There are several different types of e-procurement processes, but some of the most common include the following:
- Electronic Reverse Auctions: where suppliers bid against each other to offer the lowest price for goods or services.
- Electronic Catalogs: where suppliers provide their catalogs of goods and services, and buyers can purchase from them directly through the e-procurement platform.
- Electronic Tendering: where suppliers submit their bids electronically in response to a request for proposal (RFP) or invitation to tender (ITT) issued by the buyer.
This article will discuss the various e-procurement processes and their impacts on the supply industry.
What Is E-Procurement?
E-procurement, also known as electronic procurement or digital procurement, uses technology, specifically the internet, to automate and streamline the procurement process. This includes activities such as sourcing and purchasing goods and services, as well as managing contracts and invoices. E-procurement can include many tools and systems, such as e-marketplaces, e-sourcing platforms, e-catalogs, and e-auction platforms. The goal of e-procurement is to increase efficiency, reduce costs, and improve the overall procurement process. It can be used by businesses of all sizes, government agencies, and non-profit organizations and can be applied to a wide range of goods and services.
3 Main Types of E-Procurement Process
E-procurement is significant because it allows organizations to automate and streamline the procurement process, resulting in cost savings and increased efficiency. E-procurement systems can help organizations reduce expenses associated with procurement, such as labor and paper, automate repetitive tasks and speed up the procurement process, increase transparency, and help organizations to make more informed purchasing decisions by providing real-time visibility into supplier performance, inventory, and spend analysis.
E-procurement also allows organizations to adhere to compliance regulations, and by using e-procurement, organizations can reduce the risk of fraud and errors.
Here are the three main types of the e-procurement process:
Electronic Reverse Auctions
Electronic reverse auctions (e-reverse auctions) are one of the types of e-procurement processes where suppliers bid against each other to offer the lowest price for goods or services. These auctions are typically conducted online, and suppliers can participate remotely. In a typical e-reverse auction, a buyer will create an auction event outlining the specifications and requirements for the goods or services they want to purchase. Suppliers will then submit bids, and the buyer will award the contract to the supplier that offers the lowest price.
E-reverse auctions are often used to purchase goods or services in large quantities, such as raw materials, components, and equipment. They can also be used for transportation, warehousing, and logistics services. E-reverse auctions can provide several benefits to buyers, including cost savings, increased competition among suppliers, and improved supplier performance.
Electronic catalogs (e-catalogs) are one of the types of e-procurement processes where suppliers provide their catalogs of goods and services, and buyers can purchase from them directly through the e-procurement platform. An e-catalog is an online catalog of products and services offered by suppliers, which buyers can access through a web-based portal. These catalogs can include information such as product descriptions, pricing, images, and other relevant details. E-catalogs can be used for a wide range of goods and services, including office supplies, raw materials, equipment, and services such as consulting and IT.
Buyers can search and browse the e-catalogs, add items to their cart, and place orders directly. This can automate the purchase order process and increase its efficiency of the purchasing process. E-catalogs also typically include features such as punchout catalogs, allowing buyers to access the supplier’s catalog and checkout process directly, which can help streamline the purchasing process. E-catalogs can be integrated with other e-procurement tools, such as e-sourcing platforms, e-auction platforms, and e-invoicing systems.
Electronic tendering (e-tendering) is one of the types of e-procurement processes where suppliers submit their bids electronically in response to a request for proposal (RFP) or invitation to tender (ITT) issued by the buyer. E-tendering is a way for organizations to manage the procurement process for goods and services, from the initial RFP or ITT stage through to the final award of the contract.
An organization will issue an RFP or ITT outlining the specifications and requirements for the goods or services they want to purchase. Suppliers will then submit their bids electronically through the e-tendering platform, which is typically accessed through a web-based portal. The buyer can then review the bids, ask for clarification, and negotiate electronically with the suppliers. Once the process is completed, the buyer can then award the contract to the supplier that offers the best value for money.
E-tendering can provide several benefits to buyers, including increased competition among suppliers, improved supplier performance, and the ability to compare bids side by side. It can also increase transparency, reduce administrative effort and increase the speed of the tendering process.
The Process of E-Procurement
The process of e-procurement uses technology, specifically the internet, to automate and streamline the procurement process. It typically includes the following steps:
- Planning: Identifying the goods or services needed, determining the specifications and requirements, and setting a budget.
- Sourcing: Searching for and identifying potential suppliers through various methods such as e-sourcing, e-marketplaces, or supplier databases.
- Evaluation: Assessing the qualifications and capabilities of the suppliers and selecting the most suitable ones.
- Bidding: Inviting suppliers to submit bids or quotes for the goods or services.
- Awarding: Reviewing the bids and awarding the contract to the supplier that offers the best value for money.
- Ordering: Placing an order with the selected supplier can be done through an e-catalog or e-ordering system.
- Payment: Processing payments to the supplier can be made through e-invoicing and e-payment systems.
- Post-Award: Managing the contract, tracking the delivery of goods and services, and monitoring supplier performance.
This process of e-procurement can be tailored to meet the organization’s needs. It can include different types of e-procurement systems such as e-sourcing, e-catalogs, e-auctions, e-tendering, and e-invoicing.