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    Blog Image

    How e-Procurement Can Benefit Your Business

    • Many businesses have replaced traditional manual processes in procurement with digital versions.
    • e-Procurement eliminates the need to manually carry out tedious procurement tasks such as auctions and tenders, supplier contracts and supplier onboarding.
    • This enhances procurement efficiency, reduces maverick spend and improves compliance.

    November 16, 2024 | Procurement Software

    Many businesses are today looking to accelerate digital transformation. But they aren’t sure how or where to start.

    Introducing technology in a function such as procurement can be a good way to start. Why?

    Because the role of procurement has evolved significantly. It has become increasingly vital in a business environment prone to uncertainty and disruption.

    In fact, 65% of chief procurement officers expect their teams to step up to the challenge and deliver more value in 2024, suggests a recent Ardent Partners survey.

    This makes it imperative for the function to leverage technology for various processes.

    What is e-Procurement?

    Electronic procurement, also known as e-procurement, is a business-to-business (B2B) process involving the requisitioning, ordering and purchasing of goods and services online. It is a strategic and digitalized approach to traditional procurement practices and involves dynamic processes with higher transparency.

    Unlike e-commerce, this process utilizes a supplier’s closed system that is typically available to registered users only. Suppliers and customers interact through electronic bids, purchase orders and invoices, thereby eliminating traditional paper-based orders and invoices.

    By facilitating interactions and creating a direct link, e-procurement opens the lines of communication between a business and its suppliers.

    While e-procurement started way back in the 1980s following the development of Electronic Data Interchange, its scope has now expanded across the entire function. Today, it involves all core tasks including supplier evaluation and selection, contract management, electronic orders and payments.

    Stages of e-Procurement

    • E-sourcing:

    At the outset, the business defines its key requirements and organizational goals. E-sourcing pre-qualifies all potential suppliers, which allows the business to see which ones are most qualified for evaluation.

    • E-tendering:

    In this stage, the business makes in-depth assessment of potential suppliers. E-tendering facilitates the selection phase of tendering and acts as a communication platform between buyers and suppliers. It helps reduce legal errors, provides clear audit trails and improves efficiency in tactical processes.

    • E-auctioning:

    This stage involves supplier evaluation and contract negotiation. Sellers and buyers engage in negotiations to reach the most attractive deal.

    • E-ordering:

    The business now creates requisitions and purchase orders to place orders for products. They often use a digital catalog to store their rendered contracts, thereby making it easier for new buyers and employees to find information.

    Benefits of e-Procurement

    By implementing e-procurement, businesses can create a direct connection between the supplier and buyer. This helps to streamline B2B or B2C processes that involve emails, invoices, purchase orders and bids. Here are the key benefits of adopting e-procurement:

    • Improves efficiency:

    Transitioning procurement from a manual to electronic platform enables the team to work in close collaboration and get so much more done. The e-procurement platform automates source-to-pay (S2P) processes and speeds up operations with faster processing. It reduces the time needed to review proposals and make purchasing decisions. This also frees up staff who can focus on more strategic tasks such as contract negotiations.

    • Enhances choice:

    With e-procurement, businesses can access a wide range of products and services to meet their specific needs. They can search through online catalogs to select suppliers and items that match their parameters of cost and quality. They can also quickly find products offered by preferred suppliers and vendors. This reduces the workload on the team who can also use this information to reduce inventory and associated costs.

    • Increases transparency:

    E-procurement software boosts visibility and transparency into S2P processes, offering procurement greater insight into spend behavior. Cloud-native technology provides access to more data, which is aggregated, cleansed and classified to enhance spend visibility and analysis. Businesses can track their spend in real time to better manage and monitor their spending as well as track savings.

    • Boosts compliance:

    The use of technology allows procurement to effectively monitor supplier performance to ensure compliance with contractual procedures. It also lowers maverick spending by ensuring that internal teams follow the set procedures for procurement.

    • Improves reporting:

    e-Procurement increases visibility into enterprise procurement spending and enables better reporting of procurement trends and metrics. As all information is centralized, business leaders can access relevant information, whenever needed, and improve decision-making. This allows stakeholders to exercise better control over the procurement function.

    Finally, e-procurement platforms can be accessed over mobile devices, which makes it convenient for the team to do business on the go.

    e-Procurement is not merely helpful for large enterprises with expansive purchasing departments. Even mid-market companies and small businesses should adopt e-procurement and leverage advanced tools such as online auctions and web-based procurement systems.

    If you are looking to streamline supply and supplier management, e-procurement can be a great tool. Learn more about how this form of procurement can benefit your business.

     

    Tags: Procurement , Procurement Software

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