ELECTRONIC PROCUREMENT

(E – PROCUREMENT)
“E – Procurement” is the business – to – business or business – to – consumer or business – to –
government, where purchase and sale of supplies, work, and services are done through the
Internet, and share information through electronic system. The e-procurement value chain
consists of indent management, e – tendering, e – Auctioning, vendor management, catalogue
management, Purchase
Order Integration, Ship Notice, e – invoicing, and e – payment. This part of the value chain is
optional, with individual procuring departments defining their indenting process. In
works procurement, administrative approval and technical sanction are obtained in
electronic format. In goods procurement, indent generation activity is done online.
Distinct categories of E – Procurement
Business – to – business (B2B). Is simply defined as e – procurement between companies E.g.
Intel selling microprocessor to Dell.
Business – to – consumer (B2C). Is e – procurement between companies and
consumers, involves customers gathering information, purchasing physical goods or receiving
product’s information’s over an electronic network. Example – Dell selling me a laptop on
internet.
Consumer – to – consumer (C2C). E – Procurement or C2C is simply commerce between
private individuals or consumers. For example:- Mary buying an iPod from Tom on
Business – to – government (B2G). Is generally defined as e – procurement between companies
and the public sector. It refers to the use of the Internet for public procurement, licensing
procedures, and other government-related operations. Example: - Business pay taxes, file
reports, or sell goods and services to government agencies.
Government – to – customers (G2C).

E-procurement tools and applications

Some e-procurement tools and applications
include:
 Electronic systems to support
traditional procurement
 EDI (electronic data interchange)
 Internet as a support or complement
to traditional procurement
 Electronic mail (e-mail)
 World Wide Web (WWW)
a) Electronic systems to support traditional
procurement
These include mainframes and
personal computers (PC), Electronic
Data Interchange (EDI) and
Enterprise Resource Planning (ERP).
b) EDI (Electronic Data Interchange)
EDI is an application whereby electronic
messages can be exchanged between
computer programs of
two separate organizations. Messages
can automatically be sent, transmitted
and stored between
computers without retyping or keying data.
c) Internet as a support or complement to
traditional procurement
There are various types of internet based
applications that serve different purposes.
Some well-known
applications that use the internet are
described below:
d) Electronic mail (e-mail)
E-procurement tools and applications
Some e-procurement tools and applications include:
Electronic systems to support traditional procurement
EDI (electronic data interchange)
Internet as a support or complement to traditional procurement
Electronic mail (e-mail)
World Wide Web (WWW)
a) Electronic systems to support traditional procurement
These include mainframes and personal computers (PC), Electronic Data Interchange
(EDI) and
Enterprise Resource Planning (ERP).
b) EDI (Electronic Data Interchange)
EDI is an application whereby electronic messages can be exchanged between computer
programs of two separate organizations. Messages can automatically be sent, transmitted
and stored between computers without retyping or keying data.
c) Internet as a support or complement to traditional procurement
There are various types of internet based applications that serve different purposes. Some well-
known applications that use the internet are described below:
d) Electronic mail (e-mail)
Email is an Internet based application through which electronic messages are exchanged between
people.
e) World Wide Web (WWW)
The WWW is a major service on the Internet. The World Wide Web is made up of "Web
servers" that store and disseminate "Web pages," which are "rich" documents that
contain text, graphics, animations and videos to anyone with an Internet connection.
E – Procurement platforms that replace traditional procurement
E – Procurement platforms that replace traditional procurement include the following:
E-sourcing
E-tendering
E-auctioning
E-ordering
E-information
Enterprise Resource Planning (ERP)
E – Catalogue
E – Payment
a) E-sourcing

E-sourcing supports the specification

phase; it can be used to pre-qualify
suppliers and also identifies
suppliers that can be used in the selection
phase. For suppliers the benefit is:
“marketing” and for the
buying organizations the benefit is
facilitating the sourcing of suppliers. The
UN Global Market Place
(UNGM www.ungm.org) is an example of
an E-sourcing tool.
b) E-tendering
E-tendering supports the selection stage
and acts as a communication platform
between the procuring
organization and suppliers. It covers
the complete tendering process from
REOI via ITB/RFP to
contracting, usually including support for
the analysis and assessment activities; it
does not include
closing the deal with a supplier but
facilitates a large part of the tactical
procurement process. It
results in equal treatment of suppliers;
transparent selection process; reduction in
(legal) errors; clear
audit trial; more efficiency in the tactical
procurement process and improved time
management of
tendering procedures. Some UN
organizations such as UNDP-IAPSO and
UNHCR have used E-tendering
in the formulation of long-term
agreements for vehicles, tents,
motorcycles and pharmaceuticals
through an in-house developed tendering
portal.
c) E-auctioning
E-sourcing supports the specification phase; it can be used to pre-qualify suppliers and also
identifies suppliers that can be used in the selection phase. For suppliers the benefit is:
“marketing” and for the buying organizations the benefit is facilitating the sourcing of suppliers.
The UN Global Market Place (UNGM www.ungm.org) is an example of an E-sourcing tool.
b) E-tendering
E-tendering supports the selection stage and acts as a communication platform between the
procuring organization and suppliers. It covers the complete tendering process from
REOI via ITB/RFP to contracting, usually including support for the analysis and assessment
activities; it does not include closing the deal with a supplier but facilitates a large part of the
tactical procurement process. It results in equal treatment of suppliers; transparent selection
process; reduction in (legal) errors; clear audit trial; more efficiency in the tactical procurement
process and improved time management of tendering procedures. Some UN organizations such
as UNDP-IAPSO and UNHCR have used E-tendering in the formulation of long-term
agreements for vehicles, tents, motorcycles and pharmaceuticals through an in-house
developed tendering portal.
c) E-auctioning

