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E Procurement

E-procurement refers to the electronic transfer of data to support various procurement processes, primarily conducted through the Internet. It encompasses several forms such as e-ordering, e-sourcing, and e-reverse auctioning, each serving different phases of procurement. The benefits include cost savings, increased productivity, and standardized buying, while challenges may involve micromanagement and provider onboarding issues.

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44 views12 pages

E Procurement

E-procurement refers to the electronic transfer of data to support various procurement processes, primarily conducted through the Internet. It encompasses several forms such as e-ordering, e-sourcing, and e-reverse auctioning, each serving different phases of procurement. The benefits include cost savings, increased productivity, and standardized buying, while challenges may involve micromanagement and provider onboarding issues.

Uploaded by

Henry drago
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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E-procurement

Introduction

E-procurement is nothing but electronic data transfer to support operational,


tactical and strategic procurement. E-procurement has been existence for long
time in one form or the other earlier it was done through electronic data interchange.
In today’s environment, most of the e-procurement is done through the Internet.

E-procurement (electronic procurement, sometimes also known as supplier


exchange) is the business-to-business or business-to-consumer or business-to-
government purchase and sale of supplies, work, and services through the Internet
as well as other information and networking systems, such as electronic data
interchange
Introduction cont’d
• Electronic procurement (EP) can be defined as using Internet technology in the purchasing

process. It is important to note that this definition is narrow in the sense that it excludes

old applications like ordering by telephone or by fax. On the other hand, this definition is

relatively wide, because it does not only encompass the use of Internet applications in the

purchasing process, but it also includes the use of intranet and extranet applications. For

example, using this definition ordering office supplies by using a supplier catalog on a

website is a form of EP.

• One of the most characteristic elements of Internet technology is the TCP/IP-protocol. The

Internet as well as intranets and extranets are based on this protocol.


Forms of E- procurement
Based on this definition of EP a large number of forms of EP can be distinguished.

Some of these forms have received a lot of attention already and they are by now quite

well-defined and relatively well-developed. Other forms of EP are still quite young and

immature. Some of them will mature, others may never reach that state. In this paper

we focus on the forms of EP that seem quite well-defined and relatively well-

developed. We distinguish between the following forms:-

• e-ordering;

• web-based ERP;

• e-sourcing;

• e-tendering;

• e-reverse auctioning;

• e-informing.
Forms of E-Procurement
Each of these forms can be explained as follows:

 E-sourcing supports the specification phase; it identifies suppliers that can be used in
the selection phase.

 E-tendering supports the selection phase; it facilitates the REOI and ITB/RFP
activities, usually including support for the analysis and assessment activities.

 E-reverse auctioning supports the contract phase; it enables closing a deal with a
supplier;

 E-ordering and web-based ERP is the process of creating and approving procurement
requisitions, placing purchase orders, as well as receiving goods and services ordered,
by using a software system based on the Internet.

 E-informing is not directly associated with a phase in the procurement process; it is


the process of gathering and distributing procurement information both from and to
internal and external parties using Internet technology.
Benefits of E-Procurement
Reduced Costs

E-procurement saves you money by preventing duplicate spending, leveraging


volume buying, and saving you costs associated with paper-based systems (for
example, the cost of stamps to mail your paperwork).

Transparent Spending

Electronically conducting your procurement makes it easier to write and


analyse reports on your procurement systems, meaning you can ensure that
your procurement procedures conform to your policies.
Benefits Cont’d
Increased Productivity

Once you’ve learned the system, e-procurement is less time-consuming than traditional
procurement. Having your records stored electronically makes it easier to submit reusable
tenders. Meanwhile, use of templates means paperwork can be filled out more quickly.

Eliminating Paperwork

Tired of finding new space to store all that paperwork? With e-procurement, everything can be
saved and stored electronically. This not only saves you from needing more room, it also
makes the process of finding older tenders more simple.

Increased Transaction Speed

E-procurement is both time-saving and efficient. As the electronic handling of tasks supports
and simplifies the purchasing process, transaction speed is increased. Also, because of e-
enabled relationships with suppliers, procurement cycle times speed up. The e-procurement
process eliminates unnecessary activities, allowing you to focus on more valuable tasks.
Standardized Buying

When you have various departments making procurement decisions, there


can be differences in what and how they purchase. Conducting purchasing
electronically makes it easier for every department to conform to company
procurement standards.

Reduced Errors

Electronic paperwork is streamlined and thus easier to check for errors—


there’s no messy printing to get in the way either. Along with this, past
orders are more easily referenced, meaning there’s a greater chance that
your company can compare orders to ensure new ones are correct.
Pros of E-Procurement
1. Enhanced Organization

Numerous organizations are spooky due to the disorganization. Such organization struggles to manage

purchases and place order according to the schedule. This unorganized procedure can be difficult to

change and can lead to exceptions. Here, E-procurement is the appropriate solution as it can streamline

buying and furthermore diminish the danger of exception in your purchasing procedure. Another

highlight is that you can centralize the purchasing.

2. Improved Control

Online procurement helps you to be adaptable in a free manner and also enables access restriction in an

agile manner. With the correct e-procurement software, you can confine a large group of issues including

acknowledged price from every supplier, ordered things, selected vendors and sort of purchases done. By

firmly controlling these essential components you can keep up consistency all together and limit rogue

spending. Also, the online procurement software can coordinate easily with your current frameworks to

boost the efficiency.


3. Reporting and Reconciliation

A key issue in procurement is crisscross amongst purchases and invoices. In any

case, this issue has a tendency to be pushed out of sight as organizations tend to

center around fundamental tasks. In addition, it is hard to create reports on

procurement and additionally assemble information on authentic approval utilizing a

manual system. E-procurement software can resolve this issue as it offers adjustable

and customized reporting structure.

4. Cost Saving

You can conduct proper research and discover a cost-effective online procurement

software solution. Reliable sellers offer pricing packages that empower you to pay

just for what you utilize and commonly there is no client authorizing charges or

hidden expenses. Also, your workers can save time with this product and spend it
5. Reconciliation with Existing Software

As specified before, top e-procurement software solution can


incorporate consistently with your current business process
automation stages. Numerous online procurement software
additionally gives modules to streamline budgetary tasks and
handle capital ventures. You can choose one such supplier to
guarantee all the tools in the software are compatible with each
other making it less complex to actualize the e-procurement
product.
Cons of E-Procurement
1. Micromanagement

E-procurement software devices provide a detailed report on data analytics and


classification. In any case, the risk is that you can get carried away with the
customization alternatives. There might be a high number of fields which could lead
to confusion and could decrease the platform’s reporting proficiency. The only
solution is to discover the customization level that will be suitable for your enterprise.

2. Not Ideal for Direct Materials

E-procurement works best to purchase catalog based indirect materials, for example,
office supplies. You are certain to get great ROI for purchases like these. However, e-
procurement is perfect when buying direct services and materials. So, it would be
advisable to utilize it for arranging purchases that are a piece of expansive and costly
deals.
3. Provider Onboarding Problems

More established vendors could find it hard to get used to


the new online procurement software frameworks.
Independent ventures can experience considerable
difficulties refreshing inventories and other data with the
platform. Along these lines, it is critical to choose well-
informed suppliers to completely profit by e-procurement.

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