Basically, companies are always required to make innovations in improving company performance, including through procurement, which means the company’s activities in finding or obtaining the material needed, starting from finding suppliers, making orders until the materials are received.
Examples of such procurement include the purchase of raw materials for various business tools, production machines, or various building materials, repair equipment, and services that are currently being required by the company.
Entering the era of globalization, especially the development of e-business, there are many examples of business fields that have become more efficient by using technology. One of them is E procurement, which is a term for procurement which consists of two words, namely electronic and procurement.
E procurement or electronic procurement means a series of electronic procurement processes for goods and services that occur between sellers and buyers through information technology. The E procurement system itself is not only limited to the process of purchasing goods or services, but can also be developed into the process of electronic negotiations and decision-making on contracts with providers of goods or services.
Types of e procurement you need to know
- Web based ERP functions to create and approve purchase requests, place purchase orders and receive goods and services using a software system based on Internet technology.
- E-MRO (Maintenance, Repair and Operating) is similar and almost the same as web-based ERP except that the goods and services ordered are non-product supplies related to MRO.
- E-sourcing serves to identify new suppliers for certain categories of purchasing purposes using Internet technology.
- E-tendering is sending requests such as information and prices to suppliers and receiving replies from suppliers using Internet technology.
- E-reverse auctioning, which is using Internet technology to buy goods and services from known or unknown suppliers.
- E-informing functions to collect and distribute purchasing information from internal and external parties using Internet technology.
The benefits of e procurement in the process of implementing the procurement of goods or services are:
Reducing operational costs
Online procurement through the e procurement system is felt to save the company’s operating costs, especially those related to the purchase of goods and services. This system will prevent additional costs or double expenses associated with the number of purchases of goods and manual procurement procedures, such as the use of envelopes for document delivery.
Expenditures will be more transparent
An online procurement system not only cuts operational costs, but also makes it easier for companies to create and analyze reports related to the procurement of goods and services.
The reason is, this system will automatically record your procurement process. Thus, you can ensure that the procedures and processes for procuring goods and services are in accordance with company policies.
That way, you can avoid fraud that causes your company to lose money. You can find ease and effectiveness in spending analysis in Paper Enterprise, the latest solution from Paper.id for management of scalable and comprehensive accounts payable.
Visibility of company expenses can be monitored clearly and you can digitize the process of managing accounts payable for minimal error and fast results. That way, you can save up to 80% of your budget. Find more Paper Enterprise solutions by clicking here!
Electronic procurement systems do not take up much time compared to traditional procurement. In addition, you no longer need to perform time-consuming processes, such as data input processing.
The data input process often takes a long time, costs a lot and is at risk of being wrong due to human errors. To overcome this, you need to implement digital procurement for a faster and more scalable procurement process.
Reducing the occurrence of errors
Through the online procurement system, each document will appear in a simpler appearance, making it easier to correct errors that may occur. In addition, order history can also be a reference in creating or comparing new orders with previous ones to avoid mistakes before payment.
The following are the reasons why your company is required to use e-procurement:
Company’s essential needs
Procurement activities cannot be avoided by companies. In fact, this can be called a routine activity that affects the survival of a company. This is because companies need raw materials, supporting materials, spare parts, finished goods, and so on, to keep operating.
Imagine what would happen if the procurement went wrong or the activity was slow and less effective. Its main impact must be on the quality of the output produced by the firm.
An important part of the procurement process is placing orders for goods or services according to needs and on time. The solution is to switch to the e-procurement method, which is a method that utilizes the internet network to provide goods and services online so that the procurement of goods can be faster and on time.
Losses are the most avoided by a company, both on a small and large scale. However, sometimes these detrimental factors cannot be monitored carefully, especially if human resources are not sufficient to exercise control. So, through e-procurement, material and immaterial losses that may occur during the procurement process can be minimized. This is because every step taken is automatically monitored and transparent.
The problem that often arises in the procurement process is how to build a good integration between purchasing and finance. however, if you use e-procurement, all integration problems can be overcome and the workflow in the company becomes smoother.
Thanks to the current presence of e-procurement, the procurement process is faster, more precise and transparent. Electronic-based goods procurement has even attracted the attention and interest of many companies.