You may all know how technology has developed in recent times. With that, the volume of business performed online has increased dramatically as worldwide connectivity has improved and technology has been adapted to the current trend. As a result of the pandemic’s effects, virtually every business that can be performed remotely is now available online as both buyers and sellers accept eProcurement as this covers supply chain transactions. eProcurement programs have been proven to boost efficiency and transparency while lowering costs. Buying and selling things online allows your businesses to reach a wider audience and improve transaction speed. In addition, it automates your business operations, encourages data exchange, improves data management, and improves decision-making. Learning more about this procedure can help you make it a reality in your business. Here will get a clear understanding of eProcurement and its benefit:
What is E-Procurement?
Have an idea what eProcurement is? If not, here you’ll get a clear view. eProcurement is also known as electronic procurement, a digital transaction process involving buying and selling goods and services online. This method makes use of a supplier’s closed system, which only their registered customers may access and benefit from. Implementing eProcurement helps speed business-to-business (B2B) or business-to-consumer (B2C) operations such as emails, invoices, purchase orders, and offers by establishing a direct connection between the supplier and the buyer. Because eProcurement is an online business measure, supply chain operations are managed using networked systems and web interfaces.
eProcurement also helps create online catalogs for their suppliers using EDI principles. Contract management and supplier evaluation are two aspects of this procedure. You can also use specialized eProcurement software to automate B2B interactions between suppliers and customers.
eProcurement software products from various developers are designed to help your businesses increase productivity and cut expenses. Inventory tracking, supplier management, order fulfillment, and document management are among the features that most providers offer. There are software systems customized to retail, 3PL, warehouse management, and basic eProcurement software.
Five steps of the eProcurement process
- Online information transferring
The stage that fits with your standard procurement cycle is online information transfer. It is a term that indicates the exchange of data between two parties. This interaction frequently occurs between internal company units and related external vendors. Your company’s eProcurement process can be optimized and streamlined with this first step.
- Online sourcing
Do you know about e-sourcing? The phase of procurement in which a corporation pre-qualifies all possible suppliers is known as online sourcing, or e-sourcing. You make this decision based on the procurement requirements, which allows you to shortlist providers for review. This second step relates to the company’s executive and procurement figures determining business requirements.
- Online tendering
When a company asks for information, quotes, and proposals from its shortlisted vendors, this is referred to as online tendering or e-tendering. This stage runs parallel with the evaluation and solicitation processes and helps your company analyze and evaluate possible suppliers. Your company may apply techniques to ensure that the assessment is transparent during this third step.
- Online auctioning
The stage in which all parties involved set the contract terms and negotiate prices is known as online auctioning, or e-auctioning. The buying company purchases the services and goods from the provider once both sides have agreed. Multiple companies may compete for a contract with the provider by offering higher prices. E-reverse auction is a solution to this situation, in which numerous providers compete for a contract with one buyer by giving them a lower price.
- Online product ordering
The final phase in the eProcurement process, which includes preparing and approving requisitions, is online product ordering or e-ordering. This occurs when your business sets orders and receives things by the estimated delivery date. To complete the process, your company indexes the contracts in a digital database so that employees can access them and place a new purchase later.
Benefits of eProcurement:
Creates information transparency
You all know transparency is the primary key. eProcurement makes the information and data transfer between the company and its suppliers more transparent. This form of data can be used to analyze your purchasing patterns, leverage purchasing power, restrict non-compliant expenditure, and find opportunities to combine suppliers.
Shorter purchasing cycles
You can save delivery time by reducing the processing of centralized transaction tracking, reporting on orders, payments, and requisitions, and verifying contract compliance. Buyers have electronic access to the available items, services, and pricing.
Purchase order tracking, supplier appraisal, invoice processing, and matching, and requests for documents such as proposals and quotations are all automated using an eProcurement system. Employees can access and view the company’s approved preferred suppliers’ web catalogs from anywhere. As a result, approvers can authorize purchase orders anytime, speeding up the process.
Larger product and service selection
You can access a wider choice of products and services because all transaction and procurement processes are completed online. This diversity allows you to compare what is available and choose the products that are ideal for your business and the most cost-effective.
Helps companies save money
eProcurement can help your company save a lot of money because it avoids costly errors that might occur when managing manual orders and paperwork. The money saved will be used for other activities, such as marketing and advertising.
Avoid invoice delays and duplicate payments
One of the more difficult validations in the procure-to-pay lifecycle is matching an invoice with the related documents. An invoice’s pricing and terms should match those on the purchase order and the goods receipt note.
Further, the invoice’s line-item quantities, product descriptions, and per-unit price must match the purchase order, and the actual goods received. Although three-way matching can be done manually, automation can considerably reduce the cost, accuracy, and time required for validations.
Limits maverick spending
When a person spends money on things not covered by the contract and agreed by the company, this is known as a maverick expenditure. Limiting such actions helps guarantee that all procurement processes agree to the company’s and supplier’s compliance standards.
eProcurement takes less time than traditional procurement once you have worked out the technology. When your records are stored digitally, it is much easier to submit reusable tenders. Meanwhile, the usage of templates allows for faster completion of paperwork.
Automates procurement processes
You will be able to run more consistent and cost-effective operations if you automate your procurement processes. You can utilize various procurement software to help you reach this goal, reducing the requirement for repetitive tasks such as data entry and analytics.
eProcurement can also provide you with a considerably higher level of control than traditional ordering procedures. In the eProcurement environment, all the information concerning online purchases is centralized, giving your business and management team more control. Further, this management can help reduce regular supply issues such as pricing errors, order duplication, inventory shortages, excess inventory, and order omissions.
Simple Configuration and Scalability
eProcurement software can be customized to meet the specific needs of both the buyer and the supplier, and they can scale up as the business grows. It is important to choose suppliers for current and potential future needs. Thus learning about supplier’s technical infrastructure development plans will help buyers determine their options.
E-catalogs and increased standardization
Electronic catalogs give buyers additional visibility into product and price information by making supplier product offerings available electronically. Vendors are shifting toward providing a more consistent product as these catalogs become more popular, allowing buyers to evaluate offerings from different suppliers more readily.
Easier Data Comprehension
Procurement is an all-hands-on-deck strategy, with multiple parties collecting and storing data at the same time. Disparate data silos can disrupt communication and lengthen the procurement cycle in data-rich contexts, resulting in missed cost-cutting opportunities. Communication and cooperation become much easier when all of the data is available through a single interface. You may improve the system’s efficiency by simplifying data management, creating specialized channels, controlling who has access to which information, and controlling how that information is used.
Faster order to delivery timescales
For 40% of all respondents, one of the most important benefits of eProcurement solutions is the ability to reduce order to delivery time frames by automating requisition approvals. eProcurement software enables quick online approvals, giving users and approvers immediate access with no downtime waiting for approvals or paper trails to manage and file away.
Improved Supplier Relationships
eProcurement helps in the expansion of the buyer’s marketplace, resulting in more contract prospects for suppliers. Tender automation and simplification, increased supplier registration speed, improved cash flow owing to shorter procurement cycles, and payment automation all contribute to more transparency and accountability, which helps to improve supplier relationships.
eProcurement is a development of the traditional paper-based procurement procedure. You can effectively manage costs using this. You may arrange all procurement processes from identifying to reporting considerably easier and faster by using eProcurement software. By choosing this, you can also make purchases and receive the greatest deals from vendors. In addition, you may follow your orders in real-time. The above listed are all you need to know about eProcurement and how you can benefit from it.