E-Procurement – digital purchasing
Since last year, when many companies reorganized their processes to minimize face-to-face contact, digitization has become enormously important. By 2025, procurement and billing processes, in particular, are to be more integrated and automated, mainly to save time and costs. For this purpose, the e-procurement network will be further expanded and used by more and more companies. What e-procurement exactly is, what advantages it offers, and how to implement it in your business processes, you can read in the following blog post.
What is e-procurement?
Directly translated, e-procurement means “online trade for the B2B sector”. Delving deeper into the subject, e-procurement is a simplified process of procuring goods and services, through the use of modern technologies. This makes it possible to reach out to other companies anywhere in the world and connect buyers and suppliers. In this process, trading partners communicate concretely with each other via digital platforms. Among other things, this ensures time, cost savings, and reduction of errors.
In traditional procurement, it can also become a challenge for employees or departments to spend unwisely by deciding where to buy goods themselves. This can be prevented by a uniform company-wide purchasing strategy, which e-procurement offers.
What advantages does
e-procurement offer?
In addition to the benefits already mentioned, such as time and cost savings, reduction of errors, and a unified purchasing strategy, there are other notable advantages that e-procurement brings:
E-procurement provides a symbiosis for internal and external parties, ensuring easier and faster data exchange
Real-time transparency and overview
Due to the quick retrievability of the expenses, one has a better overview and can allocate them accurately
With the help of process automation, offers can be compared conveniently, for example, and the manual entry of order data is no longer necessary
Working time is reduced, as the procurement time is also less
The simplified distribution of rights means that no one can place an order without authorization
Flexibility is increased because you can quickly compare offers and online orders are more customizable to your needs
High information quality, as all information and data is transmitted digitally
What is the process of e-procurement?
Different systems of e-procurement:
Closed systems
In this system, only two related companies can communicate and transact business.
Half open systems
This system is mostly used by larger retailers and provides customers with a portal where they can buy products.
Open systems
These systems are also called catalog systems because they contain different catalogs from a variety of providers. They are accessible to many users, but they must register to access them. Buyers can then compare offers.
Supplier systems (Sell-Side-Systems)
In a supplier system, the supplier specifies all requirements and rules. He sets up a system himself and specifies how orders are to be placed. However, he keeps the technical requirements low so that as many buyers as possible can have access to it.
Procurement systems (Buy-Side-Systems)
Companies specify a system here and the supplier must adapt to it. Especially about the delivery date, the scope of delivery, repetition of delivery, and technical requirements. Companies can enter the external catalog of suppliers into their own ERP system via a desktop purchasing system (DPS) and thus compare offers quickly and easily.
Electronic marketplace (Many-to-Many-Systems)
Here, an independent marketplace operator provides a system that serves as an online procurement platform. Buyers and sellers can use this system against payment.
Safety aspects
With an exclusively electronic process, there is of course the issue of security. To ensure this, there are a few things to keep in mind.
To ensure that the data is secure and not accessible to third parties, the data transfer should not take place via the public Internet. For this, companies and also suppliers are recommended to use a secured and encrypted VPN connection.
With conventional procurement, the problem is often that data or information is lost. This problem hardly ever occurs with e-procurement, thus ensuring permissible transmission.
To avoid conflicts and to be sure that both parties (buyer and seller) comply with their obligations, a legally compliant digital signature should be created.
How do individual countries use e-procurement?
Italy
As of October 2019, public entities from the healthcare sector are required to order electronically.
France and Germany
France and Germany are working on a common standard, known as Order-X, to handle orders digitally in the future. Order-X offers a uniform format that both sides can use.
Northern European countries
Denmark aimed to implement catalogs, purchase orders, and invoices in electronic form by January 2021.
In Sweden, the authorities set themselves the goal in 2019 of switching to e-procurement in the coming years.
Norway has also set itself the goal of using e-procurement in the public sector between 2020 and 2024.
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You would like to digitize? Contact us now!
We are happy to be there for you – by phone, by e-mail, or personally at your site!
Muzaffer Havcarci
INPOSIA e-Invoicing-Specialist
