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E-procurement in purchasing: definition & advantages
What is e-procurement?
E-procurement refers to the electronic handling of all procurement processes, from determining requirements to ordering and invoicing. By using e-procurement solutions, companies can significantly optimize their purchasing processes, reduce costs and increase transparency in the supply chain.
Contents
Advantages of e-procurement for buyers
- Increased efficiency: Automated processes reduce administrative effort and speed up procurement.
- Cost reduction: Purchasing costs can be reduced through better control and transparency.
- Improved quality: Strict supplier evaluations and continuous monitoring ensure a higher quality of purchased goods and services.
- Risk minimization: Proactive risk management protects the company from delivery interruptions and quality defects.
- Transparency and traceability: Clear documentation and real-time insights into procurement processes improve transparency.
Main components of e-procurement:
- E-procurement platform: A central software solution that handles and manages all procurement processes digitally.
- B2Bcatalog managementManagement and updating of supplier data and product catalogs.
- Automated order processing: Automation of the order process from the determination of requirements to the order.
- Invoicing and payment processing: Electronic processing of invoices and payments.
- Data analysis and reporting: Analysis of purchasing data to optimize procurement strategies.
- Integration with ERP systems: Seamless integration of e-procurement solutions into existing enterprise resource planning (ERP) systems.
Whitepaper: E-procurement in purchasing - digital transformation of procurement processes
E-procurement in purchasing: from traditional procurement to digital purchasing
Procurement plays a central role in the success of a company. Building on the theoretical foundations of e-procurement, it is clear that traditional procurement processes no longer meet today's requirements for efficiency and speed. In practice, this leads to long lead times, increased costs and a lack of transparency. The transformation to digital procurement solutions is therefore essential in order to remain competitive.
Traditional approach: Traditional procurement
In traditional procurement, orders are placed manually by fax, telephone or e-mail. The processes are paper-based, which leads to high administrative costs. Supplier selection and offer comparisons are often carried out manually, which is time-consuming. There is also a lack of real-time data, which means that decisions can be based on outdated information. Stock levels are monitored manually, which increases the risk of overstocking or bottlenecks. Overall, the processes are inflexible and cost-intensive.
New: Digital Procurement
Modern e-procurement solutions are revolutionizing the purchasing process through the use of cloud-based platforms and automated workflows. Orders are placed directly in the system via electronic catalogs, which reduces the process time by up to 50%. By integrating supplier portals, offers are obtained and evaluated in real time. Artificial intelligence supports the analysis of output data and identifies potential savings. Mobile applications enable access to procurement data from anywhere, which speeds up decision-making. The processes are transparent, efficient and support strategic purchasing decisions.
Practical example: Introduction of e-procurement at an industrial company
A medium-sized mechanical engineering company introduced an e-procurement solution in 2023 to optimize its annual procurement activities of 120 million euros. Previously, orders were mainly processed by email or telephone, which meant a considerable amount of manual work with an average of 8,000 order processes per year. Each order process required an average of 35 minutes of working time for inquiries, documentation and system input.
The e-procurement implementation quickly showed positive effects: The processing time per order was reduced to an average of 8 minutes, as catalog orders are now automated and approval processes are digital. With 8,000 annual orders, this meant a saving of 3,600 working hours. With personnel costs of 45 euros per hour, this resulted in annual cost savings of 162,000 euros through process optimization alone.
The indirect benefits were even more significant: the rate of order errors fell from 4.2% to 0.3%, which reduced the number of necessary corrections from 336 to 24 per year. The maverick buying rate (purchases outside defined processes) fell from 25% to 5%, which enabled additional savings of EUR 180,000 through better conditions with framework agreement suppliers. The average processing time from notification of requirements to order was reduced from 5 to 1.5 working days.
The medium-sized company's suppliers also benefited: their order processing costs fell by an average of 20%, as orders are now received electronically in a standardized way. The investment costs of an average of 5,000 euros per supplier for the system connection were amortized after just 6 months. The improved transparency of requirements and call-offs enabled optimized warehousing and production, which increased delivery reliability from 85% to 94% and sustainably improved cooperation.
Conclusion: E-procurement as a strategic success factor for modern purchasing management
E-procurement as a strategic success factor for modern purchasing managementE-procurement is an indispensable tool for companies that want to make their procurement processes more efficient, cost-effective and transparent. By using e-procurement solutions, companies can make informed decisions, optimize costs, ensure quality and minimize risks in the supply chain. Despite the potential challenges, such as the high initial investment and the technical expertise required, the advantages clearly outweigh the disadvantages. With clearly defined processes, the use of modern technologies and the promotion of a cooperative relationship with suppliers, e-procurement systems can be successfully implemented and continuously improved. This not only contributes to the efficiency and quality of procurement, but also strengthens the competitiveness and sustainable development of the company. Overall, e-procurement is a valuable tool in every buyer's toolbox and helps companies to make their supply chains more efficient, secure and successful.
