- What is e-procurement?
- What are the benefits of e-procurement?
- What is e-procurement software?
- Key features of e-procurement software
- 3 types of e-procurement software
- Best e-procurement software picks for 2023 (+ free download)
Are you part of a procurement or purchasing team? Are you searching for new ways to remain competitive, improve efficiency and manage your procurement processes more effectively? In 2023, the best solution to these challenges is e-procurement software. Digital transformation is the future of scaling companies, especially for organizations and departments carrying out procurement processes.
Advancements in technology have brought supply chains into the future. Strategic sourcing is more predictive, transactional procurement more automated, and supplier management more proactive. (Source: Deloitte)
In this article, we’re going to walk you through definitions, benefits, key features and the best procurement software picks for 2023.
What is e-procurement?
E-procurement stands for electronic procurement. It’s a process organizations go through when purchasing goods and services from suppliers online.
💡 E-procurement technology took shape in the 1980s after the introduction of electronic data interchange (EDI) allowed customers and suppliers to send and receive purchase orders.
The online e-procurement environment is now a space to qualify, manage and track suppliers in the procurement process in conduct with values such as anti-discrimination and transparency.
The e-procurement process typically follows several stages of workflows and process automations that help eliminate manual processes. The results for procurement teams include reduced costs, reduced errors, and increased productivity.
What is the e-procurement process? ⚙️
The e-procurement process is a cycle that typically includes several stages. Let’s run through them below:
- Identifyng needs
It’s time for an organization to identify the goods or services they need. To do so effectively, online communication, research, and efficiency is key.
- Supplier research
Identify and evaluate potential suppliers by gathering supplier information on products, services, prices, quality, and delivery capabilities.
- Request for proposal
An RFP, or a request for proposal, is a formal document used to request proposals from potential suppliers or vendors for a specific product or service. It provides project specification details including, requirements, and goals, along with the criteria for evaluating proposals to select the winning proposal.
- Bid evaluation
At this stage, buyers begin to assess and analyze bids from potential suppliers or vendors in response to an RFP. The goal is to determine the most suitable proposal that meets the project’s needs and budget.
- Contract negotiation
Post bid assessment, contract negotiation begins. During this process, terms and conditions are negotiated between buyer and supplier. This includes information such as pricing, delivery, and quality standards.
- Order processing
The order needs to be processed. This process involves creating and sending purchase orders, confirming the receipt of the purchase order, tracking the shipment of goods or delivery of services, receiving and inspecting the items received, and processing invoices and payments.
- Delivery and receipt
A delivery receipt confirms the receipt of goods or services by the buyer from the supplier. It serves as a proof of delivery containing information such as date and time of delivery, quantity, and description of the order.
- Performance evaluation
It’s the time to analyze supplier performance against the negotiated criteria, such as delivery time and quality. The results are then used to decide whether suppliers are awarded with future contracts.
What are the benefits of e-procurement? ✅
Choosing to implement an e-procurement system in your organization can reap plenty of tangible benefits in the short and long term. Let’s explore some advantages.
✅ Increased productivity
The primary goal of an e-procurement system is to centralize data. It helps to automate procurement processes and improve the supply chain for all stakeholders. Automation creates more accurate and reliable purchasing information that can increase productivity thanks to:
- standardized processes
- streamlined activities
- automation of labor-intensive tasks
Implementing e-procurement software means procurement professionals can rely on inbuilt reporting features that allow companies to identify issues sooner and make quicker decisions in response to supplier performance.
51% of enterprises indicated that their top strategy was investing in technology that automated their procurement process. Enterprises reduced their requisition-to-order cost by 48% and cut transaction cycle time in half. (Source: Aberdeen Group)
✅ Reduction in human error
Purchasing data errors can go undetected and cause catastrophic damage, costing companies precious resources, money, time and in the worst cases, clients. Manually inputting information is a major cause of these errors. The good news is that e-procurement can replace labor-intensive tasks with automated and more structured workflows to limit human intervention. It means procurement teams can focus on other more important day-to-day tasks.
💡 An e-procurement system for example can also help select the best supplier in terms of goods, improving the qualifying and selection process for all parties involved. This means more cost-effective decision-making.
✅ Cost savings
A complete dashboard and overview of supplier prices allows purchasing teams to negotiate and procure with the best suppliers, at the best prices. This includes finding the best deals and discounts, significantly improving purchasing department spending and cost management over time. E-procurement software (with the right user training!) will continually improve process management and error mitigation because of real-time reporting capabilities.
