eProcurement is the software based automation of procurement processes and the automation of user processes to enable them to easily make purchases. Or using Wikipedia’s definition “ is the business-to-business or business-to-consumer or business-to-government purchase and sale of supplies, work, and services through the Internet”. eProcurement automation encompasses the entire process from the moment a decision is made to make a purchase, through the selection of the goods through a catalog or other process, the approval of the order, the placing of the order, the raising of the purchase order, the receiving of that order into the supplier’s system, through to the invoicing and the delivery/receipt of the goods or services.
Benefits of eProcurement systems:
The benefits of implementing an eProcurement system are multi-faceted and offer benefits at all levels throughout the organisation. From the management’s viewpoint, eProcurement systems offer improved visibility and control; eProcurement can help finance officers or Procurement officers match up to 80% of purchases with purchase orders, receipts, job tickets or other proof of purchases: the e-Procurement platform helps companies manage liabilities nearer to real-time instead of having to wait to historically match up invoices against purchase orders and goods received. This provides a better view of the supply chain, suppliers, inventories, contracts and pricing as well as offering a better way of managing cash flow and capital expenditure, reducing stock levels and improving purchasing decisions. eProcurement systems offer employees tasked with making purchases a more efficient way of ordering from preferred suppliers or where there has been a pre-negotiated contract, enabling them to aggregate demand. eProcurement also offers employees considerable time-saving benefits allowing them to focus on more value added customer facing or ‘front line’ duties. If contracts are in place or lists of preferred suppliers for everything that an employee needs to carry out their job efficiently, then there is a major benefit to the company in terms of saved time – valuable time that can be spent securing a deal with a customer, serving a customer or making contact with new customers, for example.
The Issue: Stick or carrot?
Historically, eProcurement systems were by-passed, employees gave the reason that the systems were cumbersome, unwieldy and slow to respond. They tended to be focused around control at the centre, rather than devolvement of responsibility and empowerment to help the end user or buyer execute their role independently. Now, key process functionality has been over-layed with a consumer type shopping experience on the front end. Making it accessible and user friendly to the user who is now far more likely to want to stay in the fold and use the pre-approved system.
The trick to getting the adoption of an e Procurement system up to high levels across an organization is to make sure it is easy to use, quick to respond and uses as few steps as possible to get the requisition made. Plus, the approval and automation into the supplier’s system, in the form of a Purchase Order, needs to be a smooth process flow. See our article on eProcurement Adoption.
Summary - What is eProcurement?
eProcurement projects fail because of lack of adoption. Systems are perceived as too difficult or staff (buyers) worry that automation will put them out of a job. By making a system easy to use, and embedding analytics that show that significant savings have been made, technology adoption will become pervasive throughout the organization. Streamlining processes using alerts and exception reporting will help management focus their time on matters that are the big issues. Rather than simply being seen to wield a potentially disproportionate ‘big stick’ across all buying decisions, how ever large or small.