Nowadays, lots of companies swith to use e-procurement in their business despite of using manual procurement. Many companies believe that e-procurement can increase profitablity and reduce costs. E-procurement is the business-to-business or business-to-consumer or Business-to-government purchase and sale of supplies and services through the Internet as well as other information and networking systems, such as Electronic Data Interchange and Enterprise Resource Planning.
Typically, e-procurement Web sites allow qualified and registered users to look for buyers or sellers of goods and services. Depending on the approach, buyers or sellers may specify costs or invite bids. Transactions can be initiated and completed. Ongoing purchases may qualify customers for volume discounts or special offers. E-procurement software may make it possible to automate some buying and selling. Companies participating expect to be able to control parts inventories more effectively, reduce purchasing agent overhead, and improve manufacturing cycles. E-procurement is expected to be integrated with the trend toward computerized supply chain management.
E-procurement is done with a software application that includes features for supplier management and complex auctions. The new generation of E-Procurement is now on-demand or a software-as-a-service.
According to Baily, there are five rights of e-Procurement that can reduce costs and increase profitability, which are:
1. At the right price.
By conducting an e-procurement, company are able to have an idea for a right price. Let says, PT Telkom conducting an e-procurement for IT products. By having this event, PT Telkom should be able to look around which price is suitable for their budget and big possibilities that PT Telkom able to get the specific products with a cheap price. Companies who join the e-procurement of PT Telkom are enthusiatic bidding to win the procurement. The lowest bidder will win the procurement. Of course, PT Telkom is benefiting from this. That's one of the point that prove e-procurement will reduce cost.
2. Delivered at the right time.
Another benefit from e-procurement is that PT telkom will have their good on time. Joining an e-procurement especially from a big companies will have a quite big impact for the winning supplier. Its like catching the "BIg Fish" so it is important for them to deliver the good at the right time.
3. Are of the right quality.
For PT Telkom, e-procurement is one way to ensure that the goods that they want to buy is in good quality. Joining an e-procurement from a big companies is a gold opportunity so for sure these supplier doesnt want to ruin the opportunity by selling a poor quality products. Besides that, PT Telkom have an opportunity to select the suppliers before deciding these supplier can join the e-procurement. By doing this, PT Telkom can make sure the goods that they will receive will in a good shape and quality.Having a good quality will reduce cost because these goods can be used for a long time.
4. Of the right quantity.
Sometimes when we order a certain products from our supplier, they make errors in the quantity. If this happen, each parties will blame each other. e-procurement will prevent this error to occur. By avoiding this types of error, company can reduce cost and also at the end increase profitability.
5. From the right source.
Conducting an e-procurement will enable company to make sure that the goods they're about to order come from the right source. Usually when come to purchasing, companies especially those big companies have a strict policies to buy goods only from a reliable sources. Sometimes, those big companies saying that they dont mind to pay a little bit higher than usual but they know where their product are coming from rather than getting a cheaper price but they dont know where it come from. This happen because big companies will have an auditing team that will checking and clarify all the purchasing documents including checking the background of the stores that we're buying those goods from.
For me, these five rights of e-procurement are proven to reduce cost and increase profitablity for a company. Also, by having an e-procurement, companies will have paperless documentation and also it will be good for the environment. Saving our earth rite? :)
