E-Procurement — Everything You Should Know

E-procurement has been adopted by many organizations as it simplifies the process of procurement. However, even if many people heard about it, many are still left wondering what it is. 

For this article, we will discuss what e-procurement is all about. We will check how it works and the benefits it has that make organizations love it. We will also show you the steps of e-procurement. 

After you finish reading this article, you will have a deeper understanding of e-procurement that will enable you to become a procurement master someday. All the learnings you will gain by reading this article will allow you to use them to contribute to the growth of your organization. So without further ado, let’s dive into the world of e-procurement.

What is E-Procurement?

E-procurement is the same as traditional procurement. However, e-procurement does all processes online. Electronic procurement or e-procurement is the process of acquiring, ordering, and purchasing goods and services online. 

To give a short background, electronic procurement started in the 1980s when electronic data interchange (EDI) was developed. EDI was further improved in the 1990s as organizations developed specialized online catalogs for suppliers. 

The goal of using an e-procurement system is to get goods or services at the best possible price at the best possible time. In order to meet this objective, it is significant for organizations to establish strong relationships with their suppliers. 

Through electronic procurement, organizations can set guidelines or limits regarding the budget and spending within the platform. 

When electronic procurement is implemented properly, it opens the lines of communication between the organization and the supplier by creating a link and facilitating interactions like bids, emails, and purchase orders. 

Since electronic procurement is an online business platform, it utilized networked systems and web interfaces for supply chain processes and operations.

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    How Does it Work?

    Electronic procurement decreases the need to manually carry out strenuous procurement-related tasks like e-auctions and e-tenders. 

    The process works by connecting various parties and processes into a centralized platform. Vendor management is one of the most important aspects of e-procurement. It involves supplier relationships and information management. 

    Other key aspects of e-procurement are e-sourcing, e-tendering, e-auctioning, e-ordering, and data analytics. 

    5 Steps of Electronic procurement

    1. Online information transfer

    E-informing or online information transfer is the stage that aligns with the traditional procurement cycle. This stage describes the exchange of information between two parties. This step allows organizations to streamline their e-procurement process

    2. E-sourcing

    E-sourcing is the stage in procurement where the organization filters its potential suppliers. Organizations determine this by the designated procurement requirements that allow them to shortlist the suppliers. 

    3. E-tendering

    E-tendering describes when the organization requests information, quotes, or proposals from its shortlisted suppliers. This process coincides with the assessment and solicitation process that helps the organization scrutinize potential suppliers. 

    4. Online auctioning

    Online auctioning or e-auctioning is the process where all involved parties set the contract terms and negotiate prices. Once the parties come to an agreement, the organization purchases the goods and services it needs from the supplier. 

    There are times when multiple organizations pay more to secure a contract with the supplier. The alternative to this is an e-reverse auction where multiple suppliers lower their prices to secure a contract with an organization. 

    5. Online ordering

    Online ordering or e-ordering is the final stage in the e-procurement process that includes the development and approval of requisitions. This is the stage where organizations place their orders and then receive them by the estimated date of arrival. 

    In finalizing this process, the organization indexes the contracts in a digital catalog so employees can access them anytime and place a new order. 

    Benefits of Electronic Procurement

    1. Helps organizations to save money

    E-procurement helps organizations save money as it eliminates errors that can occur when handling manual orders or paperwork. The money that they can save can be used for other things like marketing and advertising. 

    2. Shorten purchasing cycles

    The benefit of shorter purchasing cycles is that organizations can sustain consistent and cost-effective operations. 

    There is numerous procurement software that you can use to help the organization achieve this goal. This software can help them lower the need to perform monotonous activities such as analytics and data entry.

    3. Enhance inventory control

    It is crucial for companies to manage their inventory as it allows them to have accurate information about the current supply of their goods. The information that they gathered can be used to make more informed business decisions. 

    4. Transparency

    Electronic procurement makes the transfer of data and information more transparent to organizations and their suppliers. They can use the information to view purchasing behaviors, leverage buying power, control spending, and identify opportunities.

    5. Streamlines the operation

    Streamlining the operation helps organizations to save time and increase productivity. Having all purchases online function seamlessly builds a more uniform system. This makes it easier to know the problems and resolve them immediately before it escalates.

    Frequently asked questions

    1. What is e-procurement?

    Electronic procurement or e-procurement is the process of acquiring, ordering, and purchasing goods and services online. 

    2. How does it work?

    The electronic procurement process works by connecting various parties and processes into a centralized platform.

    3. What are the aspects of e-procurement?

    The aspects of e-procurement are e-sourcing, e-tendering, e-auctioning, e-ordering, and data analytics. 

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