The Basics of e-Procurement: Definition and Benefits

Electronic procurement is the advent of procurement happening through an electronic portal, usually a website or a supplier buyer exchange, that allows ordering and purchasing of goods and services online. It is a business to business process that is largely used by government authorities to conduct their purchasing in a transparent and efficient manner. Unlike e-commerce, an electronic procurement system is only available and open to registered suppliers making them a closed system that can facilitate interactions between buyers and suppliers in a transparent manner. Government authorities all across the globe use e-procurement to buy for their needs so as to allow fair competition, transparency and create competition in the marketplace. In this article, we shall delve on the basics of e-procurement, its origins and outline the major benefits that businesses need to understand to adopt this system.

Electronic procurement started in the 1980’s with the development of Electronic Data interchange (EDI). Initially, the system only used to develop online catalogues for vendors. In the modern day eprocurement system, all modules including bids, purchase orders, invoices, questions pertaining to the product/service are answered using a unified platform for communication. The modern day electronic procurement has gone beyond supplier evaluation and contract management and is in fact used as a tool to negotiate with the potential supplies. For businesses, such platforms serve as a lead generation tool offering them insights on different procurement happening around the world.

As technologies have evolved, more and more authorities across the globe have adopted electronic procurement. Due to this, the massive flow of information is almost unmanageable. For businesses, this means that they have to go through hundreds of websites to find public procurement information. However, adversity is the birthplace of innovation and this problem has created the need for aggregator websites such as Tender Impulse who provide best in class information on public tenders. Tender Impulse is a global tender information aggregator that provides information on all international government tenders from all across the globe. The company uses thousands of crawler software that crawl through all websites that publish government tenders.

Most e-procurement portals comprise of a networked system that enables buyers and suppliers to connect with each other using the platform. It has several features such as past bid information, pricing of bids awarded in the past, technical specifications of the bid in the floated tenders and also the award criteria making it a transparent system for suppliers to bid in to get business. With the advent of technology, many authorities across the world have made it mandatory to bid using these portals calling for effective governance and a transparent system for purchasing. The goal of such a system is to acquire the goods and services at the best price in the market and also eliminate the laborious manpower driven work. In the era of automation and artificial intelligence, such platforms allow authorities to do more work in a less amount of time and with much precision. E-procurement also undertakes tasks such as auctions, prequalification’s and exchange of information for a new technology allowing organizations to be more informed about the latest products and services available in the market.

Key Components of an E-Procurement System:

It is important to understand the key components of an e-procurement system in order to work with it as a supplier or as a buyer. In the modern era of procurement, all procurement are carried out using electronic procedures and hence it is imperative to understand the major components of the system. Below are some of the key components that comprise of an e-procurement system. It is to be noted that while these are major components, it might not be consistent with every authority as each authority customizes these portals to suit their requirements.

• E-sourcing which defines requirements and sets out preliminary purchase criterion
• E-Tendering which floats tenders/RFP’s based on the requirement in a formal advert
•  E-Auctioning which evaluates suppliers, negotiations and contract management
• E-Ordering and Payments: which creates and maintains purchase orders and payments receipt
• Analytics: which gives out information on the past purchase and performs various data analysis

Benefits of E-Procurement System

For large organizations and public authorities, the process of buying and procurement is a complex one. The major benefit of having an e-procurement system is that it automates the mundane tasks and allows authorities to swiftly perform their procurement activities. It allows more work to be done in a less amount of time thus affecting productivity. It also helps in creating transparency amongst the stakeholders. The automated tools enhance the usability of these portals and they reduce overhead of procurement teams involved in invoicing, billing, managing vendors and affiliating with the different departments. The streamlined structure offers unique advantages to all entities concerned and helps control maverick spending by the authorities. The wider benefits also include creating increased competition, fair and transparent procedure, limiting corrupt practices and providing equal opportunity to all present in the marketplace. Other benefits also include reporting tools that can curb future spending and make it easier for authorities to manage their purchasing activities in an efficient manner.

E-procurement offers many advantages to authorities as well as bidders alike in various aspects of procurement. It is because of this that the shift from traditional procurement to an electronic procurement is rapid and being adopted by major government bodies across the globe. To make the most of this change, organizations need to be abreast with the latest eprocurement portals and bid for more tenders thereby increasing their chances to secure business. Some of the primary actions that can be taken include subscriptions to a tender aggregator service like Tender Impulse who can deliver a daily dose of information released by various authorities around the world. This can also enhance a company’s chances of not missing out on any opportunities as well as being well aware of the market requirements. Overall, eprocurement has many advantages and its benefits must be reaped by companies aiming to secure business via tenders.