✅ Supplier management
A supplier management system allows procurement teams to select the best suppliers based on factors such as quality and sustainability in a fair and unbiased manner. These competencies should be continually updated to aid supplier selection in the future. Accurate information is what helps minimize future risk and excess spending, that will ultimately improve margins and save costs over time.
💡 Online Procurement and E-Tender Software ensures that all registered suppliers in your network are notified with relevant tender opportunities in your company. Suppliers can receive automatic alerts to relevant opportunities based on the products or services they offer and the portals they’re registered in. A successful supplier management software can create stronger supplier relationships and improve the quality of products/services.
✅ Risk mitigation
E-procurement software to automate the procurement process, can reduce the risk of errors, fraud, and non-compliance with procurement regulations. E-procurement software offers greater transparency and accountability, as well as real-time tracking and monitoring of procurement activities. This improved visibility allows organizations to identify potential risks and take proactive measures to mitigate them.
✅ Organized data
With e-procurement software in place, it becomes easier to enter, track, and analyze data since everything is stored in a centralized database. Users can quickly make informed decisions with organized data including real-time reports on procurement activities, giving managers valuable insights into their procurement operations.
What is e-procurement software?
💡 E-procurement software are cloud based solutions designed to help organizations streamline and optimize their procurement processes electronically. This includes the sourcing and procurement of goods and services, as well as supplier management, contract management, and payment processing. Adopting procurement software, allows organizations to increase efficiency, reduce costs, and improve supplier relationships. The software typically includes features such as electronic purchase orders, supplier catalogs, request for proposal (RFP) management, and invoice processing.
Key features of e-procurement software 🔧
- Easy to use platform: Replacing or deploying a new tool creates the risk of miscommunication, information loss, and low adoption. Consider an easy to use e-procurement software for more effective training, increased time to value and digital adoption.
- Customized workflows: Customized workflows make sure that each vendor receives the right guidance and expectations, resulting in fewer errors. By tailoring procurement processes to specific vendors, organizations can streamline the process, reducing workload and time to manage multiple vendors.
- Supplier management: A centralized database of supplier information, allows organizations to easily track and monitor contact details, supplier performance and contracts, ensuring that they meet contractual obligations and deliver high-quality goods and services.
- Invoice management: Manage the process of receiving and paying invoices. Organizations can automate manual tasks such as data entry and invoice matching to help reduce the amount of time and resources required. Automated invoice management can improve accuracy and reduce the risk of errors.
- Inventory management: Track and manage inventory levels with features such as reorder point alerts and stock level tracking. Organizations can streamline and automate their accounts payable processes, receive invoices electronically and automatically match them to purchase orders and goods receipts, and process payments in a timely manner.
- Reporting and analytics: Track and analyze real-time procurement data, for better decision-making and cost-saving opportunities. Organizations can analyze procurement data, such as spend, supplier performance, and contract compliance. With this information, organizations can identify areas for cost savings, negotiate better contracts, and improve supplier relationships.
- Seamless integration capabilities: Look for software that can integrate with your existing systems, such as ERP or accounting software.
3 types of e-procurement software
We’ve selected 3 of the most common e-procurement systems you’ll find on the market.
💻 Procurement software
We’ve touched on various cloud applications that simplify your procurement process throughout this article, including e-sourcing, supplier management and invoice management. Some popular software vendors include Coupa, SAP Ariba, Oracle Procurement Cloud, GEP, Ivalua and Basware.
Electronic Data Interchange software (EDI) allows electronic documents and data to be shared between different computer systems. Thanks to automated procurement processes, EDI software reduces manual data entry, resulting in fewer errors and a quicker transfer of data. EDI software can improve supply chain visibility and collaboration by facilitating real-time communication between buyers and suppliers.
💻 ERP Systems
ERP software is often hailed the brain or nervous system connecting all areas of a company. An ERP system can improve e-procurement processes through integration with different operations across a company such as inventory management, finance, and delivery. These integrations become a part of a centralized system, creating better communication between departments.
ERP systems also provide real-time data such as inventory levels, supplier performance, and purchase history. Finally, ERP systems can even automate repetitive procurement tasks, reducing manual errors.
Best e-procurement software for 2023 (+ free download)
In 2023, selecting powerful purchasing software is essential to optimize the procurement process in your company.
Want the complete list of best e-procurement software in 2023? Download our selection of essential solutions to boost your purchasing strategy. Among them, you’ll discover innovative solutions to automate your tasks, improve collaboration with your suppliers and ensure better expense management.