E-procurement

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E-procurement (electronic procurement, sometimes also known as supplier exchange) is the business-to-business or business-to-consumer or Business-to-government purchase and sale of supplies, Work and services through the Internet as well as other informations and networking systems, such as Electronic Data Interchange and Enterprise Resource Planning.^[1]

E-procurement is done with a software application that includes features for supplier management and complex auctions. The new generation of E-Procurement is now on-demand or a software-as-a-service.

There are seven main types of e-procurement:

• Web-based ERP (Enterprise Resource Planning): Creating and approving purchasing requisitions, placing purchase orders and receiving goods and services by using a software system based on Internet technology.
• e-MRO (Maintenance, Repair and Overhaul): The same as web-based ERP except that the goods and services ordered are non-product related MRO supplies.
• e-sourcing: Identifying new suppliers for a specific category of purchasing requirements using Internet technology.
• e-tendering: Sending requests for information and prices to suppliers and receiving the responses of suppliers using Internet technology. May or may not involve e-auctions or eRFx functionality.^[2]
• e-reverse auctioning: Using Internet technology to buy goods and services from a number of known or unknown suppliers.
• e-informing: Gathering and distributing purchasing information both from and to internal and external parties using Internet technology.
• e-marketsites: Expands on Web-based ERP to open up value chains. Buying communities can access preferred suppliers' products and services, add to shopping carts, create requisition, seek approval, receipt purchase orders and process electronic invoices with integration to suppliers' supply chains and buyers' financial systems.

The e-procurement value chain consists of Indent Management, eTendering, eAuctioning, Vendor Management, Catalogue Management, and Contract Management. Indent Management is the workflow involved in the preparation of tenders. This part of the value chain is optional, with individual procuring departments defining their indenting process. In works procurement, administrative approval and technical sanction are obtained in electronic format. In goods procurement, indent generation activity is done online. The end result of the stage is taken as inputs for issuing the NIT.

Elements of e-procurement include Request For Information, Request For Proposal, Request for Quotation, RFx (the previous three together), and eRFx (software for managing RFx projects).

E-procurement in the Public Sector

Public sector organisations use e-procurement for contracts to achieve benefits such as increased efficiency and cost savings (faster and cheaper) in government procurement^[3] and improved transparency (to reduce corruption) in procurement services^[4]. E-procurement in the public sector is emerging internationally; initiatives have been implemented in Singapore, UK, USA, Australia and European Union^[5]. Often, such e-procurement projects are part of the country’s larger e-Government efforts to better serve its citizens and businesses in the digital economy. For example, Singapore’s GeBIZ was implemented as one of the programmes under its e-Government masterplan^[6].

Vendors

This field is populated by basically two types of vendors: big enterprise resource planning (ERP) providers which have e-procurement as one of their offerings, or more focused vendors.

E-procurement Systems

An e-procurement system manages tenders through a web page that is obtained by typing its URL on the browser. This can be accessed anywhere globally and has greatly improved the accessibility of tenders.

E-procurement and New Business Models

E-procurement not only brings efficiency in the way the company operates but also help the company change its business model entirely. Dell's business model of make to order relies completely on its e-procurement systems which connects it to its suppliers helping in the exchange of real time information.^[7]

Advantages

E-procurement can provide real-time business intelligence to the vendor as to the status of a customer's needs. For example, a vendor may have an agreement with a customer to automatically ship materials when the customer's stock level reaches a low point, thus bypassing the need for the customer to ask for it.^{[citation needed]}

Companies can track purchases being made in all departments and ensure compliance to standards. For example, a marketing agent might want to purchase a new laptop for his business trip. In a manual setup, the agent might be instructed to go to a local supply chain store, purchase the laptop and submit the receipt back to the company for reimbursement. Such purchases are difficult to track. With an electronic procurement system in place, the entire purchase runs through approval work flows and the person who approves of such requests ensures the laptop is bought only for the configuration needed in a business use.^{[citation needed]}

The turnaround time in making phone calls to suppliers, placing orders and delivery is reduced as buyers can place the order instantly. This ensures purchases, especially the critical ones are made on time, thus contributing to the overall process efficiency.^{[citation needed]}

See also

• Complex sales
• Construction bidding
• Contract A
• Proposal
• Reverse auction
• Tender Notification
• Tendering
• Strategic sourcing
• Outsourcing
• Public eProcurement
• Purchase-to-pay

References

1. ^ Baily, P. J. H. (2008). Procurement principles and management. Harlow, England: Prentice Hall Financial Times. pp. 394. 
2. ^ E-tendering definition at UK local government website
3. ^ "Government procurement news from FutureGov". FutureGov. http://www.futuregov.asia/articles/2011/feb/24/philippines-e-procurement-system-targets-late-2011/. 
4. ^ "Combating corruption in the EU through e-Procurement". http://blog.transparency.org/2011/02/16/combating-corruption-in-the-eu-through-e-procurement/. 
5. ^ "Critical Factors that Influence E-Procurement Implementation Success in the Public Sector". Journal of Public Procurement 6 (1 & 3): 79. 2006. http://ippa.org/jopp/download/vol6/issue-1-2/e_ProSympAr6_Vaidya_etal.pdf. 
6. ^ "Singapore E-Government Action Plan I Programmes". http://www.egov.gov.sg/egov-masterplans/egap-i/programmes. 
7. ^ "Dell Make to Order Model". http://www.manufacturingnews.com/news/98/0703/art1.html.