Early E-Procurement Systems
If your business is similar to most other businesses, you’ve at least tried to automate the process of procurement. In the beginning this probably involved using paper orders and requisitions. All you were trying to do was to purchase something that you required.
Regardless if it was some sophisticated computer equipment or something as simple as a basic steno pad, it required you to located the best supplier, check their pricing, collect all of the required information about the product information, fill out the purchase requisition on paper, make copies in triplicate, send the paper copies to three different people, wait a number of days before the requisition was approved and a buy the order, telephone of fax in the and wait for the delivery of your order not knowing when you will receive the order or if the supplier will ship you the right order. Lastly, you will need to deal with payables and receiving.
There is no doubt that a procurement process that is manual can be very difficult for both the people who managed them and for the people who had to follow them. Completing the paper requisitions and collecting detailed product information is frustrating and consumes a considerable amount of time for the people who have to do it. The delays and the resources that are necessary that result from routing requisitions manually and placing orders will not only wreak havoc with your business’s effectiveness but is also frustrating. Managing all of the low value, high-volume transactions on paper is costly and cumbersome for any purchasing department.
E-procurement then became available which included automated procurement transactions between supplier and purchasing businesses that allows inter business communication such as invoices, receipts, shipping notices, order acknowledgements, and orders that can be electronically managed. This system is very successful for many businesses. In accordance with one, using a process for procurement that is automated can cause a 60% reduction in cost to approximately $23 for each order. If you consider that large to medium businesses generate such a tremendous number of orders each year that each reduction in the cost of each order can result in businesses realizing significant savings.
Once the requisitioning process has been moved to the Internet, the automated internal buying process should eliminate the requirement for the business to look outside the system for suppliers’ service and product information. The first e-procurement systems required the businesses to order supplies by entering product and supplier information manually into a form on the Internet. But, completing the requisitions on the Internet had its disadvantages. The businesses still had to locate preferred or authorized suppliers, and they frequently had to find product details that were often obscure which were needed to complete the complemented requisition forms. This results in businesses purchasing from suppliers that were frequently entering information that was incorrect and skipping field that are required and who aren’t preferred suppliers. In some cases, the business would simply forgo the system altogether since it was easier and faster to simply call in their order directly on the telephone to the desired supplier.
Many businesses determined that they could save money, effort, and time with the creation of an electronic catalog of primary suppliers and a master list of suppliers. This process was relatively easy to use and the business that chose the goods they required directly from a catalog. Since the products and suppliers were preapproved by the organization doing the procurement, the business could purchase with confidence and the procurement didn’t have to be involved in high volume and low value purchases. There were considerably less errors because the requisitions were populated with data from the product being directly taken from an electronic catalog. Also, since the content from the supplier makes the procurement system easier to use, a smaller number of businesses purchased outside the system.
Click here for more information about e-procurement and china mobiles. Author: James Keyes
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