In simplest terms, electronic procurement defines the automation of an organization’s procurement processes using web-based applications. Unlike enterprise resource planning (ERP) systems that enable businesses to automate their internal processes, e-procurement enables widely dispersed buyers and suppliers to come together, interact, and execute purchase transactions directly over the Internet.
In a fully web-enabled e- procurement system, each step in the procurement process occurs electronically. From creating and submitting POs to receiving and paying for goods—all transactional data is automatically routed through workflow processors, reducing the time and cost of procurement activities, and boosting operational efficiency of the e-enabled organization.
E-procurement applications consolidate the paper-based catalogs of multiple vendors by digitizing product information into a single, one-stop shopping source for direct and indirect goods and services. In most cases, e- procurement applications are transparent to end-users. Embedded in the business processes and IT systems of buyers and suppliers, e-procurement applications lower process and inventory costs, extend supplier reach, and improve customer access to suppliers.
E-procurement (electronic procurement, sometimes also known as supplier exchange) is the business to business or business to consumer or Business to government purchase and sale of supplies and services through the internet as well as other information and networking systems, such as Electronic data interchange and Enterprise resource Planning Typically, e-procurement Web sites allow qualified and registered users to look for buyers or sellers of goods and services. Depending on the approach, buyers or sellers may specify costs or invite bids Transactions can be initiated and completed. Ongoing purchases may qualify customers for volume discounts or special offers E-procurement software may make it possible to automate some buying and selling. Companies participating expect to be able to control parts inventories more effectively, reduce purchasing agent overhead , and improvement. E-procurement is expected to be integrated with the trend toward computerized Supply chain management
E-procurement is done with a software application that includes features for supplier management and complex auctions. The new generation of E-Procurement is now on-demand or a software-as-a-service.
Advantages and Disadvantages
Advantages include getting the right product, from the right supplier to the right buyer, at the right time, for the right price and the right quantity. In reality e-procurement has the advantage of taking supply chain management to the next level, providing real time information to the vendor as to the status of a customer’s needs. For example, a vendor may have an agreement with a customer to automatically ship materials when the customer’s stock level reaches a low point, thus bypassing the need for the customer to ask for it. A major disadvantage to this type of agreement could be that the vendor has the power to take advantage of the customer by knowing more information about the customer than they would have if the customer was in a normal supply chain management structure.