E-procurement
Encyclopedia
E-procurement is the business-to-business
or business-to-consumer or Business-to-government purchase and sale of supplies, Work and services through the Internet
as well as other informations and networking systems, such as Electronic Data Interchange
and Enterprise Resource Planning
.
E-procurement is done with a software application that includes features for supplier management and complex auctions. The new generation of E-Procurement is now on-demand or a software-as-a-service. (Such as Ariba, which is a very famous software that Fedex implemented throughout the company for example).
There are seven main types of e-procurement:
The e-procurement value chain consists of Indent Management, eTendering, eAuctioning, Vendor Management, Catalogue Management, and Contract Management. Indent Management is the workflow involved in the preparation of tenders. This part of the value chain is optional, with individual procuring departments defining their indenting process. In works procurement, administrative approval and technical sanction are obtained in electronic format. In goods procurement, indent generation activity is done online. The end result of the stage is taken as inputs for issuing the NIT.
Elements of e-procurement include Request For Information
, Request For Proposal
, Request for Quotation
, RFx (the previous three together), and eRFx
(software for managing RFx projects).
was implemented as one of the programmes under its e-Government masterplan.
(ERP) providers which have e-procurement as one of their offerings, or more focused vendors.
business model of make to order relies completely on its e-procurement systems which connects it to its suppliers helping in the exchange of real time information.
Companies can track purchases being made in all departments and ensure compliance to standards. For example, a marketing agent might want to purchase a new laptop for his business trip. In a manual setup, the agent might be instructed to go to a local supply chain store, purchase the laptop and submit the receipt back to the company for reimbursement. Such purchases are difficult to track. With an electronic procurement system in place, the entire purchase runs through approval work flows and the person who approves of such requests ensures the laptop is bought only for the configuration needed in a business use.
The turnaround time in making phone calls to suppliers, placing orders and delivery is reduced as buyers can place the order instantly. This ensures purchases, especially the critical ones are made on time, thus contributing to the overall process efficiency.
Business-to-business
Business-to-business describes commerce transactions between businesses, such as between a manufacturer and a wholesaler, or between a wholesaler and a retailer...
or business-to-consumer or Business-to-government purchase and sale of supplies, Work and services through the Internet
Internet
The Internet is a global system of interconnected computer networks that use the standard Internet protocol suite to serve billions of users worldwide...
as well as other informations and networking systems, such as Electronic Data Interchange
Electronic Data Interchange
Electronic data interchange is the structured transmission of data between organizations by electronic means. It is used to transfer electronic documents or business data from one computer system to another computer system, i.e...
and Enterprise Resource Planning
Enterprise resource planning
Enterprise resource planning systems integrate internal and external management information across an entire organization, embracing finance/accounting, manufacturing, sales and service, customer relationship management, etc. ERP systems automate this activity with an integrated software application...
.
E-procurement is done with a software application that includes features for supplier management and complex auctions. The new generation of E-Procurement is now on-demand or a software-as-a-service. (Such as Ariba, which is a very famous software that Fedex implemented throughout the company for example).
There are seven main types of e-procurement:
- Web-based ERP (Enterprise Resource Planning): Creating and approving purchasing requisitions, placing purchase orders and receiving goods and services by using a software system based on Internet technology.
- e-MRO (Maintenance, Repair and Overhaul): The same as web-based ERP except that the goods and services ordered are non-product related MRO supplies.
- e-sourcing: Identifying new suppliers for a specific category of purchasing requirements using Internet technology.
- e-tendering: Sending requests for information and prices to suppliers and receiving the responses of suppliers using Internet technology. May or may not involve e-auctions or eRFxERFxIn procurement technology, ERFx is an acronym for Electronic Request For [x], where x can be Proposal , Quotation , Information or Tender . Other pseudonymous acronyms include ITT and PQQ...
functionality. - e-reverse auctioning: Using Internet technology to buy goods and services from a number of known or unknown suppliers.
- e-informing: Gathering and distributing purchasing information both from and to internal and external parties using Internet technology.
- e-marketsites: Expands on Web-based ERP to open up value chains. Buying communities can access preferred suppliers' products and services, add to shopping carts, create requisition, seek approval, receipt purchase orders and process electronic invoices with integration to suppliers' supply chains and buyers' financial systems.
The e-procurement value chain consists of Indent Management, eTendering, eAuctioning, Vendor Management, Catalogue Management, and Contract Management. Indent Management is the workflow involved in the preparation of tenders. This part of the value chain is optional, with individual procuring departments defining their indenting process. In works procurement, administrative approval and technical sanction are obtained in electronic format. In goods procurement, indent generation activity is done online. The end result of the stage is taken as inputs for issuing the NIT.
Elements of e-procurement include Request For Information
Request for Information
A request for information is a standard business process whose purpose is to collect written information about the capabilities of various suppliers. Normally it follows a format that can be used for comparative purposes....
, Request For Proposal
Request for Proposal
A request for proposal is issued at an early stage in a procurement process, where an invitation is presented for suppliers, often through a bidding process, to submit a proposal on a specific commodity or service. The RFP process brings structure to the procurement decision and is meant to...
