Operational efficiency
According to a study from Intersearch Corp. (1998), approximately 80 percent of all purchasing transactions are spent on indirect products and services. Most Fortune 100 companies have in excess of 40,000 suppliers of indirect goods but purchase less than US$10,000 annually from 80 percent of those suppliers. E-procurement provides an opportunity to consolidate sources and control maverick buying, which can account for dramatic savings. These cost savings are one of the most important motivations for e-procurement. Nearly all of the companies analyzed in the benchmarking study have confirmed operational efficiency.
E-procurement benefits fall into two major categories: efficiency and effectiveness (Kalakota and Robinson, 2001). The former includes process, products and inventory savings (see Figure 9), the latter the proactive management of key data, and higher-quality purchasing decisions within organizations. Efficiency improvements are calculated on the basis of the as-is situation prior to the implementation of e-procurement. The more complicated the old paper-based procurement processes, the more authorization stages and exceptions, and therefore the higher the savings will be. To take advantage of these potentials, the procurement process