E-procurement refers to acquisition and sale of supplies, work, and services between businesses, consumers, and government agencies through e-platform.
It relies on a supplier’s closed system, which is usually only accessible to registered users. However, when properly implemented, e-procurement creates a direct relationship between a corporation and a supplier, allowing for interactions such as bids, purchase orders, and communications.
The benefits of E-Procurement
E-procurement has a number of benefits. Some of them are briefly explained below:
All of your data is centralized with e-procurement. You can track down a purchase order or an invoice and evaluate the metadata to see where you can make improvements to your procedures. This could imply keeping track of:
- Approvals in an area where they take the longest can speed up
- Vendors with whom you spend a significant amount of money (and who you might be able to negotiate better terms with)
- When should bills be paid in order to take advantage of early payment discounts and maximize cash flow?
- Spending on-contracts vs. off contracts
- There are many more other things
E-procurement platforms give you more flexibility and control throughout the entire purchase process. Control is fundamental to the contemporary e-Procurement system, from who can input an order through who can approve and purchase it, and lastly, who can receive against or pay it.
After a transaction has been completed, you may control who may access the details and which details they may see. A comprehensive digital e-procurement system is what you need if you want complete control over not only what your company spends but also who can spend it, authorize it, and view it.
Human error is a major issue with old procurement systems. For example, If someone enters inaccurate data in a spreadsheet, or fails to save their modifications, it may lead to some obstacles. In addition, a vacationing employee fails to approve a purchase order before departing, which may lead to the failure of the purchase process.
To overcome these obstacles, modern e-Procurement systems rely on automation. You can utilize one of the following solutions instead of having one of your employees manually enter a PO or invoice:
- Creating electronic POs
- Catalogs for internal use
- Catalogues from PunchOut
You can automate data entry and rely on invoice matching capabilities and exception alerts to tell you when your numbers don’t match up, reducing the risk associated with AP operations.
Instead of carrying a piece of paper from desk to desk, the system can email each approver in turn, allowing them to approve the purchase directly from their inbox. If your approver is away from the office, let OOO (out-of-office) delegate approvals automatically transmit the document to an alternate or the next approver to keep things flowing.
Every organization must deal with budgets, and a strong e-procurement system must include them. Unfortunately, budget computations are done manually or in spreadsheets with legacy technology. As a result, there’s no way to enforce authorization for over-budget purchases, and one erroneous keystroke can cause difficulties.
All of this will be automated by modern e-procurement systems, which will inform authorized users of the available budget and the potential effects of spending before it occurs.
Not only will best-of-breed systems notify approvers if a request is over budget, but they will also activate additional routing rules or approval workflows for over-budget spending to ensure they are fully accounted for. Another advantage of contemporary e-procurement is that it allows budgeting at both the GL Account and Project level, giving you more flexibility in your budgeting.
5. Easy Vendor Management
You can strategize significant cost reductions when you can see all of your orders for a vendor in one spot. This includes the following:
- Taking advantage of bulk discounts by combining similar orders.
- Using a spreadsheet to show merchants how much you spend with them to get discounts
- Look for instances where non-preferred vendors are being utilized (and even put a stop to those orders to save money there, too)
A legacy system simply cannot provide this level of metadata.
6. Reduced Rogue Spending
Many businesses struggle with rogue spending. Around 40% of employees admit to going rogue at some point, either by purchasing an item without proper approvals or by purchasing something other than what was approved.
It’s possible to hide or camouflage a rogue purchase using paper and spreadsheets. E-Procurement, on the other hand, is different. In fact, having an electronic audit trail that can’t be destroyed is a tremendous deterrent to rogue spending, so you’ll not only catch it easier, but you’ll have fewer cases, to begin with.
6. Strong Audit Trail
For many businesses, knowing who interacted with the transaction, from request to payment, is more crucial than knowing what was purchased. Some of this information can be tracked using paper and spreadsheets, but what if the information on the paper is updated midway through the purchasing process? To be honest, there’s no way to tell with the earlier system.
Modern e-Procurement, on the other hand, keeps track of every interaction and offers a full audit trail of who did what and when. If the third approver added five extra widgets to your order, you’d now know when and where they did it, or, better yet, you’ll be able to prevent them from modifying it in the first place.
Audits become a breeze since a comprehensive history of all changes to each request is available for everyone to examine, reducing what used to be a time-consuming task into a simple exercise.
7. Save Money
Switching to e-Procurement can save your company time and money. Most enterprise organizations save a million dollars each year by reducing fraudulent expenditure, taking advantage of early payment discounts, and reducing staff by using e-Procurement. Without needing to add personnel to their procurement department, several organizations have saved the equivalent of two to six full-time roles by implementing Fraxion to scale their operations.
8. Reduce Procurement Risks
Procurement leaders are struggling to figure out how to control costs and reduce risks while dealing with an old-fashioned procurement system as the need to accomplish more with less grows. To address this issue, teams must abandon outmoded, manual processes that lack the authority and control necessary to generate efficiency and cost reductions.
E-procurement technologies can minimize risk, processing time, and overall cost, allowing the procurement team to concentrate on more human-centric duties. In addition, it enables organizations to buy intelligently, streamline their purchase-to-pay cycle, and eliminate supply chain risks regardless of their size.
An e-procurement platform that allows for seamless cooperation allows for the quick and secure transmission of updates and documentation, lowering the risk of repeat payments and off-catalog purchases. Furthermore, its dynamic rule engine may enforce policies proactively to guarantee that purchasers adhere to budgets, processes, and product limitations.
9. Boost Productivity
E-procurement frees up time for the team to focus on more strategically important activities and duties because it automates parts of the procurement and wider business procedures that are traditionally handled by personnel.
Goods can be bought, processed, and paid in minutes using automated invoice matching; the key is to ensure that the supplier is set up in the buyer’s systems to accommodate as much automation as possible.
An e-procurement system lays the way for B2B transaction efficiency to undergo a digital transformation. As previously stated, existing software benefits are ideally positioned to facilitate the wider adoption of e-procurement.
Businesses all across the world can accomplish similar outcomes by leveraging the framework’s learnings, standards, rules, and recommendations and tailoring them to their own needs. Given the breadth of procurement tasks, an effective e-procurement system would need to suit a wide range of business demands while also complementing and simply linking to existing processes and solutions.
It will not replace or disrupt existing systems or procedures, but it will provide possibilities for stakeholders to innovate and get more value from their procurement processes.