E-Procurement Reduces Costs and Improves Value
Advances in web technology have opened a door of opportunity for procurement professionals. With an automated procurement system, including pay-to-procure, in-house, and stand-alone marketplaces, e-procurement provides a means for reducing costs, standardizing processes, and more. It’s a tactic being used by government agencies and companies in both private and public sectors.
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For governments, e-procurement provides efficiency and a competitive advantage among vendors. Reductions in cost and increases in quality are both possible with an e-procurement process. In addition, standardization of processes across vendors is easier to carry out using e-procurement systems and contributes to cost reductions.
There are also regulatory concerns, created to make sure that procurement is fair, safe, transparent, and non-discriminant. These guidelines are meant to enforce the procedures most likely to produce the most efficient and economic result while maintaining the public nature of the process.
E-procurement also enhances competition among suppliers, driving down costs while creating a competitive edge in terms of quality standards. Often, you’ll see websites set up with supplies from approved vendors. Specific departments or employees have access to certain product categories or to the resource as a whole. In this case, the job of the procurement manager is to ensure that vendors meet minimum quality standards and offer pricing at or below the amounts budgeted.
E-procurement systems are typically set up so that there’s a budgetary limit per department. It’s not possible for a department to over-spend because once the limit is reached the system will not permit further purchases.
Due to the automated nature of this process, it becomes simpler to control inventories, control purchasing overhead, and even integrate with computerized supply chain management. When implemented properly, an e-procurement system will manage all the interactions between the company and its critical vendors. Systems with built-in monitoring tools will streamline data analysis, providing the foundation for evaluating suppliers and refining vendor selection.
E-procurement is becoming increasingly common in the procurement field. There are clear benefits associated with moving to an e-procurement model, including efficiency and cost reduction—two key areas of focus for procurement leaders. [/show_to]
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