Definition of e-Procurement

Electronic Procurement (also known as e-Procurement) is the way of using internet to make easier, faster, and less expensive B2B (business-to-business) purchase and sale of supplies and service over the Internet.

E-Procurement is more than just a system for making purchases online. A properly implemented system can connect companies and their business processes directly with suppliers while managing all interactions between them. This includes management of correspondence, bids, questions and answers, previous pricing, and multiple emails sent to multiple participants.

Well e-procurement system helps a firm organize its interactions with its most crucial suppliers. It provides those who use it with a set of built-in monitoring tools to help control costs and assure maximum supplier performance. It provides an organized way to keep an open line of communication with potential suppliers during a business process. The system allows managers to confirm pricing, and leverage previous agreements to assure each new price quote is more competitive than the last one.



Definition of e-Procurement

Implementing an electronic procurement system offers a company many benefits to the company, such as:

1. E-procurement helps with the decision-making process by keeping relevant information neatly organized and time-stamped.
   Most are template-driven which makes all transactions standardized and track able. Keeping track of all bids means leveraging your knowledge to obtain better pricing. Companies can focus on their most lucrative trading partners and contracts.
2. Well-managed e-procurement helps reduce inventory levels.
   Knowing product numbers, bid prices and contact points can help businesses close a deal while other suppliers are struggling to gather their relevant data.
3. E-Procurement systems that allow multiple access levels and permissions help managers organize administrative users by roles, groups, or tasks. Procurement managers do not need to be as highly trained or paid because such systems are standardized and easy to learn.
4. With e-procurement all purchases are easier to track because they are done over the Internet and the company's managers can easily see who made which purchases without having to wait to receive a monthly revolving credit statement. Furthermore, many companies incorporate product specifications into their e-procurement systems, so an employee wanting a laptop might only be able to purchase a certain brand with specific features, memory capacity, and software.
5. E-procurement saves times.
   Buyers do not need to leave their desks or make phone calls to suppliers in order to place orders; they simply go through the Internet. And, because suppliers receive the order almost immediately, they can also fulfill and ship it much faster than with the traditional procurement methods.

There are some real benefits that experienced by some companies that use electronic purchase method (e-procurement):

1. Lower price of purchasing (5%-20%)
   
   • More supply resources that can be access
   • New supplier will be easier to get
   • Competitive price
   • Broader the geographic scope
2. Time Efficiency of Purchasing Process (20-30%)
   
   • Faster to look the sources
   • Faster to ask for offering request
   • Faster to send the requested list
   • Faster the offering evaluation
   • Faster the release the requested item
   • Faster the follow up
   • Easier to detect the offering
3. Reduce the time limit for claim and payment.
   
   • Potentially get the price reduction
   • Reduce the potential mistakes that can be happen in term of offering document, receiving documentations, and billing.
4. Reduce the administration fee
   
   • Reduce the manual jobs and paper work
   • Increase the buyer productivity
5. Develop the ability to create/ manage the optimal supply basis
   
   • Fix the market data
   • Avoiding the effect of high demand level
6. Expedite the communication between buyer and seller
   
   • Faster and more accurate
   • More faster in detecting problem and problem solving
7. Just-in-time purchasing
   
   • Daily request communication
   • Daily delivery communication
8. Supply Chain Management
   
   • Transparent communication and information delivering in supply chain in real time
   • Synchronization and automatic payment
9. Support the partnership practice.
   
   • Support daily, fast, and accurate communication
   • Support transparency between partners.

E-Procurement cause the lower cost with many ways. For example: sale price, admistration fee, inventory cost, and other cost, and that’s why e-procurement can increase company ROI (return on investment). With all the benefit that achieved from E-Procurement, the company can significantly increase ROE (return on equity) dan ROI (return on investment). The price can be reducing directly from the sales price from selling process expense.

Real Example of E-Procurement Implementation in the company
Case of : Starbuck Company


The struggling world economy has some wondering if we - consumers and businesses alike - have raised expectations in the area of sustainability higher than we can afford. It’s a fair question since past environmental movements have stalled when the economy turned sluggish, as it did in the early 1990s.
Starbucks CEO Howard Schultz wrote an interesting piece on this subject last week on The Huffington Post. His take:

Now is a time to be bold. Now is a time to invest, truly and authentically, in our people, in our corporate responsibility and in our communities. The argument–and opportunity–for companies to do this has never been more compelling.

Schultz, in describing their recently stepped up efforts, wrote:

We also announced a set of ambitious but realizable goals for the way we source our coffee, how we help to sustain our environment, and what we can do to work with, and continue to contribute to, the communities in which we do our business and the world as a whole. Consumers are spending less and will more closely scrutinize products; they will embrace only the companies and brands they trust and with which they identify.

In other words, consumers expect companies they know and trust to continue, and even, enhance their sustainability initiatives. Doing anything less would harm the brand and bottom line. So the sourcing and procurement operations will be relied on to drive savings of sustainably sourced direct goods.

That’s why Starbucks decided to become customer of Perfect Commerce that supply the solution for better information technology provider. Perfect Commerce positioned themselves as the company that offers world-class sourcing and procurement solutions for companies of all sizes.

"We needed a provider who offered more than point solutions, and we needed a partner that could provide the flexibility and accelerated implementation of an On-Demand offering. Perfect Commerce delivered on all accounts."
Peter Lohri, Director, Corporate Procurement and Supplier Diversity at TIAA-CREF


Sources :

• http://www.supplyexcellence.com
• http://www.perfect.com/company
• http://www.salesforce.com/customers/case-studies.jsp
• http://reagansatyawira.blogspot.com/2008/12/e-procurement-meningkatkan.html
• http://www.epiqtech.com/e-procurement-RFQ.htm