E-procurement means procuring products from vendors online. Enterprises create e-procurement portals on which vendors register. Once registered, vendors see which products are needed and quote prices at which they will supply them. This streamlines processes and makes them transparent. As every transaction happens online; corruption, which plagued procurement in the past, has been eliminated.
Earlier what vendors could do only by visiting buyers’ premises, is now done online. This has lowered costs for all stakeholders. There is no to and fro between buyers and sellers because communication is easy. And all vendors registered on e-procurement portals enjoy equal access to information. This builds faith in processes, and between vendors and businesses.
Advantages of E-procurement Businesses with e-procurement portals can create Request for Proposals (RFPs) from vendors. Once RFPs are created, vendors quote prices at which they will fulfil them. Quotes submitted by vendors help businesses shortlist suppliers.
E-procurement portals also allow businesses to create auctions. Businesses hold auctions by stating any vendor willing to supply a product at a less than quoted price will win a contract. Hence unlike traditional procurement channels, e-procurement quickly allows businesses to receive quotes from many vendors.
Another advantage of e-procurement portals is they store all information online thus eliminating the need to manually keep track of it. But the advantages of e-procurement portals don’t end here. Technology is reshaping what is possible with e-procurement portals.
Technologies Powering E-procurement PortalsOver the past few years, the function of e-procurement portals has evolved. While they remain platforms where vendors fill buyers’ demands, their function now includes the generation of data and insights. The insights generated by e-procurement portals help businesses make strategic decisions.
Artificial Intelligence (AI) has an important role to play in e-procurement. Like search engines, e-procurement portals use AI to produce relevant results. When users input keywords in portals, AI produces relevant results. This makes finding buyers’ needs easy for vendors.
Disruptive technologies are making e-procurement more valuable than ever. Buyers use AI to predict demand for products. AI has transformed e-procurement portals from platforms where buyers could procure products to tools that help make crucial business decisions. They are also being used to spend optimally. A buyer that transacts with vendors primarily on e-procurement portals may use data analytics software to help budget expenditures in real-time. This allows buyers to lower costs.
A staggering amount of automation is possible with e-procurement portals. They immediately sense when a buyer is low on materials and automatically reorder from vendors. They can also anticipate when materials ordered will be consumed. Businesses that use e-procurement portals eliminate repetitive processes. This helps them automate more and more processes and makes procurement teams smaller and more agile.
The advantages of automation extend to paying vendors. Businesses with e-procurement portals can trigger payments to vendors as soon as products are delivered. This makes the procurement process seamless and transparent.
The automation built into modern e-procurement portals makes cumbersome purchasing teams more agile and effective. The advantages of e-procurement portals are even more profound. To an extent, they aid purchasing managers in assessing vendors.
Assessing Vendors Sentiments Businesses with thousands of vendors on their e-procurement portals do not have personal relations with each vendor. They have no way to judge vendors’ sentiments reliably. This poses challenges when dealing with vendors. For instance, a business cannot be certain that a vendor who was reliable in the past will not renege on promises in the future. Vendors also suffer. Scrupulous vendors have to earn the trust of businesses.
E-procurement portals bridge trust barriers by ranking vendors. The most trustworthy vendors are ranked highest and least trustworthy lowest. They are ranked according to objective metrics. Vendors who consistently provide quality products and make timely deliveries enjoy a high rank. Ranking vendors objectively builds trust and creates transparency. Scrupulous vendors need no longer work hard to earn businesses trust, their rank on e-procurement portals lets businesses know everything they need to make an informed decision.
Every transaction is tracked and stored on e-procurement portals giving businesses access to every vendor’s history. This helps businesses in decision making.
Large businesses no longer view e-procurement portals as convenient platforms to procure materials. Instead, they see them as crucial disruptive tools that help automate processes and generate insights necessary to take vital strategic decisions.
The author is CEO of C1 India.
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