Automating procurement for SMEs


Regional plan: Oh hopes to grow Supplycart into a regional brand for e-procurement.

PROCUREMENT is seldom seen as an area that needs to be automated. For years, companies have purchased their supplies and services through long-standing relationships and a manual process that has stood the test of time.

But as the need for better efficiency increases, Supplycart chief executive officer Jonathan Oh says this is an area that small businesses can explore to improve cost – and in the longer run, to digitalise their procurement supply chain.

“SMEs just want to drive growth. But if you look at the purchases that are linked to driving the growth of the company (it is through your procurement practices). You may be paying more expensive prices, and this could affect cost and margins.

“So more and more SMEs should be looking into this. Efficiency and productivity is really important. People are used to doing things the same way, using the same flow. But you should look into how you can do it better and quicker, ” he says.

Supplycart is a local business-to-business (B2B) e-procurement platform that allows clients and vendors to procure, manage and pay for supplies through a fully digital process. This gives clients better control, visibility and insight, which will lead to cost reductions in the business.

Oh notes that the traditional procurement process is not a transparent one and a significant amount of time is spent to source, secure budget and document the purchase.

“The challenge here is that it has created a lot of inefficiencies. There is no visibility or data on how much is spent. Previously, if a business wants to know how much they are spending on procurement, they go to the finance department and generate a report.

“But even then, the report is only at the surface level. What are we buying, what are we spending on, who is buying all this, what’s our trend like? With all these questions not being answered, the move towards e-procurement is there.

“With e-procurement, you have a more transparent procurement flow in the organisation. The prices are there, there are the e-catalogues, there are no errors of wrong orders and you have the whole experience of e-commerce.

“Also, there is better control on pricing. A lot of times, companies have so many suppliers to manage, you never know what kind of prices you are getting. So now you have visibility of all the best prices. Traditional procurement leaves a lot of money on the table, ” says Oh.

Notably, SMEs are hesitant in adopting any kind of new system. There are concerns as to whether the new system would add to their workload and cost.

To this end, Oh acknowledges that there is a lot of education work that needs to happen in the marketplace to encourage more companies to look at e-procurement.

He emphasises that the move to digital procurement does not necessarily involve high costs and reaching out to the relevant stakeholders to address their problems is a crucial part of encouraging that change.

While there is a lot of hype about going digital, Oh notes that most companies’ primary concern is that they don’t know how to go about it.

“I’m a big advocate of digital transformation. And we become digital consultants that help look into these companies’ flows by starting with e-procurement. Let’s look at how you are managing your business spend, your data, your vendors. Are your vendors also moving to the digital space? If not, we also help the vendors.

“We can become the tech partner to digitalise them. So we are a bridge to help SMEs change how they purchase as well as how suppliers supply or do their business with SMEs, ” he explains.

One of the main catalysts that helps companies buy into the need for e-procurement, though, is the need to improve their bottomline. For companies that have matured, Oh says many of them are now looking at their back-end processes to plug leakages to enhance efficiency and margins.

“By fixing the procurement process, we are able to improve our bottomline. So they are clearing the fat that they’ve accumulated over the years, ” he says.

The government’s push into Industry 4.0 will also help quicken companies’ initiatives to digitalise their businesses.

Supplycart currently services about 1,600 clients and over 200 vendors, a long way from when it started its B2B business back in 2016.

Oh says most of its business is currently focused in the Klang Valley but it is looking to expand nationwide in the coming months, and then regionally in one to two years’ time. He expects his team to grow from about 30 people currently to over 50 as the company looks to the region.

However, he says that getting local talent can be quite a challenge as it grows. While he prides himself in having a fully-Malaysian team, he notes that many of the local talents are working overseas. He adds that there needs to be more effort to draw local talents back home as well as expose those who are here to international best practices to further develop the industry.

“We have grown many folds throughout the years. Where we are heading with this is to continue to improve our software so that it is affordable and available to more SMEs in Malaysia. Ultimately, we want to be a homegrown tech company and we’d like to expand into countries like Singapore and Indonesia and be the procurement software in the region, ” he shares.

It raised US$2mil in its Series A round last September, which will help the company invest in its technology and product features.

Supplycart is up against big players such as Oracle and Microsoft which Oh says have similar products. But the procurement space is huge and there is room for different product offerings that would meet different needs. Oh adds that market adoption of e-procurement is still in the single-digit.

“So we are all working together to grow the market. And iron sharpens iron. With more players, we can also benchmark how fast we can execute our solutions. But it really comes down to whether we are helping our clients solve their problems.”

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