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... more

A considerable amount of valuable work has now been completed by authorities who have already gone through the tough process of automating their procurement activities. But there remains a great deal of work to be done by authorities as a whole if significant savings are to be released to support important front-line services such as education and health. Meeting demanding e-Procurement targets is not just about making sure authorities have the right range of technologies in place. more

E-Procurement Solutions

Definition: E-Procurement is the business to business (B2B) purchasing of goods and services through the Internet.

EProcurement can be implemented through either a manual process or using automated software such as Enterprise Resource Planning (ERP) tools.

Benefits of e-Procurement

A vital part of supply chain management, the procurement of materials and services can become a major stumbling block for enterprises involved in the manufacture of deliverable goods. Without a regular and reliable supply of raw materials the manufacturing process will come grinding to a halt, leading inevitably to missed delivery dates and a backlog of orders. It is vital, then, to ensure that the process of procurement is as efficient and reliable as possible.

e-Procurement, eprocurementEprocurement can be an invaluable tool for enterprises experiencing difficulties in their supply chain. If purchase orders are not being processed in a timely fashion and delivery dates are not being met through manual purchasing methods, e-Procurement can be extremely useful in streamlining the procurement process.

Types of E-Procurement

There are several varieties of e-Procurement, each of which can offers benefits to manufacturing enterprises in ensuring both that materials are delivered in time to meet production schedules and that they are at the best price to maximise profit margins.

* Web-based ERP

ERP software packages (from vendors such as SAP AG, Oracle and The Sage Group) are designed to optimise the resource planning of an enterprise. In terms of the manufacturing process they can generate recommended purchasing schedules in order to achieve an ideal just-in-time (JIT) production cycle.

One of the many features of ERP software is its ability to automatically generate purchases orders using the Bill of Materials for the finished product as a basis. Web-based ERP software can go one step further. As well as generating purchase orders it can forward them to suppliers in order to fully automate the procurement process. Based on the ideal manufacturing process laid out by the ERP software, these orders ensure that materials will be available in time to begin production at the ideal time.

In addition to generating new purchase orders, ERP software can also issue reschedule notices to suppliers. Reschedule notices are supplementary orders that can either cancel, delay, speed up and alter the size of pending orders.

* e-MRO

ERP software can also generate and send purchase orders for maintenance, repair and operating supplies to enable the smooth running of the production process. When repairs are necessary to components of a production line, e-MRO orders can greatly reduce down time.

E-MRO orders are of greatest benefit to automated production lines using numerical control machine tools. Many automated machine tools can run self-diagnostic programs, notifying an operator by SMS message to a cell phone in the event of components failure. In addition to a message to the operator the tool can also use ERP software to generate an e-MRO order for replacement parts.

* e-sourcing

E-sourcing is the use of the Internet for the identification of new suppliers for a category of purchasing requirements. Otherwise known as reverse auctioning, e-sourcing is a method by which enterprises can move their procurement process online in order to reach a larger number of suppliers than would be possible through usual channels.

The major benefit of e-sourcing is the competitive aspect by which suppliers bid for projects. Suppliers submit bids along with various details of the service they promise to provide, and purchasers can pick and choose from the offers.

While reverse auctions can be performed through traditional channels, many enterprises prefer using the Internet as they can connect with a wider range of service providers than would be practical in the real world.

* e-informing

Finally, e-Procurement can be used for the simple job of exchanging purchasing information between buyers and suppliers. Using Internet technologies such as e-mail the process of accumulating a database of supplier information can be made much simpler than by using traditional contact methods.

Perhaps most importantly, these databases can be applied in the future to generating action in a reverse auction. By informing suppliers of forthcoming auctions an enterprise can allow suppliers the time to build a tender.

In a Nutshell

E-procurement, then, offers two main advantages. The first is the further automation of business processes related to the production of goods and services. By automating procurement orders an enterprise can ensure that orders are placed in time to align with the recommended production schedules of ERP applications.

Furthermore, e-procurement can also be a valuable tool in sourcing new suppliers of goods and services, driving down materials expenditure by promoting competitive bidding.