What is e-procurement?

Digital technology has revolutionised the way in which work is traditionally organised within companies. As a result, many activities have changed. In the back office, for example, the digitalisation of processes is making administrative tasks easier and faster, with the aim of delivering greater added value. And if there’s one activity that has evolved transcendently, it’s the act of buying.

Yet purchasing is still managed in an archaic way. An ambivalence in the light of changes in behaviour over the last few years. That’s why e-procurement is becoming an increasingly popular way of digitalising purchasing . There are many benefits to be gained from optimising the purchasing process to enhance business performance.

But how exactly does it work? First, we’ll look at the definition of e-procurement, its use in business and the benefits of digitising purchasing for your organisation.

Origin and definition

E-procurement is the dematerialisation of exchanges between companies and their suppliers to optimise the purchasing act. More broadly, e-procurement facilitates the organisation of the purchasing department or, failing that, the collaboration of the teams responsible for purchasing.

The etymology of the term “e-procurement” makes it easier to understand. It is an Anglicism made up of the prefix “e” for “electronic” and “procurement. It can therefore be translated as “e-procurement”, “e-procurement” or “e-purchasing”.

While the function of purchasing is carried out on a personal basis, e-procurement is exclusively professional. It most often takes the form of a solution adapted to corporate purchasing and therefore to the B2B (business to business) sector only.

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What can e-procurement do for you?

The primary objective of e-procurement is to digitise purchasing, and to connect buyers and suppliers around a collaborative and interactive solution that can include all stages of the purchasing process, from issuing the requirement to payment.

Depending on the size of the company, the various players in the purchasing function need to have access to a wide range of functions:

  • An electronic catalogue of goods andservices purchased within the company.
  • Integrated supplier contracts with prices negotiated by the purchasing department, in line with suppliers’ contractual terms and conditions.
  • An exhaustive, centralised description of requirements to ensure transparency ofinformation.
  • The components of the purchasing process: requests for quotes, invitations to tender, orders, etc.
  • Supplier panel thanks to comprehensive referencing.
  • Generation and transmission of purchase orders.
  • Definition of a clear approval circuit to guarantee operational efficiency
  • Management of supplier invoicing by dematerialising their invoices.

Thanks to e-procurement, all these administrative stages are dematerialised. Connected businesses that opt for these new solutions enjoy a host of benefits.

The benefits of e-procurement

Economies of scale

From product selection to payment, including validation of the purchase requirement, the process is 100% digitised. Operational costs arereduced and orders optimised. Over and above the savings made on administrative costs, productivity allows you to take a broader view of purchasing and create opportunities: negotiating framework agreements, reducing uncontrolled purchases and orders, managing purchasing.

Shorter lead times

Saving time is one of the main benefits of digitisation. Firstly, in the administrative management of the purchasing file, which is transmitted more quickly, from creation and validation through to archiving. A centralised file with digital approval means that initials can be put away and paper saved.

What’s more, when the purchase requisition is approved, the order is immediately sent to the supplier, which means faster delivery times. Finally, the dematerialisation of supplier invoices with order reconciliation speeds up processing and reduces payment times.

Controlled expenditure

Centralising purchasing on a single digital platform provides a clear , real-time view of the company’s expenditure. Thanks to an information reporting system, it is possible to anticipate expenditure as soon as the need arises. Purchases can be linked to budgets and sub-budgets or analytical codes, expenditure can be managed by project, and strategies can be improved and areas for improvement identified.

Enhanced collaboration

Implementing an e-procurement solution provides visibility over the projects underway within the company. In purchasing, it is important to have good communication to ensure efficient collaboration within teams.

This involves identifying internal needs, transparent information flow between the various staff and visibility of the progress of the purchasing project. The more a company communicates internally, the less internal tension there will be between teams.

A reliable and secure process

In the interests of efficiency and transparency, the management of supplies and indirect or direct purchases must be supervised and traced. On the one hand, to guide the organisation’s users as effectively as possible towards efficient purchasing, and on the other, to ensure that the processes put in place are properly respected. During an audit, for example, a reliable audit trail must be established to guarantee the integrity and compliance of a purchase. Digitising processes has the advantage of tracing interactions and tracking the actions taken on a file.

In conclusion, e-procurement digitises a company’s purchasing to save time and money, and also consolidates internal (team) and external (supplier) relations. By taking advantage of new information technologies, you can improve the performance of your purchasing department.

While the digitalisation of purchasing cannot be considered a miracle solution that will solve all problems, it does generate positive externalities. These include paper savings, a better understanding of the business and improved internal quality.

 

Want to learn more about our procurement management software Weproc? Contact us or request your free 15-minutes demo below!

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