e-procurement-101
Finance strategy 3 min read

E-Procurement 101: understanding the basics

Faustine Rohr-Lacoste

We can do (almost) anything online today, so why not company purchasing too? Procurement management is going paperless and many companies are now opting for e-procurement.

It’s a solution that allows companies to save money and streamline the entire purchasing process, which is great news for companies looking to improve business performance! But how does it work in practical terms? Does it meet your needs and is it in line with your purchasing strategy? Here’s all you need to know to decide if it’s time to take the plunge!

Definition | What is e-procurement?

E-procurement (or electronic procurement) refers to a set of tools that optimise purchasing. It has progressed significantly since it was first created more than twenty years ago. Today’s e-procurement solutions are online platforms through which purchasing teams can manage the entire process with ease. It offers a range of features from a product search function to ordering and invoicing. These solutions are particularly suitable for large companies with a high purchasing volume. Everything is paperless and centralised, making the procurement strategy more transparent, straightforward and efficient. Its many advantages include: span tracking, expenses, deadlines and monitoring.

e-procurement

Context | How did e-procurement come about?

Several factors led to the appearance of e-procurement :
 
  • the digitalisation of the economy and e-commerce
  • the rise of new supply management solutions such as EDI, ERP, SCM, and SRM
  • increasingly complex buyer needs
  • a more precarious economic context and increasing competition
Consequences: procurement has become crucial for companies looking to gain a competitive advantage. Procurement teams looking for new tools to offset ever-rising costs are finding that e-procurement is one tool that fits the bill.
 
At first, e-procurement referred mostly to paperless catalogues. Teams could use product references to place their orders online. But it was mostly for indirect purchases, supplies in particular. Today it’s a comprehensive system that facilitates the management of all kinds of costs and all steps in the purchasing process, in short, the entire procurement process.
 

But how does it actually work?

Concept  | What does e-procurement allow us to do?

E-procurement is a solution that normally falls under “procurement” in a company’s ERP. It uses a collaborative, interactive platform to bring buyers and suppliers together. 
 
Everything is covered, from procurement to payment (the P2P process). The e-procurement tool allows the purchasing team to: 
 
  • access catalogues (e-catalogues) or a special interface (B2S available at prices negotiated by the manager in line with contractual conditions)
  • choose products
  • access a list of suppliers
  • manage calls to tender
  • approve and send orders
  • submit and validate orders (respecting the company’s approval process, i.e. its “approval workflow ”)
  • manage invoicing: paperless invoices are generated automatically

E-procurement allows paperless management of all these processes, which offers many advantages!

Advantages  | What are the benefits of e-procurement?

By automating the various above-mentioned processes, e-procurement allows procurement teams to create value. There are many advantages:
 
  • for suppliers: this tool streamlines collaboration through improved monitoring, transparence and tighter control over contracts
  • for the company: it provides greater visibility of overall spending, better monitoring, and real time savings when it comes to ordering and delivery
All of these advantages make e-procurement an indispensable tool. It simplifies daily task management, streamlines the purchasing process; and provides significant time savings on overall company productivity. 
 

In an upcoming article we will go into more detail on “how to choose the right procurement/e-procurement solution”.

To sum up, e-procurement allows companies to enlist technology to optimise and manage the procurement process with ease. These have become must-have tools for many companies due to their impressive range of features and their user-friendly design. What if you switched to SaaS? You could benefit from the many advantages that going paperless provides to better manage your purchasing process! 

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Faustine Rohr-Lacoste

Faustine is Head of Community at Spendesk. She is in charge of CFO Connect, a community of modern finance leaders.