Eprocurement systems & how to choose one for your business
November 17, 2022
Procurement is an integral part of any organisation where it directly spends money. Every businessman aims to save the most he can but manual procurement pokes a hole into your savings. It’s time-consuming and highly prone to human error. A slight calculation mistake can cost you hundreds of dollars. Moreover, it paves way to ‘Maverick Buying’ where employees ignore purchasing policies and disregard negotiation, price comparison and contract agreement. All this results in the wastage of company funds.
It’s time you stop relying on your employees bargaining skills to save you money in the procurement process. Start automating with e-procurement. Whether your organisation is big or small, there’s an e-procurement system made for you.
We’ve compiled a list of top e-procurement systems that will help you automate the e-procurement process and save time and money. Let’s understand how e-procurement works.
What is the meaning of e-procurement?
E-procurement is the process of purchasing supplies, goods, equipment, and services using an electronic platform. It’s the centralised management of a business’s procurement process. E-procurement aims to automate the manual tasks involved in the procurement process. These tasks include sourcing, auctioning, tendering, filling onboarding questionnaires and exchanging contracts.
How does e-procurement work?
E-procurement links various organisations and processes in a centralised platform. When it’s time to make a purchase, you can create Purchase Requests(PR), get them approved, find and select suppliers, send a Purchase Order, receive goods and reconcile the invoice all within one platform.
Steps involved in e-procurement process:
Identifying the requirement: Procurement managers identify what goods or services are required in various departments. The company may require new items for inventory, renewal of expired subscriptions or restocking old goods.
Submitting purchase request: Once they find the requirements, managers send out Purchase Requests (PRs) for approval. The upper management (or the department that oversees procurement) approves or denies the request.
Supplier assessment: After getting the approval on their purchase order, managers assess various suppliers and shortlist some of them. Then, managers send a Request for Quote (RFQ) which means the cost for the purchase. Procurement managers shortlist a few suppliers based on their prices, reputation and past performance.
Negotiation: Procurement personnel negotiate with shortlisted vendors for an ideal price. Then, they finalise the best vendor for procurement.
Creating and sending a purchase order: A Purchase Order (PO) contains all the necessary details of the requirements. Procurement personnel send a detailed description of each good so there’s no compromise on the quality.
Order Fulfilment: Vendors fulfil the order in the given timeframe. Procurement personnel check the quality of all supplies and ensure they match the expectations.
Three way matching: Three way matching process involves matching the purchase order, order receipt and the invoice. Accounts payable department ensures that the company receives everything that it pays for. They pinpoint discrepancies (if any) before moving to payments.
Invoice approval and reconciliation: After three way matching, the accounts payable department clears the invoice. It’s important for your company to maintain a system to clear their dues on time, reconcile the payments and sync records with their accounting software. Use Aspire for account payable management so you never miss a deadline.
Recording the procurement process: Procurement department records the purchase requests, purchase orders, contracts and invoices for future reference. Records come in handy for spend analysis and in case of disputes with a supplier
All these steps are conducted within the e-procurement platform. That’s what makes it valuable.
Objectives of e-procurement
The chief objective of e-procurement is to ease the company's procurement process with automation. Manual operations —obtaining quotes from suppliers, pursuing them to agree upon a contract or analysing savings— are prone to errors and take a lot of time. E-procurement aims to substitute all these steps with automation.
Chief Objectives of e-procurement are:
To standardise a company’s procurement options
To shorten the procurement timeframe by automating manual processes such as signing and mailing a contract, clearing invoices, and reconciliation
To reduce the room for human error in various steps of the process through automation
To facilitate quick communication within the organisation about supplies and manage their supplier relationship
To keep track of procurement documents such as purchase orders, contracts, invoice and Request for Proposal (RFPs)
To promote savings through real time cost tracking features and competitive bidding amongst suppliers
Benefits of e-procurement
E-procurement takes charge of the overall procurement cycle. It automates each step so you finish your tasks with a few clicks. You oversee the workflow without begin too involved in the labour tasks —it does everything for you.
Below are the benefits of e-procurement:
Improves procurement workflow
With e-procurement, employees don’t have to manually analyse requirements, send purchase requests, find suppliers and negotiate contracts. E-procurement standardise the whole process for them, thus improving the overall workflow.
Increases visibility of procurement behaviour
All procurement data about purchases, contracts or invoices is consolidated within the eprocurement system. Stakeholders can monitor the workflow easily.
Offers supplier management
E Procurement offers supplier relationship management by administering the supplier data within a centralised platform. The end result is that your company gets transparent information about products and multiple suppliers to choose from.
Improves purchase quality
Eprocurement lets you keep supplier’s quality in check. It documents any discrepancies on the suppliers’ behalf so companies can easily inspect them and select the right one.
