Digitalization has rapidly changed human life. It has confined the world to our living room. While online platforms have a deep impact on the personal sphere of modern life, can commercial areas be far behind? Of course not! The advancement of technology and networking has changed the traditional ways of trading. Electronic procurement or e-procurement is a product of the modernized trade and commerce world. It is a method of requisitioning, order management, and buying products or goods online. It is a business-to-business process. Only registered users can avail this method. Some advanced procurement companies are also promoting e-procurement. It deploys the closed system of a supplier and facilitates communication between shortlisted suppliers and customers via bids, purchase orders, and receipts or invoices.
Origin
The concept of e-procurement was inspired by the progress of Electronic Data Interchange EDI. After a decade, modifications in EDI enabled the organizations to build online catalogs for their suppliers. Now, e-procurement can deal with everything, from screening the suppliers and selection to drafting the contract, placing electronic orders, and payments.
How does it work?
E-procurement engages a web interface or some other type of networked system that bridges the gulf between the suppliers and the customers. Some organizations have an in-house procurement team for setting the policies to govern the e-procurement of products for the organization. Some organizations prefer hiring an experienced procurement service provider to deal with these issues.
E-procurement value-chain contains:
- E-informing
- E-auctioning
- E-tendering
- Vendor management
- E-purchasing
- E-invoicing
- Catalog management
- E-ordering
- E-contract management
Advantages
E-procurement has a bunch of advantages. You can avail these benefits by hiring one of the leading procurement companies.
Some of these key benefits are:
- Cost-reduction
E-procurement software possesses a built-in tool that maximizes the performance and lowers the costs at the same time. It eliminates not only overhead but also paperwork. This is fully automated software that organizes the processes and causes fast cycles. It looks after everything, from creating an order to closing the order after its completion. It also provides an opportunity for a more fascinating selection of products and services.
- Shortening purchase cycles
E-procurement nurtures a centralized transaction process that makes the reporting on orders, requisitions, and final transactions smoother and simpler. Also, it assures compliance with the contract. As an outcome, a business will be able to deliver its end products on time. The customers, on the other hand, will get access to all available products and services.
- Improved inventory
A renowned procurement service provider will have experts on their boards who can locate required products instantly from the selected suppliers. Here, the purchases are limited. It implies that the organization can get a better hold on its inventory.
- Transparency
All the purchase-related information is centralized when it comes to e-procurement. Management, shareholders, and internal and external shareholders can get access to this information. It helps government procurement where each bidder receives equal opportunities.
Disadvantage
As suppliers get more information from the customers than what they would have from regular supply chain frameworks, they can take the advantage of the customer.
Bottom Line
E-procurement can be more beneficial for some particular types of purchases. It may not be the right bet for procuring mission-critical goods, which can be availed only through a few selected suppliers. Hence, before making any decision, you should not forget to analyze your business.