The letter “E” is attacking every business term. What happened to traditional mail? It’s now ”email”. How about commerce and business? E-commerce and E-business replaced them. Parallelly, modern businesses wish to arrive this “E” platform. The first, reason is rivalry. Secondly, it gives lots of benefits. This situation is valid to the procurement as well. Hence, businesses install the E Procurement Process inside their organizations. Come on! Let’s have a good discussion about this new trend.

The content of the Article is as Follows

  • Definition
  • Procurement Vs. Purchasing
  • Steps of Traditional Procurement Process
  • Steps of E Procurement Process
  • Five Right Framework of E Procurement Process
  • Advantages of E Procurement Process
  • Barriers and Risks of E Procurement Process

Definition of E Procurement Process

Getting the “acquiring procedure” of the organizational materials, accessories, and related supplies done across the internet technology.

Now you might wonder about the difference between e-commerce and e procurement. Yes, they are different! Because, Procurement is greater than purchasing.

Procurement Vs. Purchasing

Procurement is way greater than purchasing. Because, purchasing refers the activity of buying only. But procurement involves all the activities related to the purchasing process. In fact, procurement refers the buyer’s activities as well as the seller’s activities. E procurement process brings this “two party procedure” across internet.

Now let’s compare E Procurement Process with the traditional procurement process.

Steps of Traditional Procurement Process

Let’s get a simple example. Your manufacturing department requires raw materials.

  • First, the officer of the department prepares a requisition letter. There he demands the required materials.
  • Secondly, the head of the department approves it. Then, he informs the buying department.
  • Following that, the buying department prepares the purchase order. Buying department overlooks the purchasing process.
  • Next, your entity sends the purchase order to the supplier. You send similar copies to the warehouse and to the accounting department.
  • Accordingly, the supplier forwards an invoice to the warehouse. Here, the warehouse verifies whether the invoice content matches with what you ordered. The warehouse uses their purchase order copy for this.
  • Based on the verification, the supplier sends the purchased items to the warehouse. Sometimes, the supplier sends the invoice and the goods together. It depends on his policies.
  • When the goods are received, the warehouse raises a “Goods Receipt Notice” (GRN). Then they forward it to the accounts department to make the payment.
  • The payment comes finally. Prior to make the payment, the accounts department carries a 3-way invoice match. They compare the purchase order, the invoice and the GRN. There they confirm whether the three documents are tallying. Finally, they make the payment.

How long do you think this traditional process take? Modern businesses do not have that much time to spare. Remember the rivalry! On the other hand, the modern suppliers do not prefer this old fashion. Consequently, you should follow the E Procurement Process instead of this traditional method.

Steps of E Procurement Process

You must carefully understand one thing. There is no certain set of steps for the E Procurement Process! Because, it depends on how the organization uses their internet presence.  However, this cool trend shortens the lengthier process of traditional method.

Let’s get the same example to discuss how E Procurement works. 

Steps of E Procurement Process
Steps of E Procurement Process

Step 1: Identifying what is required

The initial step is similar to the traditional method.

The letter “E” stands to suggest “Electronic”. Following that, you could establish a digital system to recognize what you need and when. Technologically advanced businesses use digital modes to analyze customer purchasing pattern. Accordingly, they predict the future material requirements.

Technologically or not, you could identify your necessity. The game Begins hereafter.

Step 2: Evaluating the supplier

Traditional methods relate you to your registered suppliers only. So, you miss many. But in E Procurement you can maintain a database of suppliers. As a result, you avoid missing many. Once you make sure what to buy, you could go through this database. Then you decide the optimal supplier for the moment. For that, you can evaluate them by concerning the price, quality, time of delivery and other facts. Because, your database makes this information readily available.

Some organizations include Supplier Relationship Management in their E Procurement Process. That is to keep in touch with the suppliers. Also, this helps to maintain strong relationships with the key suppliers. This allows the organization to arrange profitable deals when needed.

In the same vein, you could maintain a portal in your website. There you can advertise your necessity. Then, the interested suppliers will forward their quotations. Likewise, the facts to be concerned becomes available.

Accordingly, E Procurement makes evaluation easy. Concern the facts, select the best suppliers, negotiate if possible and decide the final supplier. Further, you can let authorized officers to join when getting the decisions. So that, the purchase approval is made same time.

Step 3: Placing the Purchase Order

Unlike the traditional process, you can go green in the E Procurement Process. Based on the approval, you could email the purchase order to the selected supplier. Even there are software available to automate this task. So that, when the officer approves the purchase, a purchase order would be generated automatically. And the system forwards it to the selected supplier just then.

Step 3: Placing the Purchase Order

Unlike the traditional process, you can go green in the E Procurement Process. Based on the approval, you could email the purchase order to the selected supplier. Even there are software available to automate this task. So that, when the officer approves the purchase, a purchase order would be generated automatically. And the system forwards it to the selected supplier just then.

