For most organizations, tracking payments and transactions in today’s marketplace has become needlessly complex. With mountains of paperwork, manual processes, and the risk of human error, your procurement process is not as streamlined and effective as you might think. Many organizations are mitigating this risk and are creating a quicker, more cost-effective approach by embracing e-procurement tools. Below, we dive into the nuances of e-procurement and discuss the key advantages and disadvantages that may sway your decision-making. 

What is e-procurement, and how does it relate to supply chain management?

With a rise in global business, more and more business is conducted via the Internet. With the ongoing COVID-19 pandemic, many organizations adopt remote business processes, including within their supply chain. As buyers and sellers look to cut costs and maximize profits, many organizations have embraced e-procurement strategies. E-procurement is the process of buying and selling goods and services via the Internet. This approach opens up communication between a company and a supplier by creating a direct link to facilitate interactions such as bids and purchase orders. 

While it might sound similar to e-commerce, e-procurement is not the same. For starters, to gain access to supplies and purchases, you need to be registered within your supplier’s closed system. You cannot simply make purchases without having first agreed-upon terms of reference. E-procurement can be done at any stage of the transaction, allowing you a more comprehensive range of options of products and services, enabling you to choose the most cost-effective option for your needs. 

E-procurement aims to fulfill your company’s needs at the lowest possible price or with the best value at your time of need.  

What are the components of the e-procurement process?

The beauty of e-procurement is that it streamlines your regular processes. By embracing a digital platform, both parties can avoid handling manual processes like contract exchanges, creating a process that is automated and efficient. E-procurement also helps to smoothen the operations between your finance and procurement departments, making a collaborative process. Your e-procurement process consists of a bundle of components. These elements are:

What are the advantages of using e-procurement?

Procurement should be as simple as any other everyday purchase. With the support of the right e-procurement tool, you can gain added visibility into your transactions and control over your spending. Organizations that have embraced e-procurement tools have seen a range of added value to their procurement processes. Some advantages include:

• It saves you money — Money talks. E-procurement offers an advantage for organizations by enabling them to control their costs and maximize their performance. When organizations implement procurement processes, they can eliminate dark purchasing, reducing their spending on unnecessary and duplicate items.

• Automation capabilities — Shout it from on the top of a mountain: Automation saves you. And not just time, but also money. When organizations implement e-procurement strategies, they can reduce overhead and paperwork trails, save everyone time in ensuring compliance, organize data, and reduce invoice time, sometimes by up to 72%. The streamlined process makes for a faster cycle and allows you to create a larger pool of products and services. 

• Shorter purchasing cycle — You know how lengthy and time-consuming reporting on orders, payments, and requisitions can be. With e-procurement, organizations can streamline this process by centralizing their transaction tracking. With electronic access, buyers and sellers have instant access to available products, services, and prices. 

• Improved control over inventory —When you rely too heavily on manual processes, you open the door to increased human error. Using a robust e-procurement tool, you can reduce your team’s workload by automating administrative tasks like field-level arithmetic calculations, approval routing, and deadline adherence. The right e-procurement tool:
  • Enforces accountability
  • Addresses potential purchase risks
  • Protects your sensitive information
  • Keeps the procurement cycle moving forward

• Added transparency for all parties — Contrasting systems and data silos can negatively impact your procurement processes’ quality, resulting in longer cycle times, unnecessary spending, and missed opportunities. A unified e-procurement system simplifies data management and centralizes your communication and functions. 

What challenges do you face when using e-procurement?

Like every business function, e-procurement requires strategic thinking and preparation to ensure your process is efficient, repeatable, and as risk-free as possible. While you cannot eliminate all potential risks from your procedure, you and your team can brainstorm contingency plans for potential barriers that can arise. Some common risks that organizations encounter include: 

• Dark purchasing — The procurement process should be well-defined and established in your organization. When you spend outside of these set parameters, you are partaking in dark purchasing. Organizations that frequently utilize dark purchasing open the door to potential redundant or unnecessary purchases. If you don’t take the time to create a system that encompasses all kinds of spending within your organization, you can face increased financial risks. 

• Long cycle — One issue many organizations face is that the actual lead time and procurement cycle are usually longer than anticipated or scheduled. Organizations need to have plans in place to help mitigate the risk incurred from a lengthy cycle. Common delays include:
  • Preparing technical specifications
  • Creating the terms of reference 
  • Making the statement of work
  • Failure to start the process promptly
  • Extensions in the timeline to submit proposals
  • Setbacks in contract negotiations

• Inaccurate data — The importance of real-time and accurate data cannot be overstated. To work productively and strategically, leaders need access to insightful and verifiable data. When organizations make decisions based on inaccurate information, companies open the door to risks including:
  • Inventory shortages
  • Excess inventory
  • Procurement challenges that impact your bottom line. 

• Supplier relationship troubles — For your procurement process to work smoothly, you need to manage your supplier relationships. Without proper oversight and support, your procurement process can quickly become complicated. When you put in the effort to create positive supplier experiences, you help to limit the risk incurred in your procurement practices. 

Where does Tradeshift fit in?

Tradeshift Buy helps you to shift your procurement strategies to a digital and easy-to-use platform. Tradeshift’s E-Procurement network makes purchasing easy, granting buyers access to a wide range of suppliers for products and services. Your organization can fill your supply chain marketplace with offers from your chosen vendors, enabling you to sort, evaluate, and make purchasing decisions in real-time with insightful information. This makes purchasing for your teams simple — your employees can order supplies as easily as they would buy things for their own homes. 

Tradeshift’s B2B supply chain network gives buyers access to thousands of products and offers with negotiated pricing. On the Tradeshift network, you can rest assured that all our suppliers are pre-vetted. With the availability to add suppliers as you go, you can quickly expand your market and customize your supply chain efforts. Digital transformation has allowed organizations greater control and management of their company expenses. This digitization enables organizations to push P2P from simple transaction processing to a strategic business capability.

Tradeshift Buy isn’t only convenient for your procurement teams. It also helps you to be more strategic. By automating purchase requests and invoices, our digital tool reduces tedious work, giving your employees more time to act strategically within their roles. And, with Tradeshift Engage, you can generate real value for your suppliers with onboarding and supplier relationship management tools, creating a robust, resilient procurement process. Our Engage platform consolidates all your information and communication into one place, creating an easily accessible and integrated experience that suppliers love. 

Tradeshift is in the business of providing solutions to your supply chain’s needs. With our user-friendly and digital platforms, suppliers and buyers can create a more transparent, reliable, and profitable relationship than ever before. Our team of experts is continuously looking for ways to improve our users’ experience and support the areas where your supply chains struggle the most.

For more information about how we can help you make a positive shift in your e-procurement and supply chain processes, reach out to one of our specialists or sign up for a demo now.