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Last edited 22 Nov 2017
The term 'E-procurement' refers to tendering processes carried out online and through information and networking systems. It can be a highly-effective way of managing complex supply chains with multiple tiers of suppliers.
Very broadly, e-procurement might include:
- E-informing: The process of gathering and distributing procurement information both from and to internal and external parties.
- E-tendering: The process of tendering using online technology.
- E-auctioning: Web-based software that allows potential suppliers to compete online, in real time, to provide prices for the goods/services under auction.
- Vendor management: Application that acts as a mechanism for business to manage and procure staffing services.
- Catalogue management: The process of suppliers enabling product content to be made available to buying organisations in order for them to procure goods electronically.
- Order status: The ability to track orders online until delivery.
- Advance ship notice: Notification of pending deliveries.
- E-invoicing: Exchange of the income document between a supplier and a buyer in an integrated electronic format.
- E-payment: Payment system facilitates the acceptance of electronic payment for online transactions.
E-procurement software automates procurement-related functions, procedures and processes, reducing the need for paper-based and human processes. E-procurement platforms can usually be customised according to the needs of the user, often with accessibility through smartphones and tablet devices. It frees up an organisation’s procurement teams from low-value tasks, allowing them to focus on higher-value activities such as contract negotiation.
There are several potential challenges for an organisation implementing e-procurement. These involve the installation and integration of software with other enterprise systems, training requirements, liaising with suppliers to ensure a successful transition to the new system, and so on. However, there are some significant benefits that can be achieved. These include:
- Lower transactional costs.
- Better reporting through automation.
- Pre-qualification questionnaires (PQQ) can be dispatched and responses automatically evaluated.
- Tender cycle times can be reduced.
- The whole tender process can be scheduled, with milestones automatically managed and participants alerted.
- E-evaluation can appraise and give different weightings to bids automatically.
- The system can be extended to handle routine clerical procedures after contract award, such as e-invoicing and making e-payments.
- There can be simpler contract management as all documents can be stored centrally.
- Because of the ease of contacting, more suppliers can be invited to tender, meaning there is greater competition.
- Integrated data solutions allow for accurate cost estimates, and a source of accurate costing data in a direct feedback loop from the tender process.
- Substantial reductions can be made in paper and energy use.
- It can lead to closer, more structured communication and cooperation with supply chain partners.
- It streamlines change management as requirements are properly documented.
- It increases accountability by formalising and documenting the tender process, and creating audit trails.
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