Shortens purchasing cycles
Without eprocurement, employees wait a lot to get a purchase order approved. It takes multiple days to send a purchase order and contract negotiation would take more time. Eprocurement offers centralised transaction of orders, contracts and invoices and shortens the overall procurement cycle.
Stronger supplier chain management
E-procurement lets you optimise your supply chain and identify the right vendors so you work with them closely. It builds stronger, strategic partnerships with the supplier that benefits your organisation in the long run.
Challenges of e-procurement
Unfortunately, e procurement accompanies certain drawbacks. It’s important to understand these challenges to prepare yourself before implementing an e-procurement software.
Challenges are as follows:
The total implementation cost including the cost of installation, infrastructure and employee training is high
The system — just like any other software— is prone to hacker attacks
It’s may take some time to integrate both internal and external systems
It’s difficult to onboard large number of suppliers (only with some systems)
It may be hard for newbies to get started with the procurement process in a new user interface
All these challenges don't take away from the immense benefits of e-procurement over the manual process. You can overcome these challenges by thoroughly researching about e-procurement systems. Ask your procurement solution providers to help you with the necessary information. Understand its features and plan the implementation accordingly.
Major tools and applications of e-procurement
Several tools assist the overall e-procurement process. A tool is used in each step of the process and has its own benefits. Below are commonly used e-procurement tools:
Internet based Electronic Data Interchange System (EDI) - to exchange information such as order confirmation, invoicing, logistics information
E-sourcing tools - to identify suppliers for the inspection phase
E-tendering tools - to send out tenders containing purchase orders, supply schedule, contracts
E-auctioning tools - to bring together shortlisted suppliers to conduct bidding
E-ordering - to purchase items
E-catalogue - to store product information such as images and prices and update them whenever necessary
What is a procurement system?
A procurement system carries out the e-procurement process. It’s a web based system that offers a comprehensive environment to both companies and vendors to conduct the procurement process with ease. Although the features of a procurement system vary with the brand, the main purpose remains the same —automation. It enables procurement personnel to automate various activities such as pursuing the vendor to sign a contract, reviewing procurement policies and maintaining vendor relationships.
E-procurement systems are equipped with tools that digitalize the entire procurement process. It includes demand management, supplier information management, e-tender, order management, contracts management and invoicing and reconciliation.
Some procurement systems offer assistance with a few steps of the procurement cycle while some automate the complete Purchase to Pay (P2P) process. A P2P procurement system, ensures compliance with the purchasing policies from order placement to reconciliation. It ensures that the end-users quickly find and order everything they need.
Advantages of a procurement system
The goal of an e-procurement system is to manage all procurement related processes. It helps procurement personnel acquire goods, services or equipment at the lowest possible price. It acts as a centralised platform to connect the procurement personnel with suppliers. Below are the advantages of a procurement software:
Extra Savings: An e procurement system comes with cost control features to keep your budget in check. E-sourcing features lets you choose from a variety of suppliers after negotiating for the best price.
Real time cost tracking : Eprocurement system comes with real time budget tracking that ensures your expenditure is in line with the company’s budget. It prevents you from the purchasing any product or service that disrupts the company’s budget, so you never overspend
Monitor approval of purchase requisitions: Eprocurement system ensures that the PR and vendor’s policies are in line with the company policies. Only then, the request gets approved.
Saves time through automation: An eprocurement system automates all the steps involved in the procurement process including PO approval, gathering supplier quotes, and invoice clearance. Automation leads to a faster procurement process and saves your valuable time. For complete automation, use Aspire’s auto bill payto schedule your invoices. It increases your cash flow by automatically paying invoices only when they’re due.
Promotes competitive supplier auctions: It’s hard to find and negotiate with multiple suppliers manually. An e-procurement solution provides a wide range of potential suppliers via e-sourcing. Select suppliers and invite them to a real time bidding to finalise the best price for your organisation.
Bid comparison: Eprocurement system eases the bid comparison process with its AI based bid comparison tools. It evaluates various products based on predetermined factors such as price and quantity.
Reduced rogue spending: The vendor management system inside an e procurement software reduces supplier risk by tracking their performance. It provides all necessary information about the vendor and product quality so you never spend company funds on low-quality supplies.
Reduced chance of human error: The whole procurement process comprises multiple crucial steps where you can’t afford any error. For instance, an incorrect purchase order directly costs you money. An eprocurement system checks the purchase order, monitors budget and reconciles payment with automation, thus reducing the chance of human error.
List of e-procurement systems
Now that you know why you need to install a procurement system, it’s time to analyse your options. Below is the list of top 7 e-procurement solutions that ease your organisation's procurement workflow:
Coupa Procurement is a cloud based procurement software that assists companies throughout the procurement cycle. It offers complete visibility of the pay-to-purchase process. With contemporary design, Coupa facilitates fast user adoption and quicker management.
Purchase requisitions guide employees to prioritise better products by suggesting discounts and advantageous options.
