How can digital procurement reduce hidden costs?


Over the past few years, digitalization has become an important part of companies of all sizes and in all sectors. Its positive effects are no longer open to debate, as it helps tooptimize an organization’sstructural costs. The digitization of purchasing also offers a number of advantages: in addition to generating economies of scale, it actively contributes to reducing hidden costs. But what are they? And how can an innovative management solution reduce the majority of hidden costs?

The different digitization methods

Before getting to the heart of the matter, let’s take a quick look at what we call digitization. It’s a method that offers the possibility of transforming a process or task by means of a digital tool, with the aim ofoptimizing speed, gain, safety and quality within a company. At present, a number of areas have been recomposed by digital technology. These include the way we transact business, the way we listen to music, the way we communicate… Digital isn’t just a collection of technologies, equipment and tools. It is also changing the way we work and collaborate

Digitalization affects every department in a company, whether it’s a very small business, an SME or a major corporation. The use of digital tools is a matter of course for the communications department, as it is one of the methods used by companies to establish a digital culture. These communication tools can be internal or external (instant messaging, blogs, websites, internal discussion platforms, newsletters, etc.)

In addition to communication tools, many companies also use digitalization to improve productivity. The tools used to achieve this vary according to each company’s sector of activity. Digitization also plays a part in overall company management, especially in purchasing management and cost reduction. A company’s various departments can easily adopt digitalization to generate profits and increase efficiency.

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Digitization to reduce hidden costs

The benefits of implementing digital purchasing within a company are considerable. Various experts argue that digital strategy enables cost optimization. Indeed, digitization offers the opportunity to boost performance and efficiency, and also reveals the existence of hidden costs more quickly. In general, it enables cost centers to be managed with new data summarized on dashboards

Digital transformation also involves automating operations, reducing the need for human intervention and the risk of error. This means lower administrative costs for the company. It also optimizes productivity and financial gain. Operating costs are optimized and, better still, redirected as digital transformation drives process improvement

Digital is also an excellent way for a company to easily gather data from customers or its supplier portfolio. It also offers the opportunity to reduce direct costs through contract management. Digitalization has also revolutionized transaction methods. The processing of supplier invoices represents a huge area for improvement for companies with high volumes. Spot purchases, known as C class purchases, are often attractive from a financial point of view, but their processing involves indirect costs such as the cost of placing the order. An invoice worth less than €100 is most often an invoice on which a company loses money, because the total costs involved in processing it are equivalent

A concrete example based on the digitalization of companies

Numerous studies have been carried out to determine the impact of the digitalization of purchasing departments in international companies. This analysis has resulted in the following figures

  • 21% lower labor costs
  • 2 to 3 times fewer transaction errors
  • 29% reduction in the number of staff assigned to the purchasing process
  • Twice the return on investment (ROI)

For companies that have not yet gone digital, it’s not too late. Transaction management in 2024 is still in the early stages of what the market has in store for the years to come. All you need to do is ensure that your staff are mobilized and trained, and that the necessary information is passed on to every employee and partner involved in the new organization, to make these projects as successful as possible. The testing of digital tools is also an important step in the implementation of digitalization, and you shouldn’t forget to analyze the results of the introduction of digital transformation within your company.

Digital transformation is an essential and indispensable process for controlling your company’s main costs. If you don’t want to spend money unnecessarily using this system, especially in purchasing management, you need to turn to SaaS purchasing software that offers step-by-step dematerialization. Weproc can help you organize the digitization of your business. This software provides you with purchasing and supply management solutions to reduce operating costs and trigger the levers you need to achieve your objectives


Want to learn more about our procurement management software Weproc? Contact us or request your free 15-minutes demo below!

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