E-procurement

E-procurement or electronic procurement, also known as supplier exchange, is the B2B, B2C, or B2G purchase and sale of supplies, work, and services through the Internet as well as other information and networking systems, such as Electronic Data Interchange and Enterprise Resource Planning. Typically, e-procurement Web sites allow qualified and registered users to look for buyers or sellers of goods and services. Ongoing purchases may qualify customers for volume discounts or special offers. E-procurement software may make it possible to automate some buying and selling. E-procurement is done with a software application that includes features for supplier management and complex auctions. The new generation of E-Procurement is now on-demand or a software-as-a-service.

There are seven main types of e-procurement:

• Web-based ERP: Creating and approving purchasing requisitions, placing purchase orders and receiving goods and services by using a software system based on Internet technology.
• e-MRO: The same as web-based ERP except that the goods and services ordered are non-product related MRO supplies.
• e-sourcing: Identifying new suppliers for a specific category of purchasing requirements using Internet technology.
• e-tendering: Sending requests for information and prices to suppliers and receiving the responses of suppliers using Internet technology.
• e-reverse auctioning: Using Internet technology to buy goods and services from a number of known or unknown suppliers.
• e-informing: Gathering and distributing purchasing information both from and to internal and external parties using Internet technology.
• e-marketsites: Expands on Web-based ERP to open up value chains. Buying communities can access preferred suppliers' products and services, add to shopping carts, create requisition, seek approval, receipt purchase orders and process electronic invoices with integration to suppliers' supply chains and buyers' financial systems.

The e-procurement value chain consists of Indent Management, eTendering, eAuctioning, Vendor Management, Catalogue Management, and Contract Management. Indent Management is the workflow involved in the preparation of tenders. This part of the value chain is optional, with individual procuring departments defining their indenting process. In works procurement, administrative approval and technical sanction are obtained in electronic format. In goods procurement, indent generation activity is done online. The end result of the stage is taken as inputs for issuing the NIT.

Elements of e-procurement include Request For Information, Request For Proposal, Request for Quotation, RFx (the previous three together), and eRFx (software for managing RFx projects).

In reality e-procurement has the advantage of taking supply chain management to the next level, providing real time information to the vendor as to the status of a customer's needs.

Basically, e-procurement processes can carries out good result in increasing profits as it can:

• Reduces time and cost

Time to purchase is shortened and of course it is cheaper as it cuts the whole processes through computers without wasting cost on paperwork.

• Budgetary control

We can limit the spending by submitting queries or telling the person in charge to control spending and the reporting itself is improved and faster to get.

• Automated payment process

We can also automated payment processes so it makes faster payment time and simplify the payment method.

• Reduces errors

Errors are usually connected to waste of money, and by limiting the errors will results in saving costs.

There are some concerns that it will result in increasing the costs and losing profits:

• Choosing the right technology

The company has to be sure in implementing the technology, or otherwise it will be costly. For example, when the company doesn’t need ERP technology, then implementing ERP in the company is a disaster.

• Determining the right ‘e’ channel

Is more or less the same point to the point above, but when choosing the ‘e’ channel, the company should consider the size of the company as not to waste money on it. For example, the ‘e’ technology the company needed to implement is as much as ‘by phone’ system, then it is no need for the company to open a complicated and complete website and/or system.

Source: http://en.wikipedia.org/wiki/E-procurement

The implementations problem of E-Procurement in Indonesia can be seen in this site: http://www.wartaeproc.com/