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The way people live and work has evolved greatly in recent years. It’s no wonder the popularity of e-procurement and digital procurement has soared as an alternative to traditional procurement. But how do you start with an e-procurement service, and how does the way it’s used differ between sectors? What’s more, are there any good e-procurement tools out there to make life easier? Read on to get the answers to all these questions and more.
In this guide:
E-procurement is the process by which businesses purchase products and services from other businesses over the internet. It’s rooted in traditional procurement, which has helped to connect businesses to the right goods and services for centuries.
E-procurement is the digital equivalent of that. It enables a business to purchase items from a supplier on better terms than they might get through a consumer-facing e-commerce solution. These systems are closed networks to which a supplier needs an invite to take part in the digital procurement.
The end-to-end process of purchasing goods or services from a third-party supplier
Incorporates identifying needs, sourcing suppliers, putting out tenders and more
Aims to streamline purchasing and establish good relationships with suppliers
The concept of e-procurement has grown as the internet and digital technologies have increased their impact on peoples’ everyday lives — and because of changes in the way people do business. This growth was super-charged as the COVID-19 pandemic triggered a huge shift towards remote working from March 2020 onwards.
Increasingly, organisations are prioritising support for remote work and diversifying supply chains to reduce costs and streamline efficiencies.
Some 85% of business buyers said the pandemic spurred their organisations to handle more of their procurement online.
— Amazon Business
E-procurement can work for organisations of all sizes and all sectors. According to a recent Amazon Business survey, 96% of buyers plan to continue leveraging e-procurement long term2. Furthermore, 1 in 3 expect their organisation to make at least half of their purchases online this year.
Let’s look at e-procurement in government, education, healthcare, and commercial businesses to get an idea for how it’s used across different industries.
Ultimately, the buyer organizations that don’t maximize e-procurement technologies will face significant operational challenges that diminish efficiency and waste precious budget
— B2B Commerce In Evolution report, Amazon Business
The broad scope of government business demands it procures goods and services across many areas of the public sector — from hospitals, schools, and the police force. Because government procurement uses public money, spending is tightly regulated3.
The Government provides a digital marketplace for public sector e-procurement support - In-tend Ltd. The platform provides multiple different services and procedures to support public sector users in their e-procurement processes. These include:
40% of government buyers said increasing efficiency within the procurement department was a top priority this year.
— Amazon Business
The Department for Education (DfE) manages procurement for early years education, schools, and universities. Procurement in the education sector is all managed through the e tendering portal, Jaggaer.
The pandemic ushered in an era of remote learning with around 60% of key stage education dependent on parent schooling for the first nine months of 20204. After all schools and education centres were closed (with only some exceptions) in March, educators had to be flexible about what they taught and where.
‘Digital purchasing supports both online and traditional educational institutions by providing easy access to supplies that can be shipped to multiple locations— campuses, schools, and directly to students.’
— Rob Green, Amazon Business
Healthcare is the biggest sector of public sector procurement. NHS procurement faces consistent high demand for its services and, therefore, essential medical goods. Healthcare itself is just one of the services that the NHS procures for – and the main one at that. For example, services include:
As the NHS is a large public-funded network or multiple sectors, Clinical Commissioning Groups (CCGs) are in charge of procuring local services for individual areas. Goods, on the other hand, are often procured in bulk and distributed to health service organisations and providers by the NHS Supply Chain.
The number one pain point for healthcare buyers is gaining access to suppliers that meet their business needs.
— Amazon Business
Commercial businesses have always needed supplies and services to operate. From stationery and staplers to cleaners and cloud solutions. The procurement of such goods goes back to the beginnings of business. For decades, these processes have centred on a desire to save money and boost efficiency.
But, in recent years, priorities have shifted. Of course, any business still wants to save money and work more efficiently — but the pandemic brought big changes. For example, in April 2020, just a month after the first lockdown was announced, 46.6% of people spent some time working from home6. Furthermore, this number had only dropped slightly by January 2022 – with 36% of employed adults saying they’d worked from home at least once over the last week7.
The adoption of remote and hybrid working meant commercial businesses had to change their procurement strategy – now many workers are not constrained to a physical office space.
‘We are coming up with new and innovative ways to empower commercial businesses to reinvest in their communities and support small and minority-owned businesses.’
— Petra Schindler-Carter, Amazon Business
E-procurement make it easier for businesses to get the products and services they need. Like traditional procurement, it works by creating a closed network to pair buyers with suppliers.
An e-procurement system brings together buyers and suppliers and makes it easy for them to do business.
But not everyone can purchase from an e procurement supplier. You must be a registered business to join a network and its website. And by creating an exclusive network, the e procurement provider can streamline the procurement process.
E-procurement simplifies areas such as:
‘Procurement leaders can drive efficiencies across their organizations by integrating digital solutions such as purchase order and invoice storage and sharing, approval workflows, expense management, and enhanced security protocols across departments.’
— B2B Commerce In Evolution report, Amazon Business
The e-procurement process covers several types and various stages — much the same as traditional procurement. Here we have captured the main options for and potential stages of digital procurement.
Establishing what the buyer requires and scoping out potential suppliers with a view to pre-qualifying.
The e-tender process is the formal tendering stages. RFI (request for information), followed by the RFP (request for proposal) and then seeking quotes.
An e-auction is a digital platform which enables bidders to compete in real-time to win a project.
The requisition stage, where a formal request is made to the supplier for its services, and purchase orders are raised.
The main functions of e-procurement for business include:
Amazon Business e-procurement tools and software can help you to reshape your buying process. Explore some of the key benefits of this solution.
Purchase smarter and simpler with the power of Amazon for your business. Explore bulk volumes. Easily add new users. Ensure every buyer gets what they need.
Get savvy about your spending with Spend Intelligence from Amazon Business. Gain insights to improve efficiency and better manage cash flow with these powerful tools.
Grow faster, smarter by leveraging the power of Amazon Business to expand your operational capabilities.
E-procurement comes with some strong advantages, but it’s not the ideal solution for every type of organisation. Here are some potential disadvantages to consider:
Amazon Business can help you to streamline your e-procurement process and make it run more efficiently. With deep integration with existing procurement platforms, Amazon Business gives you the opportunity to run procurement from one platform, enhanced and powered by the suite of Amazon tools.
To integrate your e procurement with Amazon Business you need to set up Punchout. With Punchout you can:
Setting up Punchout Integration in Amazon Business
‘We didn’t compromise our approval system, didn’t reinvent the wheel, or drastically change any of our existing systems. Instead, we seamlessly integrated Amazon Business with our purchase-to-pay ecosystem to order what we need in a scalable way.’
— Nassim Kefi, Procurement Advisor, ExxonMobil
When talking about e-procurement there’s a lot of terminology to get your head around. Here are some of the key terms you might encounter:
Businesses of all sizes and across all sectors use e-procurement. Large commercial companies and small-to-medium businesses all require goods and services, albeit to a different scale, for their business to function. The same too for government departments, healthcare providers, and non-profit organisations such as charities.
There are several e-procurement models. These include e-tendering, which is all about sourcing suitable providers and then submitting RFIs (request for information) and RFPs (request for proposal). Another option is e-auctioning, where a web platform enables potential suppliers to bid on a project in real time.
E-commerce is how everyday people shop online. There are no limits on who can buy, and the same sites and deals are available to everyone. E-procurement is a business-to-business service, where one business buys from another. With e-procurement, the purchase platform is closed, with access limited to those businesses who have been invited to take part.