What is eProcurement?
eProcurement, also known as electronic procurement or supplier exchange, is the purchase and sale of supplies, equipment, works, and services through a web interface or other networked system.
The technology is designed to centralize and automate interactions between an organization, customers, and other value chain partners to improve the speed and efficiency of procurement practices.
It boasts a suite of innovative features – all designed to bolster the efficiency, effectiveness, and total cost of procurement.
eProcurement started in the 1980s, when electronic data interchange (EDI) was developed. EDI allows files and documents to be shared between people in business and, at the time, it was revolutionary. Businesses no longer had to physically send documents, as instead they could be sent electronically.
In the context of procurement EDI, allowed customer and suppliers to send and receive purchase orders and invoices using call-forward networks, which was eventually superseded by email.
Later in the 1990s EDI was improved as organisations developed specialised online catalogues, specifically for vendors.
In its modern guise eProcurement involves, activities related to evaluating and selecting suppliers, such as eAuctions and eTenders, as well as what you need to purchase from these vendors, including electronic orders and supplier catalogues.
Benefits of eProcurement
eProcurement offers significant benefits for your organization and the most common are listed below:
- Automates laborious tasks – tasks such as auctioning orders and document management for purchase orders, evaluating and selecting suppliers, price negotiations, agree and storing supplier contracts and more can all be automated between an organization and its suppliers to increase the speed you do business, freeing up staff for other tasks
- Improved workflows for procurement – this enables end-user self-service and decentralization with control through company-approved catalogs, and more frictionless processing of employee requisitions (the ordering of goods and services) and supplier payments
- Visibility of your purchasing behaviors – eProcurement will give your organization visibility into what it spends. This data is invaluable and will help you control things such as non-compliant (or maverick) spend , identify areas for consolidation of suppliers, or to leverage buying power to negotiate cost savings
- Connecting to external supply chains and ERP – Real-time information can be shared between ERP or finance systems and supply chains for better overall visibility of supplier information and supplier transactions
How does eProcurement work?
eProcurement is designed to streamline the regular procurement process. Instead of manually doing things such as exchanging contracts, sending out tender documents, and filling out supplier onboarding questionnaires, the entire process is automated. It also blends elements of procurement and finance to streamline operations between the two.
Here are the key components of an eProcurement solution:
- Supplier management – refers to a buying organization administrating suppliers’ information, interactions, performance, and relationships. Supplier management involves gaining complete visibility on the information, interactions, and ongoing performance of an entire supplier database.
- Supplier Management is typically comprised of two elements – Supplier Relationship Management (SRM) and Supplier Information Management (SIM).
- Sourcing & Contract Management – details the end-to-end process an organization undertakes when identifying and sourcing products or services. Sourcing & Contract Management suites deals with strategic sourcing activities and managing contracts and it is usually comprised of eSourcing (eAuctions and eTenders) and contract management.
- Procurement – describes the end-to-end process of ordering a product or service from a supplier, through to the organization making a payment of services rendered.
Procurement is made up of product ordering, supplier requisitions, budget authorization, receipting of delivery, and invoice processing. Procurement software improves efficiency, savings, spend management, and transparency across the entire purchasing lifecycle.
- Analytics – most tools used in businesses use some sort of analytics platform and eProcurement is no exception. Typically, analytics allow procurement and finance professionals to view and take corrective measures for spend across the whole business. This is usually achieved with easily configurable dashboards, giving decision-makers what they need to make informed decisions.
How to learn eProcurement?
Learning the ins and outs of eProcurement can be challenging, with continuous training and study required to keep up-to-speed with emerging technologies and processes. But, with the relevant training materials and literature, you can gain a working knowledge of eProcurement and discover the benefits it can offer.
Below, we take a look at some of the avenues you can take to learn eProcurement.
- Study towards a BSc or MSc in supply chain management
An effective way to learn the principles of procurement, an undergraduate or master’s degree in supply chain management will provide a solid foundation for a career in eProcurement, with courses teaching acquisition skills, supply chain management and knowledge of eProcurement solutions.
- Gain procurement certification
There are several procurement-related certificates to attain including a range of qualifications from the CIPS, the Chartered Institute of Procurement & Supply. CIPS provides training in all areas, for a comprehensive formation of procurement knowledge.
- Webinars, blogs, and learning e-learning sites
- Mentorship and on-the-job experience
Either through an unpaid internship or as part of an on-the-job training program, a great way to learn eProcurement is in the company of an experienced mentor, who can share practical skills and knowledge in a real environment.
What are the major eProcurement tools?
There are several tools and processes used in the field of eProcurement, including:
- Electronic data interchange system
An electronic data interchange (EDI) is used to exchange data and information between electronic devices. Messages and information from partner companies are transmitted and stored via EDI, streamlining invoicing and order logistics.
- Internet applications and platforms
Businesses implement a variety of eProcurement tools and web platforms to facilitate day-to-day working, including eSourcing, eTendering, eAuctioning, and eOrdering tools. Email is also used predominantly, as well as XML-based data transfer.
- E-ordering and purchasing tools
Major tools relating to product purchasing include a web-based ERP and digital mechanisms for eAuctions.
What are the main functions of eProcurement?
The primary functions of eProcurement are far-reaching, offering a range of benefits for a company’s day-to-day operation and supply chain activities. Below, we list the main functions of eProcurement for business:
- Automates processes to free up resources and reduce errors.
- Improves communication between stakeholders and partners to streamline the procurement cycle.
- Provides a single platform for all procurement activity, giving stakeholders and managers a centralized platform for managing and auditing.
- Offers real-time updates for vendors, management, stakeholders, and partners, as well as the chance to curate and store procurement data.
- Allows for streamlined negotiation between multiple partners and stakeholders.