Businesses still encumbered by paper- or spreadsheet-based procurement face extinction as the digital supply chain era has dawned. Electronic procurement (eProcurement) technology streamlines business-to-business transactions by creating direct connections among buyers, suppliers, and other supply chain partners.
Because they operate over suppliers’ closed networks available only to registered customers, eProcurement systems are especially valuable to businesses that purchase large quantities of maintenance, repair, and operations supplies. Managing this indirect inventory requires several components – requisition, order, purchase, delivery, payment, reception, disposition, and more – with every step susceptible to human error, wasted time, and excessive costs. eProcurement solutions, however, automate many of these steps. They allow MRO purchasers to establish relationships with vendors so they can negotiate favorable fulfillment terms and acquire the materials they need at the best prices.
How eProcurement Technology Works
eProcurement technology platforms simplify vendor relationships and supplier management while connecting and aligning all the links in the digital supply chain:
- Sourcing: Determining which products the business requires and creating requests for information and proposals from potential suppliers. This quickens the pre-qualification phase and creates a short list of vendors for more in-depth evaluation.
- Tendering: eProcurement systems allow customers to distribute and suppliers to respond to RFIs and RFPs. Platforms document the interactions, ensuring transparency, fairness, inclusion, and confidentiality.
- Auctioning: Service providers and product manufacturers offer progressively lower remote bids to deliver on the specifications that procurement teams set. As eAuctions invite multiple suppliers to compete in real time, they drive prices down and allow procurers to vet and choose their partners, based price and service levels.
- Ordering: Authorized users select the products they need from vendor catalogs, place them in a digital shopping cart, and their requests to supervisors for approval. Wholesalers and distributors receive approved orders, automatically send confirmations, fulfill the purchase, and deliver the goods. Buyers get electronic invoices, which they can also settle through eProcurement technology.
- Informing: eProcurement solutions gather data throughout digital supply chain transactions. Much of this data comes from the other party in each deal. Sellers transmit catalog updates, promotions, and other information buyers can use, and buyers reciprocate by informing sellers of policy changes, order estimates, and other demand-side data.
Benefits of Adopting eProcurement Technology
MRO-heavy organizations must deal with administration, payment, and inventory challenges due to the sheer volume and variety of the materials they purchase. Adopting eProcurement technology addresses these common pain points while driving continuous improvements across the enterprise:
- Productivity: Consolidating digital supply chain functions within a single eProcurement system opens the door to automation and workflow integration. These platforms are often preconfigured to align with accounting software and ERP systems, reducing turnaround time on negotiations, orders, payments, and other procurement functions. Less manual data input reduces errors and allows workers and managers to refocus their efforts on high-value activities.
- Cost Savings: Automating order placement, approval, invoice reconciliation, and other manual tasks speeds fulfillment and eliminates redundancy, cutting labor costs, minimizing the chance of stockouts, and reducing inventory carrying costs. eProcurement systems, especially those that enable or even conduct price comparisons among eligible suppliers help stretch MRO budgets.
- Favorable Terms: Businesses can use eProcurement technology to compare competing vendors in terms of price, delivery times, and other KPIs to identify the most valuable partners. These scorecards also give purchasers leverage in contract negotiations, while the system can notify managers of term violations or off-contract purchases.
- Greater Transparency: E-procurement solutions digitally track purchases and accurately report procurement trends and metrics. These capabilities give stakeholders clear insights into spending patterns. Armed with this data, procurement teams can accurately budget for predicted market demand, internal productivity shifts, and strategic financing.
- Flexibility and Scalability: Top eProcurement solutions can adapt to evolving business needs. Cloud-based platforms make them especially easy to update to incorporate recent technologies and processes. These platforms facilitate customization and scalability that ensure organizations can respond swiftly to market opportunities and fickle customer demands. Their flexibility accommodates supplier additions and onboarding, new products, and maturing procurement strategies with facile management of increased transaction volumes that does not sacrifice performance.
- Lower Risk: Centralizing digital supply chain management under an eProcurement solution enables real-time tracking, and enforces contract and regulatory compliance, minimizing the likelihood of errors, fraud, delays, and other risks. eProcurement software helps organizations adhere to regulations and internal policies only allowing actions that conform to internal rules and approvals. They create digital footprints and a traceable audit trail, so discrepancies are easily discovered and rectified.
Learn more about the must have features in an Eprocurement platform.
Selecting an eProcurement Solution
eProcurement systems vary in comprehensiveness and functionality, but all offer a centralized process for managing purchases. Most enable procurement teams to browse and search suppliers’ online catalogs, place orders, and track deliveries. SDI’s Zeus platform aggregates supplier catalogs, so customers can filter the products they need by specifications, price, and other variables and select the provider that best meets their needs. The cloud-based platform gives buyers access to all MRO and facilities management parts in real time and generates consolidated, line-itemed expense reports each period.
It allows clients to customize rules regarding which employees can requisition, approve, order, and submit payment for each SKU purchase. This expedites the entire digital supply chain process and ensures more orders are placed through the controlled system and contracted purchasing, minimizing roque spend.
To learn more about how Zeus can relieve your procurement headaches and why SDI’s eProcurement technology consolidates all supply chain functions through digital enablement, schedule a demo today.
