EP1141 Topic 6: E-Procurement

E-Procurement process

1. Identify of business needs. 2. Sourcing and evaluation of supplier. 3. Submitting the purchase requisition. 4. Creating a purchase order. 5. Receive the invoice and the order. 6. Pay for the goods or services. 7. Record for audit.

Types of flows in e-Procurement: Flow of order fulfillment.

1. Order dispatch. 2. Accounting back-office systems connectivity. 3. Supplier connectivity. 4. Order tracking. 5. Receiving.

What is e-Procurement

E-procurement involves the systems to conduct business-to-business procurement processes online, using web-based applications. E-procurement significance: • Enables buyers to locate potential suppliers • Review product choices • Select products • Make purchasing transactions directly over the internet • Allows multiple supplier access in one place E-Procurement application includes web-based ERP solutions that automate transaction procurement processes.

What is EDI

Electronic Data Interchange (EDI) is the computer-to-computer exchange of business documents in a standard electronic format between business partners.

Types of flows in e-Procurement

• Flow of ordering • Flow of order fulfillment • Flow of order payment

Types of flows in e-Procurement: Flow of order payment.

Invoice Management • Invoice and billing. • Payment. • Reporting.

Benefits of e-Procurement

Main benefit of e-Procurement is cost saving and strengthen management control. • Through automation order and transaction time is reduced. • Simplified purchasing steps. • Global procurement that is also transparent. • Increased standardization and compliance with purchasing policies. • Reduces Maverick spending. • Real time interaction with pre-approved supplier/vendor. • Wider selection of supplier base.

Roadmap for e-Procurement Managers

Step 1- Clarify your goals Step 2- Construct a process audit Step 3- Create a business case for e-procurement Step 4- Develop a supplier integration matrix Step 5- Select and e-procurement application Step 6- Remember that integration is everything Step 7- Educate

E-Procurement Implementation

1. Assess and document 2. Identify the gaps 3. Identify the process and system solutions 4. Document benefits 5. Develop key performance indicators (KPI) 6. Secure "buy-in" from management. 7. Develop a plan and commit resources 8. select e-procurement provider 9. Create an implementation plan 10. Deliver and measure the benefits.

Types of flows in e-Procurement: Flow of ordering (requisition).

1. Secure personal login. 2. Browse authorized supplier catalogues. 3. Create requisition/ order. 4. Submit requisition/ order. 5. Enforce purchase controls and approvals.

Evolution of e-Procurement

1. Traditional procurement. This is mainly paper-based. 2. Electronic systems to support traditional procurement. Eg mainframe, PC, ERP. 3. Internet used as communication channel to support traditional procurement. Eg website, emails. 4. Internet tools and platforms to compliment traditional procurement. Eg Online supplier database. 5. Internet tools and platforms to replace traditional procurement. Eg fully integrated e-market.

Main objective of e-Procurement

Main objective of e-Procurement is to better the firm's operational cost and address key procurement challenges such as: • How to reduce order processing cost • How to reduce order cycle time • How to allow desktop requisition through employee self-service • How to offer access to employees across the company procurement • How to integrate procurement software with company's back-office systems.

Purchasing vs Procurement

Purchasing is the buying and paying process of a transaction. Receiving an invoice or a receipt. Procurement is the act of obtaining something. This would mean; contacting different suppliers to procure that supply through phone, catalogue or visiting the shop.

Why was EDI used?

This Technology replaced the traditional paper-based catalogues, phone calls, faxing and mailing.

E-Procurement analysis and administration applications

• Data collection. • Market analysis. • Supplier management decisions. • Configuration of spending controls. • Continuous feedback.

Types of e-Procurement

• Web based ERP • e-MRO (Maintain, Repair, Operate) • e-Tendering • e-Reverse auctioning • e-Informing • e-Marketplace.