Electronic procurement systems leverage technology to improve efficiency, transparency, and control in procurement processes. Each system has distinct functionalities that contribute to effective procurement. Below is an explanation of each system and its contribution:
(i) E-Requisitioning
Explanation:E-requisitioning is the electronic process of submitting purchase requests within an organization, replacing traditional paper-based requisition forms. Users can raise requisitions online, detailing the goods or services needed.
Contribution to Procurement Effectiveness:E-requisitioning accelerates the request process, reduces errors, and ensures standardization of data. It enables automatic routing for approvals, enforcing procurement policies and budget controls. This reduces processing time and improves transparency, allowing better tracking and auditability of requests.
Example:An employee submits an electronic requisition which is automatically routed to managers for approval, ensuring compliance and faster processing.
(ii) E-Catalogues
Explanation:E-catalogues are digital product listings maintained by suppliers or procurement departments. They provide a searchable and standardized database of goods and services available for purchase, often with pricing and technical details.
Contribution to Procurement Effectiveness:E-catalogues simplify ordering by giving users easy access to approved products, reducing the need for manual sourcing. They help control spending by limiting choices to pre-approved items and negotiated prices, supporting compliance and reducing maverick spending. The electronic format improves accuracy in ordering and reduces processing time.
Example:Procurement users select products directly from a supplier’s e-catalogue integrated into the procurement system, ensuring correct specifications and pricing.
(iii) E-Ordering
Explanation:E-ordering refers to the electronic placement of purchase orders via procurement software or online platforms. It replaces manual order creation and transmission methods.
Contribution to Procurement Effectiveness:E-ordering increases speed and accuracy of orders, reduces administrative costs, and provides real-time order status tracking. It minimizes errors caused by manual entry, improves communication with suppliers, and supports automatic matching of orders with invoices for smoother payment processes.
Example:Once a requisition is approved, the system generates an electronic purchase order sent directly to the supplier, reducing lead times.
(iv) E-Sourcing
Explanation:E-sourcing is the electronic process of identifying, evaluating, and selecting suppliers using online tools such as auctions, tendering portals, and supplier databases.
Contribution to Procurement Effectiveness:E-sourcing enhances transparency, widens supplier competition, and accelerates the tendering process. It reduces paperwork and streamlines supplier evaluation through standardized online submissions. Electronic auctions can drive competitive pricing and better contract terms. It also enables better documentation and audit trails.
Example:An organization uses an e-sourcing platform to conduct a reverse auction, encouraging suppliers to offer their best prices in real time.
(v) E-Payment
Explanation:E-payment systems facilitate electronic transfer of funds to suppliers, including methods such as electronic funds transfer (EFT), automated clearing house (ACH) payments, or procurement card payments.
Contribution to Procurement Effectiveness:E-payment increases the efficiency and security of supplier payments, reduces errors, and speeds up transaction processing. It strengthens supplier relationships through timely payments and reduces administrative overhead and costs associated with manual cheque processing. Automated payments also support better cash flow management and financial control.
Example:Invoices matched and approved in the procurement system are paid automatically through an integrated e-payment platform, ensuring prompt settlement.
Conclusion:
The integration of these five electronic procurement systems — e-requisitioning, e-catalogues, e-ordering, e-sourcing, and e-payment — delivers significant improvements in procurement efficiency, control, and transparency. Together, they streamline processes, reduce costs, enhance compliance, and improve supplier collaboration, making the procurement function more strategic and value-driven.
