expenses

By streamlining procurement operations via a digital procurement platform, automated workflows reduce the overall hours needed for administrative tasks, freeing up more time and money for other crucial processes within the business.

 

Furthermore, with the help of data, most e-procurement tools these days would provide insights on orders, allowing procurement officers to merge similar orders and calculate the total amount spent on a vendor to negotiate for bulk order discounts, which in turn enables greater savings.

4. Minimise Human Errors

The reliance on automated workflows makes it easier to reference past orders, make comparisons and reduce human errors commonly made in traditional manual ordering processes. With fewer missing orders, decreased order duplication, and the eradication of a paper-based system, the business would be able to rely more on zero-error digital processes.

5. Increased Transaction Speed

The ability to transact on and communicate from one unified tool speeds up the overall transaction time; eliminating unnecessary back and forth between multiple devices and platforms. Some tools even allow for tender clarification functionalities where users can communicate directly on the same platform concerning all tender related issues with vendors.

With the automation of workflows and processes, availability of pre-set templates, and the time saved on having to communicate on project updates with instant transparency: productivity soars.

6. Digitalisation & Data Security

With eprocurement software, property and facility management companies will have to digitise not only their workflows but also their documentation processes, which encourages more digital processes like electronically signed contracts and order forms than paper-based ones—securing data and information digitally within data-security solutions to prevent the destruction of data in the event of a fire or natural disaster.

With the automation of workflows and processes, availability of pre-set templates, and the time saved on having to communicate on project updates with instant transparency: productivity soars.

7. Transparency in Spending Cost

Real estate management companies can easily track and analyse their spending and produce reports with it; enabling compliance to company’s policies and regulations. The insight into spending expense also helps reduces rogue spending where employees procure without proper approvals or acquire unapproved items – having an electronic audit trail is a powerful deterrent to rogue spending.

8. Price Benchmarking

The ability to upload vendors’ e-catalogues provides a broad view of market rates for desired goods and services. This purposeful feature helps property partners gain a form of benchmark when considering quotations and even with preparing ITQs or budget planning.

 

Coupled with features like a bids comparison table that enables property managers to compare quotes received in a side-by-side comparison view, it not only decreases the overall evaluation time but also strengthens the decision-making process.

9. Global Database of Quality Vendors

As cloud-based e-procurement platforms gain global reach, so does the network of vendors and suppliers and the variety of products and services available.

Some procurement tools give property partners the chance to extend their ‘invitation-to-tender’ to either a network of relevant vendors or a selective few. The flexibility of inviting various sets of trusted supplier network increases the overall efficacy of procurement processes.

Illustration of integrated vendor selection process

10. Preventative Maintenance of Contracts

With automation workflows set with notification reminders, property and facility managers do not have to worry about missing deadlines or due dates whenever the time to renew or end a contract is up. Also, property and facility management agencies can stay top of maintenance requirements with pre-scheduled cleaning, lubrication, oil changes, adjustments, repairs, inspecting and replacing parts, and partial or complete overhauls, leaving it to the system to prompt and notify actions ahead of time.

Image of an alarm clock on desk

11. Bespoke Solution to Increase Efficacy

Real estate organisations have different needs, as will their supplier counterparts and stakeholders. Eprocurement software are usually designed to allow bespoke customisation to enhance the functionalities of a standard property or facility management tool, allowing for the creation of a versatile technical infrastructure for real estate professionals.

12. Integrated Tender Management

Property partners can also execute tender-related tasks on eprocurement software such as host, view or award tenders on the same platform. Tender management feature shows updates on tender progression and helps both vendor and buyer stay aligned on deadlines and deliverables.

13. Simplified Vendor Management

Most eprocurement system will contain a vendor management component that allows companies to add, sort and manage vendors and their product or service offerings on the database. Some software, when combined with access to a large, trusted quality supplier network, can also allow property managers to search and add new vendors from an external network onto their approved vendor list without having to leave the platform – a ‘Google’ for trusted suppliers within the industry.

14. Increased Policy and Regulatory Compliance

Businesses that use a traditional procurement system pose a higher risk of non-compliance as it is difficult to perform due diligence on each stage of the procurement cycle, with an automated e-procurement system, the rule-based workflows will prevent erroneous and uncompleted requests, eliminating the risks of non-compliance.

Illustration of a judge smiling at a balanced scale

15. Remote Access (Contact-Free)

The best thing about switching over to an eprocurement platform means that you can now take your procurement management tasks online, and you can do it anywhere in the world. You can procure safely and surely on a beach with secure internet if you’d like. Soon you might even be able to work on-the-go with mobile apps offering greater mobility. With upgraded technology integrations, you will soon be able to host online meetings, and the reviewing of buildings performed entirely online – future of work!

“Mobile technology has enabled improved access, delivering and sharing at other personal and enterprise levels. This is transforming procurement by enabling better connections and collaborations between buyers, suppliers, customers and other trading partners.”

16. The power of Data

Data is constantly created and stored. From when an employee logs in to the number of times a supplier has reviewed the contract, to budget expenses or data on asset inventory, Data is captured in the system. An eprocurement platform enables the accumulation, sorting and analysing of data. This assists not only with preventative maintenance but also on management consulting strategies for building owners and clients or even the invention of solutions of real value for your business and its market. The ability to collect such data is an incredible asset for any decision-making processes within the property business.

 

As they say, “Knowledge is Power”.

“Mobile technology has enabled improved access, delivering and sharing at other personal and enterprise levels. This is transforming procurement by enabling better connections and collaborations between buyers, suppliers, customers and other trading partners.”

eProcurement is bulldozing its way into 2021

Soon real estate players will embark on a race to not only adopt, but be efficiently trained at e-procurement practices. The risk for not enacting on it now will reap considerable consequences for real estate businesses who are still on the fence with the digitalisation of property management workflows.

It is extremely necessary to evolve to keep up with the fast-changing digital economy and not get left behind.

 

Take it from Alex Chesterman, founder of Zoopla, a proptech platform, who thinks that that “technology is often viewed wrongly as a purely disruptive threat, which in turn has been slow to adopt technological change. Nevertheless, (He) firmly believes that it should be seen as a force for innovation, not disruption.”

Get in touch to find out more about our data-driven property and facility management solution for real estate professionals.

As they say, “Knowledge is Power”.

“Mobile technology has enabled improved access, delivering and sharing at other personal and enterprise levels. This is transforming procurement by enabling better connections and collaborations between buyers, suppliers, customers and other trading partners.”

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