Why your business should use e-procurement

The benefits accrue not just at the top management or the procurement function level, but at all levels of your organization


E-procurement is the purchase and sale of products and services through online channels. In Pakistan, the proliferation of e-commerce sites has made internet based sales and purchases at a business to consumer (B2C) level common. However, online procurement, or e-procurement, remains less common among business to business transactions.

In Khareed’s discussions with clients, we have heard a familiar refrain among procurement professionals when discussing the advantages and disadvantages of e-procurement solutions. Most procurement professionals question how complex products can be sourced or ordered online. Others wonder what it will benefit them, if they are continuing to source and purchase from their existing vendors.

The reality is that e-procurement is not as dramatically a new a way of doing things as most people might believe. It is simply a more structured and simplified way of submitting procurement requisitions and receiving and processing the price quotes against these. Even companies who have ERP systems with purchasing modules installed, tend to submit their requisitions manually–either by email or by phone. Price quotes are also received in hard form and manually compared and entered into the ERP system at the time a purchase order is being created.

A good e-procurement solution can heavily reduce this manual work. Khareed’s Prism e-Procurement solution, for example, not only enables buyers to directly connect with vendors, but allows the vendors to submit their quotations into the system so comparative statements can be auto-generated. For products and supplies where the model and item specifications are already known, an e-procurement solution can completely reduce the manual sourcing and processing component, saving the company valuable time and resources.

The benefits of using e-procurement are obvious for the procurement professionals: The procure to order cycle is substantially reduced, physical visits to the market are curtailed, and the tedious task of comparing price quotes and filing documents is made dramatically simpler and automated.

For top management, there are aggregate cost savings as procurement efficiency and team productivity increases. Furthermore, there are transparency benefits to receiving at least 3 bids for all requisitions, both large and small ticket, as well as having all received quotations centralized in a searchable database.

But the benefits for the rest of the company are numerous as well. Technical and production teams can search, find, and initiate requisitions for the products and items they need without having to wait for someone in procurement to do it for them. The embedded approval workflows allow complete accountability and tracking, enabling companies to track where procurement bottlenecks are occurring. The institutional knowledge that gets compiled helps companies increase visibility into their purchase cycles and inventory to minimize the need for emergency purchases.

Correct implementation of the right type of e-procurement solution can yield large dividends to a company at all levels by saving time, minimizing down time, reducing unproductive time, and ultimately saving money.