What is E-Procurement?- Definition
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 customers and suppliers to send and receive purchase orders and invoices using call-forward networks, which was eventually superseded by email.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 organizations developed specialized online catalogs, specifically for vendors.
In its modern guise eProcurement involves activities related to evaluating and selecting suppliers, such as eAuctions and e-Tenders, as well as what you need to purchase from these vendors, including electronic orders and supplier catalogs.
Benefits of E-Procurement
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, agreeing 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) spending, identify areas for consolidation of suppliers, or 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.
Main Functions of E-Procurement
The primary functions of e-Procurement 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 e-Procurement 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.
Explore Additional Resources to Know More
How to identify new suppliers and using RFPs to shrink time from scoping to supplier selection with improved cost reduction?
Sourcing in Healthcare – Fast-track vendor selection using RFI/RFP/RFQ and grab an opportunity to win new business.
Leverage this Request for Proposal template to evaluate key features of the Sourcing Management solution providers.« Back to Glossary Index