Sales and purchases are a major part of the business. As the core of a business, sales and purchases continue to grow with the times. One of them is the use of sales software to increase productivity so that business processes are easier. In addition to sales, e-procurement is also an equally important option.
Procurement holds an important role in determining your business’s success. However, do you realize that the conventional procurement process has a lot of weaknesses that significantly affect your business? However, worry not, because e-procurement is nowhere to solve the issues. As a part of technology innovation, the function of e-procurement is to simplify the procurement process.
Let’s find out more about the e-procurement system and learn its benefits!
Table of Contents
Before we explore more about e-procurement, we may want to look back to recognize what procurement is. Procurement is an activity where a company purchases goods that will be used for the production process. This activity consists of several processes such as making inquiries, choosing the vendor, establishing purchasing terms, selecting the goods, making contracts, and making payment. With a system that is still conventional, you will find it difficult to do various things because everything is still manual. The conventional procurement process requires coordination from a lot of people to handle piles of documents such as purchase orders, invoices, contracts, delivery, receiving, and many more.
That type of procurement, whether you realize it or not, has weaknesses that hamper your business efficiency. Here are some of them:
- The amount of piled documents
- Repetitive order
- The number of suppliers involved in the procurement
- Inventory data inaccuracy due to human error
- Neglected processes due to tendency of working on the emergency tasks
- The validating process requires a lot of people from different levels
- Prolonged execution time
If you experience those matters while running the procurement for your business, maybe it’s time to switch to e-procurement.
How Does E-Procurement Work?
E-Procurement is a procurement process by e-procurement software. The system in the process computerizes all the procurement processes. Therefore, by minimizing the use of paper, e-procurement can reduce any error too. In business, e-procurement is more than just online shopping. The e-procurement software automates all functions, procedures, and policies used by a company to manage the procurement process. In addition, this system also inputs all data into one database to make it more efficient.
Here are how e-procurement facilitates the procurement process:
Identifying the Inquiries
The first step of the procurement process identifies what the goods required are. E-procurement will centralize this process in one database. Hence, purchasing manager will have a clear insight of the remaining inventory, what to purchase, and determining budget. The conventional procurement process will burn daylight because identifying the needs will require paper-based sheet calculation. The risk of not inputting the precise data is real.
In this step, validating means verifying in what vendors or suppliers the inventory will be purchased. E-procurement streamlines and accelerates this process. It will proceed with the documents to be validated by the persons in charge. The conventional procurement process usually consumes an abundant amount of paper containing documents that are needed to be signed. It often takes days because sometimes the persons in charge are not available for quite a time.
The system in e-procurement enables the ordering process. This system will automatically order the inquiries to the supplier or the vendors, according to the list of required inventory. As a businessman, you should try to use an inventory management system that functions to optimize inventory levels, monitor the stock transfer process, estimate inventory requirements, and effectively manage stock at each location. If you do this process manually, you have to send the order to the vendors or suppliers one by one. Before ordering, you also need to check the material of the goods so that there are no mistakes. Also, if there is no integration between the procurement process and other functions, it will cause inefficiency.
After completing the ordering, e-procurement allows the manager to track the inventory to acknowledge in what process they are. It is possible because the system presents real-time data from the suppliers or vendors. With real-time data from suppliers, you can check their whereabouts in real-time. Meanwhile, the conventional procurement process can only make the manager wait in uncertainty concerning the inventory order. With conventional procurement, you need to visit or ask the supplier directly about the goods.
This last step of procurement can also be completed in the system because it also integrates the accounting function. At the same time, the supplier can create a valid invoice in the system. With digital invoices, you will have no trouble finding or needing them. Conventional procurement only allows the supplier to hand the valid invoice in person and this is very inefficient. The possibility of losing the invoice is there and it will impede your business.
Because the system records all the procurement activities, reporting will be much easier compared to the traditional procurement process. Reports will be directly connected to the system and can be accessed by other employees for analysis. All the data in the database can automatically generate analytical reports automatically. The system uses the record regarding the employees, department, and supplier involved in the procurement process maximally to create an assessment. This will facilitate the assessment of the parties.
The Benefits of E-Procurement for Your Company
With this stream-line procurement process, you can gain a profitable advantage from it. First, your procurement system is now automatic. You don’t have to do a repetitive purchase order. Your company can invest the time to build a strategy that can boost your business revenue. You can also save procurement costs by limiting paper usage. In other words, you implement an eco-friendly procurement process. You can control the quality of your purchased inventory because every descriptive information can be seen in the catalog. It is possible because the software enables the procurement manager to do research about the specification and quality of the goods.
E-procurement is an innovation for a paper-based conventional procurement process. By applying e-procurement software, you can organize all procurement processes from identifying to reporting much easier and faster. With this, you can manage costs efficiently. You can also submit purchases and get the best offers from suppliers. Apart from that, you can also track your orders in real-time.
In addition to the use of procurement software, you can also integrate all aspects of your business through an ERP system. This system allows you to simplify business processes ranging from buying, selling, bookkeeping, inventory, and much more. The selection of reliable software and integrated with other business functions will facilitate effective and optimal procurement process management.