Electronic procurement or e-procurement, as it’s more commonly known – is where an organization uses the internet (or sometimes intranet) to procure the goods and services it needs to operate. Paper-based processes are replaced with a fully electronic workflow that streamlines all aspects of the purchasing process.
How does e-procurement work?
The first step in making e-procurement work in your organization is selecting and implementing an e-procurement solution. There are quite a few providers on the market to choose from and initial research may feel a little overwhelming. When you do begin your search for the perfect e-procurement solution, it’s important to take into consideration all relevant stakeholders’ needs. That means understanding where it can help and how it will be used by different teams.
E-procurement eliminates the need for paper-based processes, and with its automated capabilities, it drastically decreases manual processes and the errors that come with it—even sometimes completely eliminating.
E-procurement solutions equips employees with the technology needed to search through online catalogs and select the items they want to buy. But e-procurement is more than just online buying. With it, employees can manage their own purchases based on user permissions, guided buying, eCatalogs, webshop punchouts, and smart searching tools.
The e-procurement begins with a purchase requisition, which can be electronically approved by the user if he or she has the authority to do so. E-procurement solutions like Basware’s ensure your users get what they need quickly by using line level approval workflows. This means that as each individual item is approved, POs are automatically generated, and orders are placed – regardless if different approvers are involved.
Once a requisition has been approved, it automatically becomes a purchase order (PO), which is then delivered digitally to the supplier. Once the item or service is delivered, it’s marked as “received” in the system, and an invoice is created and sent to your accounts payable for payment.
What tools are used in e-procurement?
Some e-procurement tools and applications include ones such as Basware’s:
Marketplace: Powered by an advanced database of product information, easy catalog uploads from suppliers, punchouts that allow users to visit suppliers’ websites (e.g., Amazon, Staples, etc.), and B2C-like navigation. This functionality gives users the familiar shopping experience they’re used to while you reap the benefits of up-to-date pricing and item selection.
Guided purchasing: Guided purchasing refers to technology that “guides” users through the entire buying process by steering them in the right direction for preferred spending and delivering assistance as they navigate the e-procurement solution.
Actionable analytics: Built-in procurement dashboards allow the user to track on-contract and maverick spend across the entire organization. You can view spend by category, supplier, geography, or business unit for easier analysis. Use the data to find opportunities where approval times can be accelerated, get more spend under management, and monitor supplier performance, all from one platform.
Strategic sourcing: Our sourcing functionality delivers automated capabilities so you can be more strategic about how you request bids, host sourcing events, and connect with new suppliers.
Line level approval workflows: These make it possible for an action to be taken on different procurement line items upon their approval, without waiting for the approval of other line items.
Basware virtual assistant: Our Virtual Assistant is an intuitive and conversational chatbot that leverages natural language processing and artificial intelligence (AI) to help simplify procurement processes, enabling users to easily find purchase orders and order requests and receive items into the system.
What are the main functions of e-procurement?
The primary functions of e-procurement touch all aspects of an organization, reaching and benefitting every part of a company’s day-to-day operations and supply chain activities. Here are the main functions of e-procurement:
Automates manual processes to both free up time and reduce careless, human errors.
Simplifies the procurement process through touchless processes, advanced technologies, and compliant steps.
Gives employees and stakeholders and centralised platform for monitoring and thereby optimizing procurement performance.
Allows for streamlined negotiation between multiple partners and stakeholders.
The benefits of e-procurement
Digitization of your processes gets rid of a number of manual steps while accelerating your workflow and reducing careless errors. Digitization itself can reduce processing costs by up to 70% in an organization. But savings isn’t the only thing that e-procurement solutions offer.
When a business truly adopts an e-procurement solution and gains 100% user adoption, purchasing compliance increases ten-fold, more spend is brought under management, and goods and services can be negotiated at better prices from strategic suppliers. In addition, e-procurement can:
Optimize spend by reducing maverick purchases
Seize discounts by combining orders and purchasing in volume
Increase overall transaction speed
Standardize the purchasing experience
Negotiate more favorable contracts with strategic suppliers
Strengthen supplier relationships
Safeguard against risk and supply chain disruption
Alleviates routine tasks so procurement teams can focus on strategic initiatives
Minimize fraudulent purchases
Further reading on e-procurement
Ready to learn more about e-procurement? Check out these additional resources: