Today the world is all about online markets where e-procurement plays a vital role.
But how? Let’s understand the term ‘e-procurement.’
E-procurement is a process through which goods/services/products can be ordered
and purchased. It is an online B2B process that facilitates the interaction between
buyers and suppliers on the basis of an online catalog. It needs an interface that
will connect the potential customers with the suppliers on the basis of their criteria.
The widely used medium for e-procurement is a web interface or an app that will be
a connectivity between buyers and sellers. The set of procurement policies of each
company must be fulfilled by the e-procurement system. E-procurement has
simplified the process of procurement by giving it an automation aspect. The
factors like centralized transaction tracking, contract compliance, simplified
reporting has sped up the delivery time and reduced the long procurement cycles.
We must also understand how cloud procurement software works. So, it begins with
purchase requisition where regular processes involving forms, questionnaires and
all manual tasks are overtaken by automatic processes that use the preset data.
E-procurement connects different entities in a centralized platform where the
performance of relationship between supplier and customers can be represented
through supplier management. The relationship between entities can be improved
through e-procurement. The companies go through sourcing and contract
management to research, verify, select and manage vendors who can provide the
inputs required to function, but through e-procurement this lengthy process is
simplified.
Demerits of manual procurement:
● Manual procurement involves a lot of risks throughout the supply chain
including management of every single supplier contracts, market risks,
frauds, cost, quality, delivery risks, expenses, and dealing with compliance
risks like policy adherence, anti-corruption issues. The tedious task is to
constantly identify the best suppliers and monitor suppliers for timely
delivery of requirements.
● An important tool for procurement is the visibility along the supply chain
that is lacking in manual procurement which results in lack of transparency
between the supply chain.
● At times there are unwanted additional items involved in the process while
ordering kits, accounting these in financial and inventory records is difficult.
These kinds of things arise complications in the procurement strategy,
departmental budgets, inventory management and financial audits. The
indirect expenses result in loss of revenue and control. The delay in
procurement processes is also caused due to rigorous control on expenses.
● There are constant problems with documentation because sometimes
processes for accepting goods are often overlooked that results in unpaid
invoices until manual follow-up has been carried out by the financial
department or the supplier.
Why choose E-Procurement Software?
● It takes control of our daily routine and utilizes time to our advantage with
most productivity in the shortest amount of time that makes it time efficient.
E-procurement software helps to minimize operations by automating all company
policies. As the manual, repetitive, or low-value tasks are decreased, the
procurement department can redirect resources to higher-value activities,
such as contract negotiations.
● The e-procurement process also makes the process cost efficient by saving
money through changes in a product or process to make it work better. It
improves the company’s end result by reducing acquisition costs and also
improving overall efficiency. Through e-procurement system, the built-in
monitoring tools reduce overhead for purchasing teams, optimizing
performance, increasing process efficiency and achieving cost savings. It
also limits expenses and purchases done outside the parameters set by the
company’s policies.
● In terms of buyers and suppliers, procurement Software improves purchase portfolio
as it helps the buyers to understand where their products are classified and in
terms of supply risk and profit contribution, it addresses purchasing strategy.
This helps the companies to get access to a wider selection of products and
services to meet their specific needs. In addition, it gives the ability to
quickly locate products from preferred suppliers or sellers and helps to
control stock size and costs.
● E-procurement initiates collection of existing information and presenting it in
a digestible way which adds on to the value to inform a decision. It
constantly reports and analyzes business today. It collects data and organizes
it through different tools such as graphs and tables. Later, the data is used to
give insights into improving companies performance. The information is
centralized in order to help the company easily access it and make the
decision-making process smooth.
Types of e-procurement system:
1. EDI: Here, two different organizations exchange messages with each other
batching notifications with other messages. This system speeds up the
process and is primarily implemented by close networks, unlike open
networks such as the internet.
2. ERP systems: These are one of many electronic procurement tools and
applications that take care of all the administrative tasks a company might be
working with. It involves the manufacturing process, logistics, distribution,
and shipping invoices. It also deals with sales, delivery, billing production,
inventory management and human resources.
3. Online Bidding: It is simpler and easier to use as it provides a centralized
way to manage bids from different suppliers though sometimes it can be
slow and cumbersome, and tracking spending of it cannot be easy.
4. Email Bid Watching: It allows suppliers to submit bids electronically. It
involves an email notification system. This system is faster and efficient than
online but tracking spending in this can be more difficult than online
bidding.
5. Piping: It is a more advanced form that allows suppliers to submit bids
through secure pipes instead of emails. This method is faster and more
efficient but can be more complicated to set up and use.
6. Web-based procurement: It allows suppliers to submit bids through an email
notification system.
The fast rapid growth in technology has led to the increasing demand for business
requirements. The world is innovating and expanding which is generating the need
for updates in industry. E-procurement in this era is not just for large businesses
with expansive purchasing departments but also in mid-market companies and
small businesses should consider to streamline the procurement process. Online
auctions, web-based procurement systems can make the procurement experience
much more substantial.
