E-Procurement is an online procurement strategy that is progressively becoming more popular with businesses globally. These days, more businesses are beginning to see that e-Procurement trumps traditional procurement when it comes to efficiency. With e-Procurement, the purchasing and processing phase is simplified and sped up as a result of real-time interaction with pre-approved suppliers and trading partners, regardless of location or time.
Purchase approvals can also be done online and orders can be completed within minutes, making delivery times shorter. In business, time is money, and embracing e-Procurement in your procurement strategy will surely bring about significant savings in terms of time and operational costs. However, many organisations are still unclear about the processes and risks associated with e-procurement, and require advice and guidance on how to utilise this new technology. In this article, we take a look at the seven steps for implementing a solid e-procurement strategy that will reduce maverick spending, foster compliance and realise organizational goals.
Assess and document your current and desired procurement process
Your traditional procurement arrangement has served you relatively well over the years but there’s always room for improvement. Before you can begin to put in place improvements to the procurement process, it’s necessary to have a clear overview of the current procurement process in use. To do this, assess and document every aspect of the procurement process, including time frames for different tasks, suppliers involved, compliance checks, payment methods, etc. Subsequently, think about your desired procurement arrangements and put it in black-and white so that you have a form of reference. Once you’ve completed these steps, you should have a clearer idea of what needs to be included in your new e-procurement strategy to maximise the effectiveness and efficiency of your business procurement process.
Identify gaps and solutions to bridge the gaps
Having clarified your current and desired procurement process, you can now start to identify the gaps in your current procurement strategy. Some of the more common procurement problems that businesses everywhere face include burgeoning costs, supplier-related issues, accidental or late orders and non-compliance with procurement policy. The first step to problem-solving is, of course, to identify and understand the issues you are facing from the outset. Once you’ve identified all the gaps and issues in your procurement strategy, you can then think about putting solutions in place. For example, having unreliable suppliers can really mess up the procurement cycle and may result in lower revenues for your business. In this case, the solution is clear: You need to review your supplier list and replace those that aren’t up to mark.
Document the benefits of implementing an e-procurement system
Listing down the benefits of implementing an e-procurement system can really help to get management buy in. Overhauling a business process is very often an expensive affair, so for it to materialise, management buy-in is a must. Try to organise your list of benefits according to what management considers important, first of which is usually the company’s bottom line. If you can convince management that implementing an e-procurement system is cost-effective and brings savings to the company in terms of time and resources, you ae more likely to obtain approval to proceed with your e-procurement strategy.
Develop an e-procurement plan and KPIs
Now that you have a clear understanding of your current and desired procurement process, identified the issues in your procurement strategy and am privy to the benefits of e-procurement, it’s time to think about how to revamp your entire procurement process through e-procurement. What are the plus points of using e-procurement? What are the processes, costs and resources involved? Where can I find more information about the e-procurement process? Who should I approach to kickstart the e-procurement plan? These are just some of the questions you need to ask yourself when developing an e-procurement plan. You should also design the KPIs for your e-procurement plan so that it’s easier to keep track of progress and effectiveness of the e-procurement strategy. It’s important to understand the impact of your e-procurement plan on the structure of your entire organisation, so it’s best to involve the management team and any other stakeholders that will be affected by this plan.
Review and select the optimal e-procurement solution provider
When deciding on an e-procurement solutions provider, it’s important to review company budgets and requirements. Price may be a big consideration when selecting a provider, but it shouldn’t be the determining factor either. The reliability of the provider can make all the difference to your company’s bottom line so be sure to carry out research on potential providers, focusing on track records, expertise and service offerings. A competent e-procurement solutions provider can greatly reduce the huge administrative burden associated with procurement processes, the management and evaluation of submissions, and the management of your supplier base.
Create an implementation plan that optimises resources
Once you’ve selected an e-procurement solutions provider that is capable of meeting your company’s procurement needs, you are ready to implement your e-procurement plan. However, the implementation process requires careful consideration as well. Before rolling out the red carpet for your e-procurement plan, be sure to check that there are enough resources on your end to carry it out smoothly, especially when it comes to your staff. In this case, your IT personnel would be the ones most heavily-involved in managing the e-procurement process, so be sure to optimise resources for effective implementation. You wouldn’t want to overburden the people that are key to the successful implementation of your e-procurement strategy! Make sure communication lines are clear and everyone is aware of their roles and responsibilities – the e-procurement solutions provider should also be approached for assistance where possible.
Deliver and measure the benefits
With the e-procurement process having been successfully implemented, there is a need to keep track of the whole strategy and process over the next few months. Businesses need to know whether their investments in e-procurement are well worth the expenditure, and this can only be clear if the progress of the e-procurement strategy is tracked and measured. Keep in mind the KPIs that were developed earlier when measuring the success of the strategy, and take note of all the issues that have cropped up over the past few months upon implemention.
The data and information collected can then be used to develop improvements as required, and mitigate risks that arise from e-procurement issues. In general, an organisation’s e-procurement strategy should be holistic and integrated with the overall procurement strategy to ensure that business objectives are met.
ThunderQuote is the most comprehensive business services portal in Singapore, Australia and ASEAN , where hundreds of thousands of dollars of procurement contracts are sourced every month by major companies like Singapore Press Holdings, National Trade Union Congress and more.