E-Procurement helps firms cut down on purchasing costs

E-Procurement helps firms cut down on purchasing costs

Are the employees in your company still using the old, paper-
based procurement procedure? Does Ina still have to obtain seven
signatures before she can get a new ink cartridge for the inkjet
printer on her desk? Does Tommy often get angry because his PO
for fax paper always gets lost in the office labyrinth? Then your
company is still living in the New Order era. This is the Web
era.

Imagine how many ballpoint pens a large bank like BCA has to
buy every month. Imagine also how many reams of photocopy paper
the entire bank organization uses up every month. Or how many
paper clips? Or staples?

If your company buys only two dozen pens, you may not get a
discount. But if your entire organization buys thousands of pens
every month, ballpoint pen salesmen will be more than eager to
offer you attractive discounts. Incidentally, in the New Order
era -- and we are still struggling to eliminate the practice --
"discount" was just another world for "kickback" or "commission".
In today's business scene -- or the post-New Order era --
discounts should once again mean savings to the buying company.

In the cutthroat competition of today's business, cutting
costs is one of the few effective ways to remain profitable. One
of the ways costs can be lowered is to ensure that the company
gets huge discounts, and the discounts are not converted into
commissions for the pockets of the purchasing managers. How can
this be done? The answer is e-Procurement (sometimes also written
eProcurement).

E-Procurement service allow employees, staff or anybody in an
organization that has implemented it to make their requisitions
electronically. As the volume is larger than if the items were
brought by individual purchasing managers, the discounts can be
tremendous and the savings to the buying company can be very
substantial. Besides, the authorization process is streamlined
and made transparent. When the e-Procurement application is
connected to the company's ERP or financial system, invoice
matching can be made to occur seamlessly and automatically. It
also helps reduce financial losses by eliminating duplicate
ordering, lost requisitions and maverick buying.

Features of a typical e-Procurement include facilities to send
RFI (request for information) and RFQ (request for quotation).
The authorization process is also made simple and quick. The
application can also accommodate electronic catalogs submitted by
participating suppliers that have been preselected. A user can
browse the contents of the catalogs, make his selections and drag
and drop the selected items he wants to order into the
requisition form.

E-Procurement is not a new concept, but in the New Order era,
the majority of purchasing managers rejected the e-Procurement
idea, as it would eliminate kickbacks and commissions.

Today, dozens of companies have been offering the necessary
software to build e-Procurement application in your enterprise.
One of them is PurchansingNet (www.purchansingnet.com). Two of
its major customers are the famous Warner Bros and Black &
Decker. The e-Procurement application at Black & Decker, for
example, relieves the employees from the headache of having to
obtain seven layers of approval before their requisition for
office supplies and MRO (maintenance, repair and operation) items
reach the Purchasing Department.

So, if you want your organization to leave the New Order era
behind and become a truly low-cost producer or provider, then you
should seriously consider signing a deal with one of the
reputable e-Procurement vendors. (Zatni Arbi)

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