Breakout logo

What is E-Purchasing?


E-purchasing, also referred to as electronic procurement, is the automation and extension of manual buying and selling processes through electronic means.


Electronic Purchasing

Electronic Purchasing

Introduction: History of Electronic Purchasing

The idea of electronic purchasing was first put to paper by Oracle in the year 2001 when the multinational computer technology corporation published a white paper that explored the potential and reality of e-procurement.

But in actuality, it was the 1980s that marked the beginning of the electronic purchasing era with the creation of electronic data interchange (EDI).

Although by today’s standards, EDI would pale in comparison to the kind of software and tools available to companies and procurement officers, it was quite a boon for businesses at the time. EDI allowed companies and their suppliers to exchange purchase orders and invoices via call-forwarding networks and later on through mails.

Decades later, the adoption of e-procurement technology is only growing. More and more businesses are starting to see e-purchasing benefits and reaping all the rewards it brings.

But what exactly is electronic purchasing, and how does acquiring an e-purchasing software help businesses to flourish? This article will venture to discuss and talk about just that.

E-Procurement in Modern Context

What is E-Procurement
E-purchasing (previously referred to as electronic-procurement) is the purchasing and selling of supplies, services, equipment, and work digitally, alongside relevant information as well as networking systems.

These transactions occur between businesses to businesses, businesses to governments, and businesses to consumers. Procurement is the process that ensues right after the sourcing, and contract management and right before supplier relationship management, invoice management, and payment.

In its basic function, e-purchasing allows the interactions that occur between businesses, customers, and other value chain partners to become centralized as well as automated. This, in turn, boosts and advances the momentum, speed, and competence of procurement practices.

E-purchasing, at its core, allows chief procurement officers or official procurement departments within companies to create an outline of policies required for procuring goods and services for said companies. The ultimate goal of these processes is to acquire the best possible price while also providing the greatest value as and when required.

Benefits of E-Purchasing

Benefits of E-purchasing
E-purchasing benefits are, by and large, numerous in number. The process itself is designed to make things faster, simpler, and efficient for businesses and their relationship with their customers. Here’s a look at some of the benefits that are sure to ascertain your transition from a manual to an e-purchasing process. Also, read about common procurement risks and how to manage them.
  1. Reduced Spending
    With an e-procurement process in place, your company will be able to prevent duplicate spending, leverage volume buying, and save the usual costs incurred by investing in paper-based systems and tools.
  2. Transparent Spending
    Because all your transactions are conducted digitally, it becomes easy for your employees to create and examine reports on your procurement systems, thereby guaranteeing the fact that your e-purchasing processes are in alignment with the public as well as company policy.
  3. Increased Productivity
    Undoubtedly, e-purchasing is less time consuming than the traditional means of procurement. As a result of all records being stored digitally, you have the luxury of submitting tenders that are reusable. There is also the fact that templates make the paperwork aspect of procurement a cakewalk as they become far quicker and easier to fill out.
  4. Better Alignment of Business Objectives and Sourcing Processes
    Naturally, the sourcing activities must fall in line with the business objectives. Procurement strategic sourcing revolves around the alignment of business objectives and sourcing processes. As a result, organizations will deliver improved performances and greater efficiencies, along with minimal risks.
  5. Efficient Order Processing
    With ePOS (electronic point of sale) systems and digital invoicing, your company is afforded the luxury of automatic order processing, thereby making company transactions and business processes swift and economical.
  6. A Smoother Supply Chain
    With an e-procurement software in place, you, as well as your customers, only stand to gain because now your supply chain mechanisms are new and improved. Since your business is now allowed to connect to external supply chains, you will be able to allocate real-time data for the enterprise resource planning (ERP) and supply chain management needs of your business.
  7. Transactions are Quicker
    E-procurement exists to make the purchasing process simple, quick, and efficient. In that vein, the digital handling of tasks that were previously manual in nature (such as the task of carrying out transactions) has now become speedy and uncomplicated. Additionally, since the relationship between businesses and their suppliers has now extended to a digital one, procurement cycles have sped up.
  8. Not Much Room for Error
    Because e-purchasing involves paperwork that is digital, the usual errors that occur while printing no longer exists. Moreover, it is easier to check for errors since everything is electronic now. An added bonus is the fact that employees can reference past orders without a hitch. This way, comparing old and present orders to make sure that the new ones are correct becomes an easy task.

