DRIVERS OF THE USE OF E-PROCUREMENT

Reduced Transaction Time: individual business activities (transactions) can be completed much more quickly; they are not restricted by office hours and may not even need human intervention, thus increasing the capacity to complete transactions on a real-time basis. This means that downstream processes are not constrained by waiting for transactions to be completed.

Electronic catalogues: the development of e-catalogues has enabled organizations to market their product offer electronically, this has been a fantastic marketing tool for sellers and for buyers, there is price transparency (you can easily see how much items cost) and buyers can compare offers from various e-catalogue vendors.

Increased Standardization: With the electronic catalogues mentioned, there has been a move by some suppliers to offer a more standardized offer, thus allowing buyers to easily compare the offers from e-catalogues, however care must be exercised in these comparisons as it is difficult to assess the quality of products without samples. If in doubt request samples and take time to make your own assessment.

The great news is that most catalogue sites operate in a very similar way, and they are very easy to set up allowing multiple business users to undertake some of their own procurement…this keeps the business running, sourcing the day-to-day needs of the business and allows procurement people to continue to develop great value-adding relationships.

Wider Spread Supplier Bases: Because the virtual e-procurement portals are web-based, buyers can search suppliers worldwide, meaning a wider selection of products and services are available to the organization meaning that when items are not available locally, it is still possible to source these. It is important to remember the time and cost of shipping goods, but it’s great to know that it is possible to source items from somewhere in the world!

Simplified Global Procurement: With the e-procurement applications supporting various languages, currencies, international taxation and financing, shipping regulations and more, it is simple for buyers and suppliers in different countries worldwide to communicate and co-operate.

Increase Productivity: As e-procurement automates some of the procurement and wider business processes typically handled by employees, this will free up time for the team to spend on more strategically significant functions and tasks. For example with automated matching of invoices, goods can be ordered, processed and paid in a matter of minutes; the key however is to
ensure that the supplier is set up in the buyers systems support as much automation as possible.

Simple Configuration and Scalability: E-procurement applications can be configured to suit the individual needs or both the buyer and the supplier, and can grow with the organization as needs be. It is important to select suppliers for both the current requirement as well as possible future need so gaining an understanding of the technical infrastructure development plans of suppliers will help buyers to select possible longer term partners.

Creation of Trading Communities: Because the e-procurement applications are internet based, they allow for both vertical and horizontal trading communities to be developed. This means buyers can consolidate buying power and it also opens up opportunities for new supply chains. The opportunity to consolidate the requirements of smaller buyers via consortia or trading communicates has enabled smaller business to access prices historically reserved for bigger buyers, thus fueling a fast developing SME sector. Many Chambers of Commerce and other local business organizations operate such buying communities.

More Cost Efficient: With the time reductions and increased supplier selection, development of trading communities, more opportunities for purchasing surplus goods and services at below market price, and much more, it isn‟t surprising that e-procurement proves to be much more cost efficient than traditional procurement.

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