E-procurement

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E-procurement (Electronic Procurement) is the business-to-business purchase and sale of supplies and services through the Internet as well as other information and networking systems, such as electronic data interchange (EDI) and Enterprise Resource Planning (ERP). An important part of many B2B sites, e-procurement is also sometimes referred to by other terms, such as supplier exchange. Typically, e-procurement Web sites allow qualified and registered users to look for buyers or sellers of goods and services. Depending on the approach, buyers or sellers may specify prices or invite bids. Transactions can be initiated and completed. Ongoing purchases may qualify customers for volume discounts or special offers. E-procurement software may make it possible to automate some buying and selling. Companies participating expect to be able to control parts inventories more effectively, reduce purchasing agent overhead, and improve manufacturing cycles. E-procurement is expected to be integrated with the trend toward computerized supply chain management.

There are six main types of e-procurement:

  • Web-based ERP (Electronic Resource Planning): Creating and approving purchasing requisitions, placing purchase orders and receiving goods and services by using a software system based on Internet technology.
  • e-MRO (Maintenance, Repair and Operating): The same as web-based ERP except that the goods and services ordered are non-product related MRO supplies.
  • e-sourcing: Identifying new suppliers for a specific category of purchasing requirements using Internet technology.
  • e-tendering: Sending requests for information and prices to suppliers and receiving the responses of suppliers using Internet technology.
  • e-reverse auctioning: Using Internet technology to buy goods and services from a number of known or unknown suppliers.
  • e-informing: Gathering and distributing purchasing information both from and to internal and external parties using Internet technology.

Vocabulary for e-procurement:

  • RFI: request for Information.
  • RFP: request for Proposal
  • RFQ: request for Quotation
  • RFx: the above three together.
  • eRFx: software for managing RFx projects.

[edit] What is needed for e-procurement

You will need a software application. They contain usually supplier management, complex auction system, automatic notification system etc. eBay's tools for its sellers has similar features.

[edit] Check list to evaluate the applicability of tender/auctions

  • Number of potential suppliers? 1 <== tender auction ==> many
  • Number of qualified suppliers? 1 <== tender auction ==> many
  • Market transparency? no <== tender auction ==> high
  • Market situation/selling situation? monopoly <== tender auction ==> polypoly
  • Buying share? very low <== tender auction ==> very high
  • Price dynamic? stable prices <== tender auction ==> dynamic prices
  • Importance of price? low <== tender auction ==> high
  • Binding acceptance of bid? no <== tender auction ==> yes
  • Attractiveness for bidder? small <== tender auction ==> huge
  • Number of negotiations? 1 <== tender auction ==> many
  • Product specification? hardly feasible <== tender auction ==> detailed
  • Number of evaluated criteria? many <== tender auction ==> 1
  • Acceptance on supplier side? no <== tender auction ==> yes
  • Acceptance on growers side? yes <== tender auction ==> no
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