E-procurement is the process that involves purchase and sale of supplies, work, contracts or services either between businesses, consumers or government electronically. It mainly allows electronic data transfer to ensure efficient operational, tactical and strategic procurement process. This process came into full effect in the 19903 after establishment of the internet that to some extent replaced the traditional procurement processes and procedures. E-procurement, which is also referred to as supplier exchange, is mainly supported by internet technologies, learn all about it at https://www.punchoutcatalogsgt.com.
Implementation of E-procurement in any organization or company requires thorough understanding of the tools and concepts of the entire E-procurement process. Therefore, before implementing this process, it is important for the procurement officers and managers to;
-Have a general understanding of various E-procurement applications.
-Try and identify the procurement process which can be supported by the system.
-Evaluating the E-procurement benefits
-ldentifying the risks associated
-Developing ways that contribute to development of E-procurement tools after implementation
E-procurement Tools and Applications
The applications and tools involved in E-procurement include;
1. Electronic system which mainly include personal computer, enterprise resource planning, mainframes and electronic data interchange. This helps to support traditional procurement process.
2. Electronic Data Interchange (EDI). It allows exchange of electronic messages between programmed computers of two separate organisation. It also allows exchange of messages as a group or a batch, which can be sent and stored automatically. This tool runs on a closed network ( Value Added Network) and has to be implemented by each pair of the organization wishing to use it.
3. Enterprise Resource Planning (ERP) systems. This system manages, integrate and automate the business practices information associated with the company. It is involved in handling manufacturing, shipping, logistics, distribution, invoicing and other business information of a company.Generally, this system aids in controlling of many business activities.
Internet is the other tool that is crucial in supporting and complementing procurement system. 4. Internet. The various applications which utilise internet are the electronic mail, web enabled EDHNT, Extensible Markup Language (XML) that allows easy interchange of documents on web servers, World Wide Web that is made of web servers and basically stores and disseminate web pages.
Value Chains of E-procurement
The E-procurement procedure involves several chains which include:
-E-sourcing. It is mainly involved in specification stage when the contracting authority is looking and searching for the potential suppliers of certain good and services
-E-tendering. It is used in selection stage of the suppliers who have met the required procurement policies standards.
-E-auctioning involves the contract stage between the suppliers under negotiable prices.
-E-ordering and web based ERP involves the process of creating and approving the procurement requisitions
-lndent management, which can be optional, checks workflow involved in tender preparation.
-E-payment is involved in payment of goods and services
-E-informing involved in gathering and distributing business procurement information to both internal and external parties.
Benefits of E-procurement
1. It contribute to greater transparency in the whole procurement process thus enhancing accountability and reducing the incidences of corruption.
2. It leads to costs reduction since all the purchasing information is all put together thus identifying where unnecessary extra cost is incurred is easily noted.
3.lt ensures smooth managing of contracts which have to comply with the set policies and standards of the procurement
Risks of E-procurement
-The whole process involves a lot of investment which sometimes may not be guaranteed to bring back the profit.
-The suppliers may choose not to comply with the E-procurement tools especially on a competitive market where profit margins are exemplary low.