In a nutshell, e-procurement mechanizes the day old manual processes to augment spend visibility, eliminates fake buying and provides a controlled purchasing environment where transactions made with multiple vendors translates into cost reduction thereby escalating transparency and efficiency.
Electronic procurement isn’t cocooned for a particular discipline or activity, but it is a collection of technologies that support a wide range of purchasing and sourcing options. These options include purchasing products online by organizing e-auctions or selling through e-marketplaces perhaps supported by the electronic purchasing cards.
Implementing electronic trading into a core business within organizations is not a challenging task. It makes the process easier where orders are processed electronically and the transactions are link back to their core financial and Enterprise Resource Planning applications.
Factors that drive e-procurement include cost savings, competence and corporate governance. Besides, it also helps tackling organizational and managerial challenges, which impacts on staffing, authorization and work processes.
Nevertheless, E-procurement is not only about fiscal savings, but also offers central control and visibility to stakeholders of a business. It is highly beneficial for Financial Directors willing to achieve 360 degree transparency on all transactions made throughout an organization, which includes technology that resembles invoices to contracts and deliveries. This helps controlling maverick spend and eliminate fake contract purchasing.
It is impossible to deny the fact that re-engineering paper based procurement process demands more standardized methods of exchanging data and inter-operability between corporate systems. Organizations implementing e-procurement can use its system to enhance transparency in procurement, analyze its patterns and data and eliminate inefficiencies noticed in the system.
With the advanced technology and online aggregation of software gives buyers a tool to compare price and availability of goods within one secure environment. Besides, management functionality is often offered that helps buyers to forecast, plan and ultimately keep upbeat in responding to the supply chain dynamics, using a right methodology to purchase for the best value before prices rise.
E-Procurement benefits can be seen from two forms of savings:
1) Cashable Benefits: It reduces purchasing costs, time consumed to process orders and lower overheads as the process is fully automated.
2) Non-Cashable Benefits: Increases efficiency and cost savings as human intervention from the supply chain is completely removed. Companies can buy or sell a wide range of assets with lesser man hours managing the process. As employees’ attention can be diverted from procurement administration they can focus on key roles and elements such as financial reporting, corporate governance and auditing.
The bottom line is time and cost savings, which enlarges the scope of any in-direct procurement budget.