Step 4: Receipt of Goods along with the invoice

Based on the purchase order, the supplier sends the requested items. But, remember you are in a different platform. The eyes do not capture automated methods. Therefore, it is risky to assume that the supplier would make his part since you are done with yours. Hence, use the technologies coming under E Procurement Process! Use the tools such as interlinks, supplier relationship management systems to give a good follow up. You can’t wait till the supplier freely sends your order. Keep in touch! It is easy with E Procurement system.

Remember one thing! Saying that you are using E Procurement systems, it is not mandatory to bring your payments to an E-platforms. Because, cash is always different story. Therefore, use the safer way according to your organizational policy.

Five Right Framework of E Procurement Process

To crop the best of E Procurement Process, the FIVE RIGHT FRAMEWORK is recommended.

1) Right Price

Using the database you have, and the web applications you receive, select the supplier with the best price. If you mistakenly go ahead with a wrong price, it increases the cost. Consequently, it declines the demand. As a result, this lessens the revenue. Ultimately, it harms the profit. Never allow it! You have established an E Procurement Process. Ample suppliers are available with their details. So, you can easily select the right supplier with the right use. Exploit that opportunity.

2) Right Time

In E Procurement Process, you have the information to know who delivers quickly. This lead time is as important as the price. Never let your production process to get paused. Because, you will get late to reach your customer. By that time, the customer might have leave you. Therefore, select the supplier with the right time of delivery. For that, you may use the information you could  pick up from your system.

3) Right Quality

E Procurement process makes pool of suppliers available for you. Your list carries the suppliers famous for their high quality. So, try to get partnered with them. Because, the quality matters for sure.

4) Right Quantity

With E Procurement Process you can easy place orders! So why to go for huge orders by thinking about future? It is an in vain cost to the present. The technology specifies your needful. On the other hand, it is easy to reach the suppliers. Therefore, just get the right quantity for now. For future, you can easily buy in future.

5) Right Source

It makes all the crucial facts available! For example, the price, the quality, the delivery time, the statistics of the supplier etc. E Procurement Process gains these facts within a shorter time. Therefore, consider the facts and choose the right person.

Hope you are clear on how to implement this latest technology wisely. Let’s see why you should switch into this platform. Answer is simple. It gives you loads of benefits. Let’s see what they are!

Advantages of E Procurement Process

1) Increased Process Efficiency

An E Procurement Process lessens your task time. It informs you what you want. Accordingly, you can pick up your supplier easily. Because you have got the information you need. You do not need to wait for quotations. Suitable suppliers exist in your database. Also, the web applications fill your request portal. As a result, you can place the purchase orders digitally with few clicks. Basically, except the shipping time, all other activities could be done within one day if you are smart.

2) Reconciling the documents

A good E Procurement Process automates the data analyzing tasks. You need not to spare your valuable time to do documentation. Try to include automating features.

3) Verifying the budget

Just like we discussed so far, E Procurement Process makes information readily available. Therefore, verifying the purchase budget is no more a headache. Computer systems could be deployed for the budget preparation tasks. To clarify, set computers to refer the price details available in the database. Accordingly, this technology lessens the salary expenditures.

4) Loyal Suppliers

As discussed, this trendy method paves a good supplier relationship management. Also, it allows frequent purchases. These facts make you familiar to your suppliers. Hence, go for flexible negotiations. Because, you need to be profitable always.

Like every other fact, E Procurement Process has a darker side too. Consider the below.

Barriers and the Risks of E Procurement Process

1) Losing Competitive Advantages

In some industries, the market participants perform communities. They implement their E Procurement Process with those communities. There, they control the supplier with them. In other words, the community suggests low prices. Accordingly, the suppliers agree them. If not, the supplier misses the entire industry. Due to this, both the established entities and the low rated entities could purchase for cheap. Which means, the established entities do not get benefited out of their status. As a result, the giant organizations miss their competitive advantage. Such as, the bargaining power, partnering with a unique supplier etc.

2) The negative Impact to the Supplier

Before E Procurement process, suppliers fixed the minimum prices at their choice. The buyers purchased from whoever sells at an affordable range. But now, buyers fix a maximum price. Then the suppliers should obey. Accordingly, this limits the supplier’s market power.

 3) Need of Catalogues

As discussed, suppliers forward web applications for the buyer requests. When submitting the applications, suppliers need to be comprehensive on some facts. For an example, suppliers give instructions on how to use. (Especially for technological accessories). Under an E Procurement process, buyer does not visit the supplier physically. Therefore, the instructions should be provided online. Submitting such catalogues is never easy.

4) Cultural Profile

Some organizations are bound with strict articles. Under such circumstances, switching the procedures is difficult. Therefore, if the organization needs to adhere the articles when buying, it will not be able arrive the E Procurement Process even though it is advantageous.

Conclusion

In conclusion, E Procurement Process shortens the task time of procuring. It helps both the supplier and the buyer. Importantly, it gives access to many suppliers anytime. But you need to be wise when setting up your procedure. Then it will provide you many advantages. However, it carries few disadvantages too.

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