When it comes to doing business, there’s one key element at the heart of operations: the procurement process. But did you know that conventional procurement processes are often fraught with bottlenecks and inefficiencies? Fortunately, Singapore has emerged as a pioneer in embracing innovative solutions to enhance business practices, and one such solution is e-procurement.
In the dynamic business landscape of Singapore, e-procurement has become a digital revolution that refines and strengthens business measures. By leveraging e-procurement, companies in Singapore have witnessed not only more efficient cost management but also a transformation in the entire procurement process, making it smoother and more organized. This forward-thinking approach aligns with Singapore’s commitment to staying at the forefront of technological advancements and ensuring the competitiveness of its business ecosystem.
Let’s find out more about the e-procurement system and learn its benefits!
Key Takeaways
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Table of Content:
Table of Content
Difference between E-Procurement and Conventional Procurement
Procurement is a conventional purchasing process that is usually carried out by almost all companies. It involves standard activities such as vendor selection, price negotiation, and purchasing goods or services. In this scheme, communication can occur through various means, such as in-person meetings, phone calls, or even instant messaging apps like WhatsApp.
In conventional procurement, documentation is often in the form of physical paper, and transaction records may be kept in the form of manual archives. Although considered less efficient when compared to modern digital methods, conventional procurement has the advantage of direct and personal interaction between buyers and vendors, allowing for the formation of trust-oriented business relationships.
E-procurement, on the other hand, is a modern approach to digital purchasing that is part of the broader procurement ERP framework. It is not just an online transaction, but an integrated system from start to finish. Using an e-procurement portal within a procurement ERP system, tender negotiations are conducted through a dedicated portal, ensuring security and transparency.
Usually, big brands with extensive vendor networks are the ones that require best e-procurement system. The reason? More complicated processes require a more integrated system.
While smaller companies often choose not to use e-procurement due to vendor limitations and communication habits via Whatsapp or phone, with e-procurement, all processes, from submission, acceptance, to vendor maintenance, are guaranteed to be more structured and centralized in one portal and system. The entire process becomes more efficient and does not require manual intervention.
What are the Disadvantages of Conventional Procurement?
There are disadvantages to offline or conventional procurement that can directly impact the sustainability of your wholesale business. The points below are factors that hinder the optimization of the procurement process:
- Too many paper documents
- Repeated orders
- The number of suppliers that need to be organized
- Inaccurate inventory data due to employee error
- Potentially overlooked process is prioritizing work that is considered an emergency
- Requires approval from various parties
- Long implementation time
If you experience these things when doing the procurement process, then it is time for you to switch and implement an e-procurement system in your wholesale business.
E-procurement system or e procurement system is the latest technology to digitize the procurement process from traditional to modern. Therefore, the e-procurement system makes it easier for companies when procuring goods so that the results are more optimal.
How does E-Procurement Work?
E-procurement is a procurement process that is facilitated by an e-procurement system. The system in this software can computerize all processes in procurement.
Thus, reducing the use of paper will improve the procurement process and minimize errors. This system also inputs all data into one database to make it more efficient. The company will also not need to check the number of goods that arrive because it can be done through e-procurement.
Some of the main components of e-procurement include:
- e-sourcing: defining needs and pre-qualifying potential suppliers;
- e-tendering: request for information, proposals, and bids;
- e-auctioning: supplier evaluation, negotiation, and contract management;
- e-ordering and payment: creation of requisitions and purchase orders, including the utilization of purchase order OCR for accuracy and receipt of ordered goods; and
- analytics: viewing spend and taking corrective action as needed.
In the wholesale business, e-procurement goes beyond online shopping. It automates all the functions, procedures, and policies companies use to manage the procurement process.
This system has the advantage of increasing productivity and saving costs. In addition, many people have access to the system, making it more effective due to transparency.
Procurement Stages Assisted by E-Procurement
E-procurement is a procurement process using e-procurement software. The system computerizes all procurement processes. Therefore, by minimizing the use of paper, e-procurement can also reduce errors.
In business, e-procurement is more than just online shopping. E-procurement software automates all functions, procedures, and policies used by a company to manage the procurement process. This system also inputs all data into one database to make it more efficient.
Here are how e-procurement facilitates the retail 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, the purchasing manager will have a clear insight into the remaining inventory, what to purchase, and determine the 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.
Validating
In this step, validating means verifying from 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 need to be signed. It often takes days because sometimes the persons in charge are not available for quite a time.
