What is eprocurement? Definition, benefits and processes

Eprocurement follows many of the same steps as a traditional procurement process; however, eprocurement is exclusively conducted over the internet. This method of purchasing goods and services can lead to widespread benefits in your organization.

The benefits of an eprocurement System

An effective eprocurement system generates benefits for all parties involved:

• Added transparency – Eprocurement makes the transfer of information simple and quick, from inquiring about an invoice to placing a supply order. Transparency is also infused into the analytical side of purchasing, including purchasing behaviors, spending habits, and consolidation opportunities.
• Lower costs – The procurement process can be tedious and time-consuming without using an eprocurement system. With eprocurement software, you can eliminate costly errors and mistakes when placing orders.
• Automated processes – Automating your procurement systems allows you to have consistent and efficient operations. From automatic payment processing to scheduled re-orders, your business can streamline operations with minimal oversight.
• Minimized downtime – Eprocurement systems lead to shorter process cycles, allowing you to obtain goods and services quickly. With more control over your inventory, you can minimize costly downtimes.
• Larger selection – Eprocurement systems work through electronic data interchange. This means that all goods and services will be listed in online catalogs, making it easy to compare what’s available and make an informed purchasing decision.

The typical eprocurement process

The eprocurement process will look different for each organization. Nevertheless, here’s a general outline of what you can expect:

1. Outline transferring information – The first step in the eprocurement process is outlining the online information that will transfer. Make a list of the type of information that will be exchanged with external suppliers and vendors and ensure these controls are optimized.
2. Online sourcing – Next, you will make a list of potential suppliers based on your business’s needs. Try to limit this list to a handful of suppliers as the eprocurement process can be complex with too many candidates.
3. Online tendering – Once you have your list of pre-qualified suppliers, you will request information and quotes that your team will analyze based on cost and other factors.
4. Online auctioning – This stage involves setting the contract terms. Here you will come to an agreement on the quantity of goods or service being purchased, the price, delivery date, and any other important information.
5. Online product ordering – The final stage in the eprocurement process is ordering the goods. Sometimes, your team will need to create a purchase requisition that will be approved by upper management. Once all approvals are received, your order will be placed.

This process can look different based on your business’s needs. For more specifics on how eprocurement factors into your organization, consult with an expert.

How Procurement Differs from Purchasing

Procurement focuses more on the value of goods, with an emphasis on cost. The procurement department generally purchases items for a production environment, like supplies and raw materials to build finished goods. On the contrary, the purchasing process is more straightforward, involving the purchase of goods for direct resale or use. These transactions are less in scope and complexity, like buying paper for a printer.

Another difference between purchasing and procurement is the needs the expense looks to fulfill. Purchasing is reactive and depends on customer perception, resulting in more focus on the transaction rather than the supplier. However, procurement is proactive and looks to build long-term relationships to avoid supply chain disruptions and maintain favorable pricing.

Implementing Eprocurement

Implementing eprocurement can be a great way to streamline your purchasing processes. Here are the common eprocurement implementation steps:

1. Assess current process – First, you need to evaluate your business’s current processes related to purchasing goods and services. How long does each task take? How many suppliers are you currently working with? Are costs being optimized?
2. Identify shortcomings – Now, identify areas that need improvement. Are invoices being duplicated? Is it taking your business weeks to issue supplier payments? Are you frequently running out of inventory? Make a list of problems you’ve noticed over the past few months.
3. List benefits of eprocurement – It can be hard to change your internal processes without knowing the tangible benefits. How would an eprocurement system benefit your organization? Will employees have more free time for other value-added areas? Will the likelihood of running out of inventory decrease? List all of the potential benefits of an eprocurement system.
4. Choose a provider – Now, you want to complete due diligence surrounding eprocurement providers. Providers, like eftsure, should be able to offer you the ability to manage suppliers, protect payments, and handle integrations with other programs, such as your centralized accounting software.
5. Develop an implementation plan – Outline how you will implement your eprocurement system. Will you offer employee training? Are you going to work with a qualified provider to ensure a seamless transition?
6. Evaluate efficiency – After your eprocurement system is up and running, evaluate your progress. Do you need to make adjustments? What benefits are you noticing? Part of running an efficient system relies on continuous improvement.

Summary

• Eprocurement is the process of using the internet to buy goods and services.
• Eprocurement systems lead to many organizational benefits, like added transparency, lower costs, automated processes, minimized downtimes, and a larger selection of products and services.
• Procurement generally involves buying materials and supplies used in the production process, while purchasing typically involves goods and services purchased for direct resale.
• Implementing an eprocurement system relies on analyzing your business’s needs, choosing a provider, and creating a comprehensive implementation plan.