A Complete Guide to E-Procurement

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:

• What is e-procurement?
  
• Who is e-procurement for?
  
• How does e-procurement work?
• What are the types of e-procurement?
• Functions of e-procurement
• Benefits of e-procurement
• Challenges of e-procurement
• How to get started with e-procurement
• E-procurement terminology
• E-procurement FAQs

What is e-procurement?

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. 

Key features of e-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. 

Who is e-procurement for?

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. 

How does e-procurement work?

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:

• Sourcing products
• Negotiating terms
• Making purchases
• Tracking orders
• Updating records

Functions of e-procurement

The main functions of e-procurement for business include:

• Automating laborious and time-consuming tasks to expand resource within your team
  
• Centralising procurement through one platform to improve transparency and access
• Live updates of procurement to enhance comms and simplify the process
• Aiding collaboration and boosting transparency across tracking and reporting
• Creating a space for multiple partners and stakeholders to simply and quickly negotiate deals

Challenges of e-procurement

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:

• Tech-dependent. E-procurement is a tech-based solution. If the tech fails, it can lead to issues around process and due diligence. Invest in a platform with a global reputation for stability and security to minimise risk.
• Engagement issues. Any new system brings process changes, which can be difficult to get your team on board with. Choose a platform that is known for its intuitiveness, user-friendly features, and comprehensive support.
• Complexity and integration. Not all systems are compatible with one another. And systems that fail to communicate are a big fail. Choose a platform that can be integrated with a wide range of procurement tools. 

How to get started with e-procurement

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.

Amazon Business Punchout

To integrate your e procurement with Amazon Business you need to set up Punchout. With Punchout you can:

• Simplify the buying experience
• Drive compliance with invoice integration
• Increase visibility into your spend

Setting up Punchout Integration in Amazon Business

1. Open Your Account dropdown
2. Select Business Settings
3. Click Groups under Members heading
4. Click Add Group to create Punchout group
5. Select Individual or Shared Payment Methods and Individual or Shared Address
6. Click the newly created group
7. Go to System Integrations > Configure Purchasing System
8. Select your purchasing system, then hit Save 

E-procurement jargon buster

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:

• Cash Flow. The net amount of cash and cash equivalents coming in and out of a business. Money coming in is termed inflows, money going out is termed outflows.  
• Requisition. A standardised accounting document which makes a formal request for an item or service required by a business, such as supplies or raw materials.
  
• Request for Proposal (RFP). Formal document created by a business inviting people to submit bids for a project. Generally, details the project, its goals, and contract terms.  
  
• EBITDA. Stands for Earnings Before Interest, Taxes, Depreciation, and Amortisation. Is used to show the overall financial performance of a business and measure profitability.
  
•  Addendum. An addendum can be added to an existing contract to amend or update the terms of conditions. Typical addendums include changing dates and amending payment schedules.

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