eProcurement is the purchase or sale of goods or services through the internet. It is not the same as eCommerce, however. eProcurement uses a supplier’s closed system that’s only available to registered users. It resembles a digitized version of the procurement cycle and includes elements such as a request for information, request for proposal, request for quotation, RFx (the previous three together), and eRFx (software for managing RFx projects).
eProcurement is a broad term that often means different things to different organizations. eProcurement systems aim to improve the labor-intensive procurement process; but, as a category, there are many different types of eProcurement tools.
eProcurement has evolved over time from digital tools that simply supported traditional procurement (such as basic email) to advanced, fully integrated, automated tools that bring efficiency to the procurement process. Here’s what eProcurement is, and some of the ways in which companies can benefit from a modern eProcurement system.
eProcurement is the purchase or sale of goods or services through the internet. eProcurement is not the same as eCommerce, however. eProcurement uses a supplier’s closed system that’s only available to registered users.
eProcurement resembles a digitized version of the procurement cycle and includes elements such as a request for information, request for proposal, request for quotation, RFx (the previous three together), and eRFx (software for managing RFx projects).
eProcurement tools target different parts of the procure-to-pay process, including:
eProcurement can make the procurement process faster, easier, and more profitable for buyers and vendors alike. Here’s how.
eProcurement brings distinct advantages to an organization, compared to the traditional paper-based system of sourcing.
eProcurement allows organizations to identify opportunities for better spend management. Reporting tools and spend analytics add visibility to the procurement process. As a result, procurement teams can identify ways to reduce tail spend, review vendor performance, and track strategic and tactical sourcing opportunities.
eProcurement tools help improve compliance. A company can gain visibility into each contractual relationship it has with its suppliers. eProcurement systems allow companies to monitor supplier performance and ensure they are meeting contractual obligations. Likewise, the company can ensure that employees are following their end of the agreement, cutting down on the risk of maverick spend.
eProcurement software cuts down on the manual labor involved in the procurement process. In traditional procurement, sourcing involved routing paperwork for approvals, managing Excel docs, making phone calls, and time-consuming data entry. eProcurement tools automate much of the process, reducing the risk for human error and saving time. Tools like Fairmarkit will automate entire sourcing events, including vendor identification, bid invitations, and response scoring.
eProcurement systems give procurement teams a way to build a digital list of preferred suppliers, easily locate products, and streamline the purchase order process — ensuring that inventory never runs out. A cloud-based CMS, for instance, can also help add resiliency to your supply chain. Even in a global pandemic, these digitized systems help you keep tabs on your suppliers and adjust your supply chain strategy as needed to keep your business running smoothly.
Finally, eProcurement systems provide deeper insight, transparency, and visibility into procurement at an organization.
“With the implementation of e-procurement software, overall visibility and transparency of S2P processes are boosted, offering procurement professionals greater insight into spend behavior,” wrote one expert. “Cloud-native technology offers access to more data at a time, and through advanced analytics, the data is then aggregated, cleansed, and classified, increasing spend visibility, and allowing improved spend analysis.”
Greater visibility empowers an organization to cut down on rogue spend, build long-term relationships with the best suppliers, and increase supplier diversity effectively.
There is a range of different types of eProcurement tools that can help your organization realize these benefits. Here are a few broad categories:
Many organizations use all or a combination of these tools to bring efficiency and cost savings to their procurement function. For more insight into how your organization can implement an eProcurement tool, check out Fairkmarkit’s blog, The Source.