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November 20, 2000

In A Perfect E-Procurement World

Illustration by Kerri Smith

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In an ideal world, E-procurement software makes life easier for buyers and suppliers alike. The software lets companies eliminate the paper requisition forms that employees typically use to order the things they need to do their jobs or to keep offices running, and it lets these users bypass searching through bulky paper catalogs. A well-managed deployment also should lighten the load of corporate buyers, who today must create and send purchase orders to suppliers and route subsequent invoices and receipts to the accounting department.

With E-procurement, employees use a Web browser to search an electronic catalog of products from approved vendors. The customized selection of products is paired with discount prices that have been negotiated with vendors based on volume contracts. An employee may even see a list of products he or she purchased in the past, enabling an automatic refill. If the order is within pre-defined approved spending limits, it's automatically sent online as a purchase order to the supplier, and to the employee's purchasing and accounting department. The whole process is designed to enforce on-contract purchasing, ensuring that the company takes advantage of the prices it has negotiated and eliminates inadvertent spending with other vendors.

When the supplier receives and fulfills the order, it routes an electronic invoice and receipts back to the customer. If the order requires additional approval or the supplier is unable to fill it, both the employee and his company are notified by the system.

If the process works as it should, buyers are freed to focus on creating strategic relationships with suppliers. Because they'll be able to analyze purchasing activity across the organization with data captured by the E-procurement system, buyers are equipped to gauge supplier performance; they can then eliminate less effective partners and negotiate better terms with new or existing suppliers. The tech nology can also let a company reduce the number of buyers on its purchasing staff.

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Illustration by Kerri Smith

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