E-procurement (electronic procurement, sometimes also known as supplier exchange) is the business-to-business or business-to-consumer or business-to-government purchase and sale of supplies, work, and services through the Internet as well as other information and networking systems, such as electronic data interchange and enterprise resource planning.
The e-procurement value chain consists of indent management, e-Informing, e-Tendering, e-Auctioning, vendor management, catalogue management, Purchase Order Integration, Order Status, Ship Notice, e-invoicing, e-payment, and contract management. Indent management is the workflow involved in the preparation of tenders. This part of the value chain is optional, with individual procuring departments defining their indenting process. In works procurement, administrative approval and technical sanction are obtained in electronic format. In goods procurement, indent generation activity is done online. The end result of the stage is taken as inputs for issuing the NIT.
Elements of e-procurement include request for information, request for proposal, request for quotation, RFx (the previous three together), and eRFx (software for managing RFx projects).
History
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It was first used by IBM in the year 2000, when the company launched its Replenishment Management System and Method, created by Mexican engineer Daniel DelfÃn, who was then the procurement director at IBM's largest production plant, and Alberto Wario, an IT programmer. The system was designed to solve IBM's complex procurement process for the plant in Guadalajara, Mexico, the largest IBM laptop producing plant in the World, with a production value of 1.6 billion dollars a year. Three years after the system was implemented, the production of the plant grew to 3.6 billion dollars, after which, the company used the system in Germany, and later sold using licenses to other companies around the World.
In the public sector
E-procurement in the public sector is emerging internationally. Hence, initiatives have been implemented in Ukraine, India, Singapore, Estonia, United Kingdom, United States, Malaysia, Indonesia, Australia, European Union.
Public sector organizations use e-procurement for contracts to achieve benefits such as increased efficiency and cost savings (faster and cheaper) in government procurement and improved transparency (to reduce corruption) in procurement services. E-procurement in the public sector has seen rapid growth in recent years. Act 590 of Louisiana's 2008 Regular Legislative Session requires political subdivisions to make provisions for the receipt of electronic bids.
E-procurement projects are often part of the country’s larger e-Government efforts to better serve its citizens and businesses in the digital economy. For example, Singapore’s GeBIZ was implemented as one of the programmes under its e-Government masterplan.
The Procurement G6 leads the use of e-procurement instruments in Public procurement.
One more example of successful incredible reform is shown by Ukraine Prozorro. It is a result of collaboration between Ukrainian government, business sector, and civil society. This system was developed by reputable international anti-corruption organization Transparency International Ukraine with a help of volunteers, NGOs, business community and state bodies of Ukraine, the WNISEF fund, the EBRD and other partners.
Vendors
This field is populated by two types of vendors: big enterprise resource planning (ERP) providers which offer e-procurement as one of their services, and the more affordable services focused specifically of e-procurement.
E-procurement systems
Implementing an e Procurement system benefits all levels of an organisation. E Procurement systems offer improved spend visibility and control and help finance officers match purchases with purchase orders, receipts and job tickets. An e-procurement system also manages tenders through a web site. This can be accessed anywhere globally and has greatly improved the accessibility of tenders. An example is the System for Acquisition Management (SAM), which on July 30, 2013 combined information from the former Central Contractor Registration and Online Representations and Certifications Application (ORCA), in the United States.
See also
- Cashless Transaction (India)
- Complex sales
- Construction bidding
- Contract A
- Proposal
- Reverse auction
- Tender notification
- Tendering
- Strategic sourcing
- Outsourcing
- Public eProcurement
- Purchase-to-pay
References