The electronic auction (e – Auction) is an

e-business between auctioneers and
bidders, which takes
place on an electronic marketplace. It is an
electronic commerce which occurs
between business to
business (B2B), business – to – consumer
(B2C), or consumer – to – consumer
(C2C). The auctioneer
offers his goods, commodities or services
on an auction side on the internet.
Interested parties can
submit their bid for the product to be
auctioned in certain specified periods. The
auction is transparent;
all interested parties are allowed to
participate the auction in a timely manner.
The two major types of
the electronic auction are “forward
auction” in which several buyers bid for
one seller's goods and
“reverse auction” in which several sellers
bid for one buyer's order.
d) E-ordering and web-based ERP
E-ordering is the process of creating and
approving procurement requisitions,
placing purchase orders,
as well as receiving goods and services
ordered, by using software systems based
on the Internet.
e) E-informing
The electronic auction (e – Auction) is an e-business between auctioneers and bidders, which
takes place on an electronic marketplace. It is an electronic commerce which occurs between
businesses to business (B2B), business – to – consumer (B2C), or consumer – to – consumer
(C2C). The auctioneer offers his goods, commodities or services on an auction side on the
internet. Interested parties can submit their bid for the product to be auctioned in certain
specified periods. The auction is transparent; all interested parties are allowed to participate the
auction in a timely manner. The two major types of the electronic auction are “forward auction”
in which several buyers bid for one seller's goods and “reverse auction” in which several sellers
bid for one buyer's order.
d) E-ordering and web-based ERP
E-ordering is the process of creating and approving procurement requisitions, placing purchase
orders, as well as receiving goods and services ordered, by using software systems based on the
Internet.
e) E-informing

E-informing is not directly associated with

a stage in the procurement process; it is the
process of
gathering and distributing procurement
information both from and to internal
and external parties
using Internet technology.
f) Enterprise Resource Planning (ERP)
Enterprise resource planning (ERP) is a
method of using computer technology to
link various functions -
such as accounting, inventory control,
and human resources – across an
entire company. ERP is
intended to facilitate information sharing,
business planning, and decision making on
an enterprise –
wide basis. That said, both MRP and MRP
II paved the way for the rise of Enterprise
Resource Planning
software.
g) E - Auctions
The electronic auction (e – Auction) is an
e-business between auctioneers and
bidders, which takes
place on an electronic marketplace. It is an
electronic commerce which occurs
between business to
business (B2B), business – to – consumer
(B2C), or consumer – to – consumer
(C2C). The auctioneer
offers his goods, commodities or services
on an auction side on the internet.
Interested parties can
submit their bid for the product to be
auctioned in certain specified periods. The
auction is transparent,
all interested parties are allowed to
participate the auction in a timely manner.
The two major types of
the electronic auction are “forward
auction” in which several buyers bid for
one seller's goods and
“reverse auction” in which several sellers
bid for one buyer's order.
h) E – Catalogue
E – Catalogues are an online catalogue
which is in flip book format containing the
detailed listing of
your offerings including part number,
descriptions, delivery terms and prices.
i) E – Payment
E-informing is not directly associated with a stage in the procurement process; it is the process of
gathering and distributing procurement information both from and to internal and external
parties using Internet technology.
f) Enterprise Resource Planning (ERP)
Enterprise resource planning (ERP) is a method of using computer technology to link various
functions - such as accounting, inventory control, and human resources – across an
entire company. ERP is intended to facilitate information sharing, business planning, and
decision making on an enterprise – wide basis. That said, both MRP and MRP II paved the way
for the rise of Enterprise Resource Planning software.
g) E - Auctions
The electronic auction (e – Auction) is an e-business between auctioneers and bidders, which
takes place on an electronic marketplace. It is an electronic commerce which occurs between
businesses to business (B2B), business – to – consumer (B2C), or consumer – to – consumer
(C2C). The auctioneer offers his goods, commodities or services on an auction side on the
internet. Interested parties can submit their bid for the product to be auctioned in certain
specified periods. The auction is transparent, all interested parties are allowed to participate the
auction in a timely manner. The two major types of the electronic auction are “forward auction”
in which several buyers bid for one seller's goods and “reverse auction” in which several sellers
bid for one buyer's order.
h) E – Catalogue
E – Catalogues are an online catalogue which is in flip book format containing the detailed
listing of your offerings including part number, descriptions, delivery terms and prices.
i) E – Payment
E – Payment is a subset of an e-commerce transaction to include electronic payment for buying
and selling goods or services offered through the Internet. Generally we think of electronic
payments as referring to online transactions on the internet, where payments are actually effected
electronically.
The following types of electronic payments are most common today.
Credit Cards
Internet. Consumers and businesses can transfer money to third parties from the bank or other
account online (Telegraphic transfer).
Mobile Payments
Advantages of e – commerce
Sales time for transaction – fast transaction
Accuracy of information
Facilitate international trade
Easy for supplier price comparisons
Enhancement of just in time procurement
Increased sales – as vital communities created
Costs saving in order processing
Disadvantages of e – commerce
Loss of ability to inspect the product from remote location personally
Rapid developing pace of underlying technologies
Difficult to calculate returns on investment
Not everyone is connected to the Internet
Limitations of implementing e – commerce
Most of the suppliers are not IT – literate
Power problems
No good communication network to support e – commerce especially to rural areas
Can be vulnerable to forgery if system is not well controlled
No enough expert to support the system
Poor ICT infrastructures to support the system (www, server and internet)