Effective procurement is about selecting the right sources (Ward, 2016). The mos

Question

Effective procurement is about selecting the right sources (Ward, 2016). The most common measures of success are completing the project on time, on budget, and according the specifications. That cannot be achieved, however, without the effective procurement of project resources and materials. The author emphasizes strategies for choosing the right tenderers for project procurement needs.

What are the main functions of eProcurement?

How does eProcurement contribute to greater efficiency and transparency in purchasing goods and services?

What are the barriers to successful implementation of eProcurement?

What are the risks in each phase of adoption of eProcurement?

Explanation / Answer

E-procurement is the electronic purchase and sale of goods and services, usually through an Internet-based platform. It is a tool designed to improve the purchasing process transparency and efficiency and help companies capture savings. During the past few years purchasing has begun to play an even more important role in the strategy of a firm. In order to excel, managers have begun to rethink their competitive priorities and their value chain process. Increasing numbers of organizations have recognized that E-procurement holds the potential to transform their competitive performance for the better. E-procurement has made substantial technological advantages over the past few years and is expected to continue improving efficiency and productivity in the future all over the world.

What are the main functions of E-Procurement?
E-procurement systems are usually modular in nature, designed to cover all the stages of the procurement process of supply chain management. Therefore, one should find modules regarding vendor management, sourcing, delivery of the raw materials, and execution of purchase orders. Moreover, there might be other parts of the process for contract management, vendor rating analysis, reporting and few others. Due to E-procurement, the process of requesting estimates, issuing a purchase order and billing is handled electronically and in a centralized manner at the level of the two enterprises, which makes it possible to shorten the ordering and delivery times while simplifying the purchasing process. Therefore it is possible to cut cost and improve handling of purchasing matters.

How does E-Procurement contribute to greater efficiency and transparency in purchasing goods and services?

Some of the benefits of e-procurement process for greater efficiency are:

1) Reduced costs for the customers: E-procurement saves money by preventing duplicate spending, leveraging volume buying, and saving company costs associated with paper-based systems.

2) Transparent spending of company finance: Electronically conducting procurement process makes it easier to write and analyze reports in the procurement systems, so organization can ensure that the procurement procedures conform to their policies.

3) Increased productivity for all the concerned parties: Once the system is up and running, e-procurement is less time-consuming than any traditional procurement process. Organization’s records stored electronically makes it easier to submit reusable tenders. Meanwhile, use of templates means paperwork can be filled out more quickly by all the parties involved in the process.

4) Elimination of paperwork for the organizations: With e-procurement, everything can be saved and stored electronically. This not only saves companies from needing more space but it also makes the process of finding older tenders more simple, i.e. more efficient file management system.

5) Increased transaction speed: E-procurement is both time-saving and efficient. As the electronic handling of tasks supports and simplifies the purchasing process, transaction speed is increased. Also, because of e-enabled relationships with suppliers, procurement cycle times speed up. The e-procurement process eliminates unnecessary activities, allowing you to focus on more valuable tasks.

6) Standardized buying process throughout: When company have various departments making procurement decisions, there can be differences in what and how they purchase. Conducting purchasing electronically makes it easier for every department to conform to company procurement standards and get the process done centrally.

7) Reduced errors by people: Electronic paperwork is streamlined and thus easier to check for errors. Also, past orders are more easily referenced, meaning there’s a greater chance that the company can compare orders to ensure new ones are correct.

8) Improved process efficiency and compliance for the organizations: For companies with traditional procurement methods, the move to e-procurement is much needed to improve their purchasing process efficiency.

What are the barriers to successful implementation of E-Procurement?

We can clearly understand that an organization can use E-procurement to create strategic advantage through improved customer relationships resulting from greater business efficiency and better information access and flexibility. But, despite of the many benefits of e-procurement mentioned by corporates, the extent of e-procurement adoption in few countries is below expectations. This low rate of adoption is due to a comprehensive list of barriers for E-procurement implementation, such as risk, uncertainty from suppliers, cultural differences, staff resistance to change, catalogue content readiness, lack of management, support high costs of implementation, lack of technical expertise, security of transactions, lack of common technology standards, time needed for the implementation process, resistance to change, lack of skilled personnel, complicated procedures and extended relationships, internal & external compatibility, getting suppliers to update & control the e-catalogs and to monitor them, etc. The barriers discussed above can be grouped into four main categories namely, management barriers, organizational barriers, IT barriers and user barriers accordingly.

What are the risks in each phase of adoption of E-Procurement?

There are numerous obstacles associated with the implementation of E-procurement projects. In some cases the benefits of implementing an e-procurement solution have been hard to evaluate. Some researchers propose that companies should use various measuring methods in order to fully track and understand how benefits are distributed according to the level and area of their impact. Even though the benefits of adopting e-procurement solutions can be significant, there are some internal and external challenges and risks related to the adoption of e-procurement. Some of the greatest risks of adopting and implementing e-procurement include staff preferences for legacy systems, issues in change management, demand for a user-friendly environment, lack of time permitted to learn the new process, perceived loss of control, and increased technological expenses.

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