Difference Between eProcurement And Traditional Procurement
As a key decision maker in your organization, you are well aware of the critical role that procurement plays. You’ve more than likely researched and applied a number of different methodologies and systems. But how do you ensure that you are applying the most efficient methodology and system that will ensure the highest value output? By weighing up the pros and cons of each approach, you can work out exactly which one fits your organization. However, procurement systems fall into two broad categories: traditional and eprocurement. The choice between these two is the baseline decision you need to make when working to implement a procurement solution. Supply Chain Partner is an expert in procurement and digital transformation solutions, so we’ve put together a short guide to tell you everything you need to know to make an informed decision. Read on to find out more!
What Is Traditional Procurement?
Traditional procurement is the procurement methodology that has existed for decades – sourcing materials, products and services across a range of organizational functions. Traditional procurement uses manual processes to complete the tasks necessary here – identifying a supplier, sourcing desired goods or services, requesting delivery, invoicing and payment, and supplier relationship management. These tasks are often undertaken by a procurement team, with each team member working to fulfill a specific function – some might file paperwork, while others might work to publish catalogs, and others still may work with the finance team in order to ensure that supplier payments are completed timeously.
These manual processes – physically filling out paperwork, filing documents, and creating requests – has, as mentioned above, been the accepted system for decades, around the world and in every industry. However, with the advent of cloud software, new opportunities that increase the efficiency of business operations have arisen at a rapid rate. One of the business functions affected is procurement, available in a new form: eProcurement.
What Is The Difference Between eProcurement and Traditional Procurement?
There are multiple benefits associated with eProcurement that are not available when using a traditional procurement system. These primarily stem from the use of online platforms, making several steps of the process much more accessible and user-friendly. Let’s take a look at what these are:
In traditional procurement, sourcing a supplier takes a lot of manual manpower, requiring your employees to manually check the catalogs of several suppliers, and to call each one to establish whether discounts are available or if the supplier has stock. In eProcurement, this process is online, which allows your employees to compare offers, immediately ascertain whether suppliers have the necessary materials available, and whether there are discounts on offer.
- Procuring Orders
This has historically been done by hand, filling out a form, getting approval from the finance department, and then faxing or mailing documentation to the supplier. In a modern eProcurement system, this process is entirely online. That means that employees are able to place an order, obtain approval, and release payment almost instantly, and suppliers can provide the same speed of service from their side.
- Purchase Tracking
With an online system, you can track your order quickly and easily, and receive minute-by-minute updates on order location and status. This is an improvement on a process that relies on phonecalls and manual label-checking, as was the case with traditional procurement.
- Enhancement of Operational Efficiency
A key benefit of eProcurement is the increase in efficiency of your team. Time that was previously spent on repetitive manual processes can now be applied elsewhere, allowing your team to improve your business processes and discover new areas for value addition.
- Improvement in Visibility and Transparency
And, as always with online systems, visibility and transparency are drastically improved. The benefit of conducting any operation online is that each step is logged in the system. This step is then immediately visible to stakeholders at all levels, which improves the transparency of the system.
As an expert in digital transformation, procurement and supply chain, SCP is the perfect partner for your organization. We are able to assist you in identifying the optimal solution for your business, tailoring solutions to your needs, and helping you to unlock the growth that your business is capable of. Enquire today about an eProcurement solution for your organization!