"I really like your new website look and all the valuable information. I had to send an email notification out earlier to our management in regards to our Contract Management tool through Enporion (a GEP Company). I referred back to your website and mirrored some of your website information in my memo. It was very helpful."
Leah Stratton, Buyer Analyst
UGI Utilities, Inc
E-procurement is the electronic implementation of the procurement cycle, not to be confused with e-sourcing, which is the electronic implementation of the sourcing cycle. It is the technology-enabled acquisition of goods and services required by an organization at the best value obtainable. The goal is the right product or service, at the right place, at the right time, at the right price in the most efficient manner possible.
Procurement is a cycle that consists of up to nine steps, depending on the value and complexity of the buy as well as organizational policies. At a minimum, it starts with need identification (and requisition), proceeds to the generation and delivery of a purchase order (possibly after one or more approvals), and results in the acceptance of an invoice and an eventual (e-) payment. For high dollar and / or more complex purchases, the process will usually include the generation of a goods-receipt or acceptance of labor hours through a time sheet or other mechanism; multi-way matching and reconciliation of the purchase order, goods receipt, and invoice; tax tracking; and rebate request preparation.
E-procurement is important because it saves time, money, and adds value to the traditional procurement process through improved compliance and added visibility:
Requisitioners can also be assured that each supplier in the system meets any regulatory and specification requirements. Finally, e-procurement institutes and enforces best practices that increase spend under management, the ultimate key to procurement savings.
Spend visibility is the best defense against maverick spending as well as the best offense you have to prevent information overload. Remember that negotiated savings are just that -- negotiated savings -- unless all orders are placed against the contract, all invoices paid at contracted rates, and all rebates and discounts collected. Furthermore, if users search the internet to find a product, they will be inundated with potential suppliers, many of which will not be good choices from a total cost of ownership viewpoint. Without good e-procurement systems and processes, chances are that maverick spend is rampant in an organization, even though it may not be the intent. Maverick spend not only eliminates the negotiated savings the sourcing team worked so hard to deliver, but could even add additional cost above and beyond previous costs.