E-Commerce Nexus

E-Procurement

E-procurement is generally referred to as the term for the electronic purchase of products or services by a company via digital networks. Modern information and communication technologies support the implementation of operational, tactical and strategic procurement tasks.

Modern electronic shopping processes the relationship and processes between the consumer and the supplier via Internet-accessible platforms. As a result, the following challenges can be overcome in an economic way, among others:

  • Routine work: The purchasing department uses a lot of time for recurring tasks, such. For example, by posting purchase requisitions, requesting supplier catalogs, and manually searching for suppliers and products. Studies estimate that nearly 70% of all shopping transactions fall into this area. For tasks with higher added value (such as the execution of tenders and supplier negotiations) there is accordingly little time.
  • Purchasing regulations: Up to one-third of all goods and services to be procured are purchased outside of formal procurement and thus outside of valid regulations. Despite negotiated framework agreements, employees often procure products from companies with which agreements have not been made in advance. In some cases, there are no procurement regulations at all, so that individual decisions are always made.
  • Acquisition time: The real procurement process requires enormous time resources, since the individual process steps take place with the addition of real employees. This applies both to the requirement formulation and the approval procedures, as well as to the order processing (eg supplier selection and incoming inspection). Studies have shown that real procurement processes can take up to nine days.
  • Procurement costs: The real procurement process is relatively expensive, which is not only due to the personnel employed, but is in particular due to the fact that about 50% of all orders are still paper-based. International studies have shown that the cost of procuring a $ 5 item and a $ 4,000 item is about the same, and the total cost of a single procurement process is around $ 70- $ 300.

Against the background of these problem areas, e-procurement should represent a significant improvement. To achieve this, however, specific requirements have to be met for the five building blocks “systems”, “processes”, “management”, “procurement”, “marketing” and “implementation”.