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E-procurement defined
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In simplest terms, Electronic procurement
(E-procurement) defines
the automation of an organization’s procurement processes using
web-based applications. Simplifying further, the term e-Procurement
is used for referring the procurement processes using internet
technology.
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Unlike
Enterprise Resource Planning (ERP) systems that enable
businesses to automate their internal processes,
e-procurement enables widely dispersed buyers and suppliers
to come together, interact, and execute purchase
transactions directly over the Internet.
In a fully web-enabled e-procurement system, each
step in the procurement process occurs electronically. From
creating and submitting POs to receiving and paying for
goods—all transactional data is automatically routed through
workflow processors.
A properly implemented system can connect companies and
their business processes directly with suppliers while
managing all interactions between them. This includes
management of correspondence, bids, questions and answers,
previous pricing, and |
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multiple emails sent
to multiple participants.
Benefits of Adopting an E-Procurement System
1.A good e-procurement system helps a firm organize its interactions
with its most crucial suppliers. It provides those who use it with a
set of built-in monitoring tools to help control costs and assure
maximum supplier performance. It provides an organized way to keep
an open line of communication with potential suppliers during a
business process.
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The system
allows managers to confirm pricing, and leverage previous
agreements to assure each new price quote is more
competitive than the last.
2.Eprocurement reduces the time and cost of procurement
activities, and boosts operational efficiency of the
e-enabled organization.
3.E-procurement applications consolidate the paper-based
catalogs of multiple vendors by digitizing product
information into a single, one-stop shopping source for
direct and indirect goods and services. In most cases,
e-procurement applications are transparent to end-users.
Embedded in the business processes and IT systems of
buyers and suppliers, e-procurement applications
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lower process and
inventory costs, extend supplier reach, and improve customer
access to suppliers. |
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4.E-Procurement helps with the decision-making process by
keeping relevant information neatly organized and
time-stamped. Most are template-driven which makes all
transactions standardized and trackable.
Keeping track of
all bids means leveraging your knowledge to obtain better
pricing. Companies can focus on their most lucrative
trading partners and contracts.
5.Well-managed e-procurement helps reduce inventory levels.
Knowing product numbers, bid prices and contact points can
help businesses close a deal while other suppliers are
struggling to gather their relevant data.
6.E-Procurement systems that allow multiple access levels
and permissions help managers organize administrative
users by roles, groups, or tasks. Procurement managers do
not need to be as highly trained or paid because such
systems are standardized and easy to learn.
Implementation Strategies
Some firms have discovered that many of their transactions
still take place on paper, and they have run into problems
ranging from content management to supplier participation
in their systems.
Most companies who desire to make the
switch fall into two camps. The first are the slow
step-by-step adopters.
They implement one piece of their
system at a time and slowly bring trading partners on
board. The others follow the total replacement model.
They
build a totally parallel system, test it, then switch over
to it when it works. There is usually some pain involved
and some mistakes are discovered, but by and large these
are absorbed and the business continues.
Points to be remembered for implementation
The parallel system approach should only be used if you
have the time and resources to do this. If not, stick to
the incremental approach.
Don't expect an immediate return on investment. A
short-tem gain may be noticeable, but it may be eaten up
by the cost of staff training and equipment purchases. A
year or two down the road, a larger ROI should be evident.
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