E-procurement refers to the electronic acquisition of goods and services for organizations using the internet. It involves the transactional aspects of requisitioning, authorizing, ordering, receipting and payment processes. Main types of e-procurement include e-sourcing, e-tendering, e-informing, and web-based ERP systems. E-procurement provides benefits such as cost savings, control over maverick spending, improved information flow between buyers and suppliers, and increased buying power. However, concerns include security risks with new systems, transition costs, compatibility with supplier technologies, and ensuring employee skills.

1. E-Commerce: E-Procurement Anil Cheerla, Allen Kenney, Robyn King MBAD 251 April 8, 2009

2. Definitions In general, e-procurement refers to the electronic acquisition of goods and services for organizations. “ E-procurement is using the Internet to operate the transactional aspects of requisitioning, authorizing, ordering, receipting and payment processes for the required services or products .” (Source: The Chartered Institute of Purchasing & Supply)

3. B2B evolution

4. The Supply Chain The supply chain process consists of a number of interrelated sub-processes and roles Acquisition of materials from suppliers Processing of a product or service Packaging it and moving it to distributors and retailers The eventual purchase of a product by the end consumer

7. Procurement Process Concept to Check Receipt of Goods/Services Supplier Communications Product & Process Development Requisition Creation Approval Cycle P.O. Generation Invoice eProcurement Payment Advance Ship Notice INVOICE INVOICE

8. Web-based Procurement System

9. Main Types of E-Procurement e-sourcing– The process and tools that electronically enable any activity in the sourcing process, such as quotation/tender submission and response, e-auctions, online negotiations, and spending analyses e-tendering– The “invitation” to participate in a tendering (bidding) system e-informing– Gathering and distributing purchasing information both from and to internal and external parties using Internet technology. Web-based ERP– Creating and approving purchasing requisitions, placing purchase orders and receiving goods and services by using a software system based on Internet technology e-MRO– Indirect materials used in activities that support production e-reverse auctioning - tendering or bidding model

10. E-Procurement Benefits Minimizing the purchases made from non-contract vendors Expedited payment process and savings due to expedited payments Improved invoice reconciliation and dispute resolution

11. E-Procurement Benefits Cost savings via streamlining Control over maverick spending Better information flow between buyers and suppliers Increased buying power and better purchase price through aggregation

12. Companies Engaged in E-Procurement Honeywell GlaxoSmithKline Royal Dutch Shell Sun Microsystems Aeroxchange Provides Internet-based infrastructure for aviation industry

13. E-Procurement in action

14. E-Procurement Providers

15. Concerns Are you introducing security and control risks by instituting new systems? What are the transition costs of implementing an e-procurement system for purchasing? Do new e-procurement systems work with suppliers’ technologies? Do employees and managers have necessary skills and willingness to work with new e-commerce technology?