, Request for Quotation
Request for Quotation
A request for quotation is a standard business process whose purpose is to invite suppliers into a bidding process to bid on specific products or services. RFQ, generally means the same thing as IFB ....
, RFx (the previous three together), and eRFx
ERFx
In procurement technology, ERFx is an acronym for Electronic Request For [x], where x can be Proposal , Quotation , Information or Tender . Other pseudonymous acronyms include ITT and PQQ...
(software for managing RFx projects).
E-procurement in the Public Sector
Public sector organisations use e-procurement for contracts to achieve benefits such as increased efficiency and cost savings (faster and cheaper) in government procurement and improved transparency (to reduce corruption) in procurement services. E-procurement in the public sector is emerging internationally; initiatives have been implemented in Singapore, UK, USA, Australia and European Union. Often, such e-procurement projects are part of the country’s larger e-Government efforts to better serve its citizens and businesses in the digital economy. For example, Singapore’s GeBIZGeBIZ
GeBIZ is a Government-to-business Public eProcurement business centre where suppliers can conduct electronic commerce with the Singapore Government. All of the public sector's invitations for quotations and tenders are posted on GeBIZ...
was implemented as one of the programmes under its e-Government masterplan.
Vendors
This field is populated by basically two types of vendors: big enterprise resource planningEnterprise resource planning
Enterprise resource planning systems integrate internal and external management information across an entire organization, embracing finance/accounting, manufacturing, sales and service, customer relationship management, etc. ERP systems automate this activity with an integrated software application...
(ERP) providers which have e-procurement as one of their offerings, or more focused vendors.
E-procurement Systems
An e-procurement system manages tenders through a web page that is obtained by typing its URL on the browser. This can be accessed anywhere globally and has greatly improved the accessibility of tenders.E-procurement and New Business Models
E-procurement not only brings efficiency in the way the company operates but also help the company change its business model entirely. Dell'sDell
Dell, Inc. is an American multinational information technology corporation based in 1 Dell Way, Round Rock, Texas, United States, that develops, sells and supports computers and related products and services. Bearing the name of its founder, Michael Dell, the company is one of the largest...
business model of make to order relies completely on its e-procurement systems which connects it to its suppliers helping in the exchange of real time information.
Advantages
E-procurement can provide real-time business intelligence to the vendor as to the status of a customer's needs. For example, a vendor may have an agreement with a customer to automatically ship materials when the customer's stock level reaches a low point, thus bypassing the need for the customer to ask for it.Companies can track purchases being made in all departments and ensure compliance to standards. For example, a marketing agent might want to purchase a new laptop for his business trip. In a manual setup, the agent might be instructed to go to a local supply chain store, purchase the laptop and submit the receipt back to the company for reimbursement. Such purchases are difficult to track. With an electronic procurement system in place, the entire purchase runs through approval work flows and the person who approves of such requests ensures the laptop is bought only for the configuration needed in a business use.
The turnaround time in making phone calls to suppliers, placing orders and delivery is reduced as buyers can place the order instantly. This ensures purchases, especially the critical ones are made on time, thus contributing to the overall process efficiency.
See also
- Complex salesComplex salesComplex sales, also known as Enterprise sales, can refer to a method of trading sometimes used by organizations when procuring large contracts for goods and/or services where the customer takes control of the selling process by issuing a Request for Proposal and requiring a proposal response from...
- Construction biddingConstruction biddingConstruction bidding is the process of submitting a proposal to undertake, or manage the undertaking of a construction project. The process starts with a construction estimate from blueprints and take offs....
- Contract AContract AIn Canadian contract law, Contract A is a concept that has recently been applied by courts regarding the fair and equal treatment of bidders in a contract tendering process. Essentially this concept formalizes previously applied precedents and strengthens the protection afforded to those who...
- ProposalProposal (business)A business proposal is a written offer from a seller to a prospective buyer.Business proposals are often a key step in the complex sales process—i.e., whenever a buyer considers more than price in a purchase.-Overview:...
- Reverse auctionReverse auctionA reverse auction is a type of auction in which the roles of buyers and sellers are reversed. In an ordinary auction , buyers compete to obtain a good or service, and the price typically increases over time...
- Tender NotificationTender NotificationA tender notification is normally an online delivery service in the form of an e-mail, which displays tendering opportunities. These opportunities are more than often open tenders, which allow any potential supplier to register interest in a tender opportunity...
- Tendering
- Strategic sourcingStrategic sourcingStrategic sourcing is an institutional procurement process that continuously improves and re-evaluates the purchasing activities of a company. In a production environment, it is often considered one component of supply chain management...
- OutsourcingOutsourcingOutsourcing is the process of contracting a business function to someone else.-Overview:The term outsourcing is used inconsistently but usually involves the contracting out of a business function - commonly one previously performed in-house - to an external provider...
- Public eProcurementPublic eProcurementThe term Public eProcurement refers, in Singapore, Europe and Canada, to the use of electronic means in conducting a public procurement procedure for the purchase of goods, works or services.-Phases:...
- Purchase-to-payPurchase-to-payPurchase-to-pay, often abbreviated to P2P and also called req to check, refers to the business processes that cover activities of requesting , purchasing, receiving, paying for and accounting for goods and services.-Automation:...