SOW based spend management system lets you track and compare all items in one unified space.
Compliance-as-a-service guides business through global purchases and keeps companies up to date with changing cross border policies.
AI and machine learning detect errors and flag fraudulent activity in your business expenditure.
Procure-to-pay manages supplier payments and provides complete visibility into the payment process.
Oracle Service Procurement
Oracle is another e procurement solution that primarily serves businesses that work in sales and purchasing. Oracle offers basic procurement features in an easy to use interface.
Assists in negotiating contracts and enforces company’s terms and rates.
Sources the best performing suppliers and drives spent towards them.
Business intelligence tools increase spend visibility and monitor supplier performance
Offers guides to source suppliers and finalise the best one in a systematic way.
SAP Ariba is an e-procurement platform for B2B companies. It offers comprehensive procurement solutions that assists you from sourcing till the end of the purchase cycle.
SAP Ariba is a Procure-to-pay (P2P) solution that integrates purchasing and accounts payable systems to support end-to-end procurement cycle.
Strategic sourcing feature lets you manage expenditure, e-sourcing and contracting for direct and indirect materials and services.
Financial supply chain management feature automates invoice capture and approval which leads to a smoother procurement process.
SAP Ariba lets you create contracts quickly with pre-created templates in Contract Lifecycle Manager (CLM). It manages your sales contracts, internal agreements and IP licences.
Basware is a leading procurement system that supports complete procurement cycles from ordering to reconciliation. It boosts procurement efficiency with spend analysis and vendor management to promote cost savings.
Basware is another P2P procurement solution that assists you from the moment you send a PO to the point of reconciliation.
Basware’s open commerce network houses more than 2 million buyers and suppliers. It lets you connect with all your suppliers with zero onboarding fees.
It supports global e-invoice format and offers automatic compliance in 50+ countries.
The accounts payable integration routes, codes, matches and approves invoices for a fast and error free procurement process.
Zip Intake to Procure
Zip offers effortless procurement for employees that feel like “ordering something from your favourite merchant”. Zip aims at easing the procurement cycle with automated POs and approval flows.
Zip automatically forwards requests to IT, Finance, Legal and other teams. Your teams can easily send requests for a purchase so the procurement officers can directly jump to sourcing.
Once you feed all you purchase details into ZIP, it automatically creates PR or PO which you can send for approval.
Zip connects with multiple task management systems such as JIRA, Zendesk and ServiceNow to track vendor approval across different departments.
Procurify is an intuitive purchasing software that’s easy to set up and offers assistance with product training. It offers all the features necessary to make the procurement process easy for employees.
Procurify offers customizable approval flows that lets certain people approve specific purchases depending how much amount they can approve.
Purchasing workflows let you track and analyse each step of the procurement cycle. You automatically generate POs, allot purchasing permissions and conduct three way matching while the software offers a birds eye view of the workflow.
The Custom Budgets feature lets you create custom budgets for each department or project. Analyse how each purchase influences the overall budget and track expenditure across all departments.
Procurify offers easy reconciliation with a mobile app.
Emptoris is an analytics software for procurement. It’s a part of the entire Emptoris Supply Chain Management bundle.
The contract management in Emptoris lets you create, negotiate and execute supplier contracts.
The sourcing feature allows you to create bids, invite suppliers and finalise the one that fits your budget. You can conduct sourcing events like e-auctions and multi stage negotiations with the suppliers.
The spend analysis feature provides a holistic view of your expenditure. It lets you consolidate and organise the spend data for your company.
Emptoris provides complete supplier lifecycle management which includes performance analysis, risk assessment, supplier engagement, classification of multiple suppliers for your organisation.
How to choose procurement systems for your business?
No matter what size your business is, there’s a procurement system out there for you. Ask your procurement solution providers to Look for the pointers below in your preferred procurement solution you get the maximum ROI:
Easy to use
The procurement process is lengthy enough. A tricky user interface would make it even worse. Start with a free trial to ensure that your e-procurement system is easy to use.
Integrates with accounting system
Accounting system integration lets you reconcile the payment and update your accounts quickly so you complete the procurement process with ease.
Offers Fast and customizable approval workflows
Fast approval workflows allow you to move away from manual approval process and save time spent on spreadsheets and paperwork.
A lot of money is involved in the procurement process. Your procurement system must come with built-in cost management and spend tracking. Use Aspire for additional expense management. It comes with robust spend policies and a budget tracking system that ensures you never overspend on any project.
A procurement system should provide assistance in finding, managing and selecting vendors. It should document all vendors’ performance to help you choose the best option for your organisation.
Efficient customer support
A software must come with 24/7 customer support to provide solutions whenever a problem arises.
Improvise, Adapt, Overcome
Improvise your procurement process by adapting to an e-procurement solution to overcome all challenges in your procurement department. It automates the whole procurement process to save your time and money.