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How
E-Procurement works |
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Inspite
of many variations, the most common e-procurement model
involves an intermediary service provider or a host who links
buyers and sellers in an interconnected supply chain using a web
based e-procurement application.
The host manages transactions, facilitates communication,
aggregates and maintains catalog content, and provides the
general infrastructure for the virtual marketplace.
Through this network, buyers may compare products from
multiple suppliers in a single electronic catalog or check on an
item’s price and availability in real time before electronically
creating a PO.
Once a PO is approved, also electronically, it’s sent to the
supplier via the host’s Web portal. |
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This same Web portal
enables suppliers to automatically return real time PO status.
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After an order ships, buyers can process tracking and receiving
functions right from their workstations. Creating an invoice and
authorizing payment is handled electronically through the same portal
as well !
Beyond merely automating shipping and receiving tasks, however,
e-procurement offers far more process improvements and innovative
options for streamlining business operations and maximizing strategic
initiatives.
E-procurement enables access to global suppliers, real time
communication between buyers and suppliers, electronic payment of
invoices, and assignment of logistics freight
rating and routing.
E-procurement has also spawned creative new business models such as
auctions for suppliers to sell excess inventory, reverse auctions
where suppliers bid to fulfill a buyer’s order, and trade exchanges
where buyers and sellers simultaneously bid for each other’s business.
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