A Typical Procurement Cycle

Procurement Cycle

How does E-purchasing Work?

The central function of e-purchasing is to automate and streamline the entire procurement process. The idea is to automate everything that was previously manual in nature. This would include the exchanging of contracts between businesses, suppliers, governments, and customers.

Dispatching tender agreements and filling up questionnaires in relation to supplier onboarding are all part of the e-purchasing automation process. Furthermore, a few components of procurement and finance are also added into the mix in order to catalog the two.

Now let’s look at some of the key components that are crucial to the e-procurement process.
How does e-Purchasing work?
  1. Supplier Management
    Supplier management is the aspect of procurement that takes care of the data, communication, operations, and performance of a complete supplier database. Not only does supplier management provide information regarding the suppliers, but it also builds relationships between businesses and their subsequent suppliers. Supplier management can be broadly classified into two elements which are:
    • Supplier Relationship Management (SRM)
    • Supplier Information Management (SIM)
  2. Source-to-contract (S2C)
    S2Cs is the end-to-end process that businesses use to identify and source products and services. These sourcing pursuits are usually strategic in nature. S2Cs also enables companies to manage their contacts through the use of eAuctions and eTenders.
  3. Purchase to Pay (P2P)
    Another end-to-end process that allows businesses to order a particular product or service from a supplier is the purchase-to-pay process. The tool is also utilized in making payments for the services offered to companies by other businesses (B2B).
  4. Analytics
    Analytics is a guaranteed benefit for any organization that wishes to partake of its many tools and uses. And the same rule applies to the e-purchasing process as well. With analytic tools, businesses will be able to take stock of, analyze, and subsequently use corrective measures for spending. It is usually the procurement officers and finance professionals who undertake this aspect of the e-procurement process.

The Advantages of Using E-purchasing Software

Advantages of E-procurement
Now that you’ve understood everything that e-purchasing can do for you and your company, the next step that you would need to take would be to invest in suitable e-purchasing software.

Though the features and functions of each software vary, there are a few essential components that make for good e-purchasing software. Here’s a look at some of the advantages of acquiring such technology.
  • Not Prone to Human Error
    The usual delays that you might have witnessed in terms of high volume tasks, those that held low value, including the ones that were time-consuming, could all disappear because process automation eliminates all of these variables.
  • Automated Processes are Everything
    With e-purchasing software, you enter an era where creating standardized forms, designing workflows as well as internal processes are the norm. This way, not only are you getting rid of everything that is time-consuming and wasteful, but you’re also supporting and improvising upon all that makes for a better procurement experience.
  • Creating a Formidable Supply Chain
    With a robust e-purchasing software in place, your company is now ready to forge a strong and strategic bond with your suppliers. With state of the art vendor management tools, your relationship is collaborative, trusting, and long-standing. As such, you are able to create vendor portals, form punch-out catalogs, and manage other supplier tools that advance data collection, transparency, and new opportunities to collaborate.
  • Multifaceted Scalability
    If you’re a small business or enterprise, you no longer need a ton of money to invest in tools that could scale your business. With e-procurement software, you can start small and still expect to grow exponentially. All you need is a supplier you are able to bank and a reliable technology to boot. Getting software that can be seamlessly integrated into your existing system will not be a problem. This way, you’ll be taking care not to increase disruption while also making sure that the productivity level of your business is high while you are making the transition.
So that was our take on e-purchasing. Hope you found it informative.
Need help with Processes?
Talk to one of our process consultant for a free 30 minute session.

Schedule Free Session with a Process Consultant

Take control of your workflows for FREE.
Get 3 Months of the best workflow automation platform - totally free for upto 5 users!
*No Credit Card Required