Connectivity is the secret to every business venture. It’s through effective interactions among businesses that real progress is achieved. The best way to maintain your business connections is through the Internet. Corporations have finally used the Web for faster transactions. This is where e-procurement takes over.
What is e-procurement? E-procurement
is an efficient and effective system that links processes and companies with their suppliers directly so that they would be able to manage every interaction well. Management of questions, answers, bids, old pricing, correspondence, and e-mails are all included here.
If there’s effective e-procurement, then there is organization too. Essential tools for monitoring help companies become assured of the best performance that their suppliers can give and also help them control their costs. With this system, company managers are able to leverage past agreements and confirm pricing methods.
Everyone is aware that a business is established so that profit and savings can be both made. Each company aims to meet its own financial objectives and to achieve these goals, they have to purchase goods and services. Large companies are at an advantage here because they have proprietary software. Companies that are classified as mid-range and small have the disadvantage when it comes to processing. They usually just resort to paper processing or manual processing, which takes very long to finish. As a result, the efficiency and productivity of these smaller companies are very and they can’t even tap into cost saving opportunities.
This dilemma has been answered by e-procurement. This is a very affordable and very powerful solution that aims to give an increased and immediate ROI. This is the platform that allows companies to purchase in real-time. There are companies that were able to lower their costs to 70%, 28 to 50% savings, and 5 to 10% savings.
Benefits of the E-Procurement System
The following are the e-procurement benefits that a company gets:
✓ Automation and streamlining of purchases
✓ Authorized users have great purchasing power
✓ Buying methods are standardized
✓ Spending is controlled
✓ Purchases made by companies are leverages
✓ An higher level of productivity
✓ Lower costs in conducting transactions
✓ Higher level of efficiency
✓ Lowered incidences of maverick purchasing
✓ Increased efficiency
✓ Relevant information is template-driven, time-stamped, and organized
✓ Transactions can be tracked
✓ Transactions are standardized
✓ Improved pricing methods
✓ Inventory levels are reduced
✓ Essential information is obtained to easily and quickly close deals
✓ Multiple permissions and access levels are given so that users can be organized by tasks, groups, or roles
Positive Changes for Companies
E-procurement services are saviors for small companies because they level the field for them and large corporations. The following are positive changes achieved by companies through this innovative system:
a) Improvements in productivity
Productivity is highly improved by e-procurement. This is manifested in the following:
- Paperworks are significantly decreased because of automated processes. This emancipates employees to handle deal negotiation and vendor management. The company heads get more opportunities to oversee and manage transactions than accomplishing administrative tasks most of the time.
- The cycle period from order to fulfillment becomes shorter because users are already allowed to directly purchase what they want or need.
- The standardization of purchasing methods greatly shortens the learning curve of beginners and prevents the delay of purchase orders due to invalid, missing, or delayed information.
b) Efficiency is increased
- Human errors, reworks, and inaccuracies are reduced because manual processes are eliminated.
- Purchase orders are expedited immediately because events, escalations, and approvals are all automated.
- Product and services searches are much easier because of online product information and catalogs.
- Separate purchase orders are reduced because they’re produced, accomplished, and submitted through automation.
- Purchasing is made more predictable and more professional because of the reporting and auditing tools are available.
c) Savings increase
- Maverick purchasing is reduced because of every purchase in e-procurement is funneled
- Inventories are not stockpiled all the time because there are shortened order and fulfillment cycles. This also yields lowered costs in inventory.
- More favorable terms in a contract are negotiated
- A company can easily spot vendors through reporting and auditing features of e-procurement.
The suppliers or the vendors also benefit from this platform because their sales and order processes become completely streamlined and automated. They could efficiently construct their schedules when it comes to their production and service rendering so that they may be able to fit into the needs of their clients.
Essentials to Consider in the E-procurement Platform
In e-procurement, a company establishes the foundations of the system and then gets vendors to be part of it. There is usually a provider of the platform and the company authorizes that provider to operate and implement the system. The vendors who have signed on then use this provider to gain access to the company’s e-procurement database. After everything has been set, the following could be accomplished:
✓ Research of products and services
✓ Purchase of products and services
✓ Negotiations with vendors
✓ Use of value-added services
Initially, the vendor creates a description of their products and services that will be published online as part of an online catalog. With an e-procurement platform, a vendor could make, import, and maintain catalogs. After setting up, the company could then use the platform. Through it they will be able to check out the products and services and ask for quotes. Companies could also ask vendors to join in price negotiations and to bid for their projects. The vendors could freely advertise or promote their products and services, bid for projects, negotiate with certain buyers, accept purchase orders, and update their catalogs. E-procurement also allows the company and the vendor to monitor their transactions, produce audit trails, assess patterns or buying and selling, and evaluate each other’s performance.
Take note that in e-procurement, any vendor or company (buyer) should not be carried away. Only engage in or seethe platform if there are sufficient resources and time. As with any venture, using e-procurement doesn’t mean very fast ROI in the first few months. Give it maybe a year or so before profits start to be hauled in.
Do you think you’re ready for e-procurement? If you are, then face the challenge and make it big! Check out Corporation Procurement Exposed and discover how you can turn your small company into a dynamic business big wig!
