Mission entirely possible
EProcurement sounds like yet another business challenge that you need to get your head around. It’s probably easier to understand if you think about it in terms of automating the purchasing and supply functions (acknowledging that procurement encompasses substantially more than this), which is really what eProcurement is all about.Essentially, eProcurement involves ordering, invoicing, authorisation and payment processes between buyers and sellers online, using Software as a Service (SaaS) or internet-based solutions. The objective is simple: to develop more cost-effective purchasing processes. It is also about eTendering for contracts online, making it easier for small businesses to compete alongside larger companies – effectively removing the barrier between large and small players and providing a level playing field.What you need to knowSo what do you need to know about eProcurement and, more importantly, how can any business benefit from it?Much of the pressure for the use of eProcurement has come largely (but not exclusively) from government which is expected to purchase most, if not all, of its services online using a paperless ordering system, as well as receive invoices.eProcurement solutions using SaaS provide a level playing field for suppliers, where small businesses gain a level of business sophistication that is generally only found in big businesses. This increases the opportunities for SMEs to compete. Buyers benefit through greater control and less fragmentation of their buying power. So, despite some initial concerns, buyers and suppliers increasingly see eProcurement as a positive process.What’s in it for suppliers? There is a wide range of benefits provided by eProcurement to businesses on the ‘sell side’, including:
- Opportunities to compete with large and established suppliers that have sophisticated systems;
- A chance to widen your client base and provide a point of difference with competitors;
- Time and efficiency gains;
- The opportunity to sell products and services to other eProcurement customers;
- Shorter payment times (because electronic invoicing is generally a more efficient way of billing clients) and potential to increase working capital through payables financing;
- A higher level of buyer ordering accuracy, thus increasing overall efficiency.
- The tender process can be standardised and automated to reduce cycle times and the complexity of analysing supplier responses.
- Paperwork can be slashed helping them analyse, obtain and respond to bids more quickly.
- Transparency is improved as all supplier bids using eProcurement systems should be traceable – so there should be a logical reason for opting for one supplier over another.
- eProcurement tools can help with the implementation of new contracts.