Ordering
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.
Tracking
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.
Purchasing
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.
Reporting
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.
Key Features of E-Procurement
- E-Procurement for Online Tenders and RFQ/ITQ: Easily manage tenders and requests for quotations online. Ensures a fast, transparent and efficient process.
- OCR for RFQ: Optical Character Recognition (OCR) technology makes it easy to recognize and extract data from RFQ documents, speeding up the process and reducing manual errors.
- Automated Vendor Ratings: The system automatically rates vendors based on timeliness, price index (compared to other vendors), and order completeness.
- Periodic Vendor Assessment Review: Conduct regular reviews of vendor performance to ensure consistent quality standards.
- Cost Savings Tracking & Reports: Track cost efficiency and provide detailed reports on savings made.
- Budget Tracking & Limits per Purchase: Better manage and monitor budgets, and set budget limits for each purchase.
- Tender Comparison: Ability to compare multiple tenders in one platform, making analysis and decision making easier.
- Product Vendor Price List Filter: Make it easier for you to compare product prices from various vendors, ensuring you get the best deal.
- Service Work Order Tracking: Monitor every service ordered and ensure everything is in line with the agreement.
- In-depth Purchase Analysis: Get detailed information such as products frequently purchased, vendors frequently worked with, average price per product, and more.
With these features, e-procurement is not only a tool to facilitate procurement, but also a comprehensive business strategy.
The Benefits of E-Procurement for Your Company
With e-procurement processes, business activities will be easier. Your business will get many benefits. If wholesale businesses correctly choose an e-procurement software, they can feel the benefits of implementation of procurement software:
1. E-procurement efficiency in the process of ordering products from suppliers
Adopting procurement software means entering the digital era where creating and sending purchase orders no longer requires paper or time-consuming manual procedures. With procurement software, the entire process of ordering products can be done in just a few clicks, reducing human error and ensuring that orders are sent accurately to suppliers. This certainly increases efficiency and speeds up the procurement process.
2. E-Procurement improves product stock management
With the help of procurement software, you can not only monitor the amount of product stock on hand, but also predict when you should reorder based on sales trends and market demand. This ensures that you always have enough stock to meet customer demand without having to hoard unnecessary items.
3. Security of using E-Procurement in the payment process to suppliers
One of the main concerns of businesses is the security of transactions, especially when it comes to payments. With procurement software, you have added security when making transactions. Moreover, every payment made can be tracked and audited, providing full transparency and reducing the risk of fraud.
4. Budget control
Managing business finances is a complex task, but with procurement software, you can easily manage and monitor your budget. You will be notified if any expenditure is close to or exceeds the set budget, giving you the opportunity to make adjustments and avoid wastage.
5. Efficiency in financial report generation
Creating accurate financial reports is key to making informed decisions. Procurement software makes it easy to create, manage, and analyze financial reports in a more structured way. You can quickly see an overview of your business performance, identify areas that need improvement, and make decisions based on data rather than intuition.
Streamline your Procurement Process with HashMicro
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 best 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 integration with other business functions will facilitate effective and optimal procurement process management. Schedule a free demo now to experience the transformational power it brings to your operations.
FAQ About E-Procurement
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What is E-Procurement?
E-Procurement, short for electronic procurement, refers to the digitalization of the procurement process. It involves using technology and online platforms to manage and streamline tasks such as vendor selection, bidding, purchase orders, and payment transactions.
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How Does E-Procurement Differ from Traditional Procurement?
Traditional procurement involves manual, paper-based processes, while e-procurement leverages digital platforms to automate and centralize procurement activities. The key difference lies in the use of technology to enhance efficiency, transparency, and accuracy in the procurement lifecycle.
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What are the Main Components of an E-Procurement System?
E-Procurement systems typically include components such as e-sourcing, e-tendering, e-auctioning, e-ordering and payment, and analytics. These components work together to cover the entire procurement process, from identifying needs to analyzing spending patterns.
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What Types of Businesses Benefit Most from E-Procurement?
E-Procurement is particularly beneficial for businesses with extensive vendor networks and complex procurement processes. Large enterprises dealing with numerous suppliers, frequent transactions, and varied purchasing needs often find e-procurement systems more suitable. However, smaller businesses can also benefit from streamlined processes.
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How Does E-Procurement Enhance Security in Procurement Transactions?
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