E-procurement (electronic procurement, sometimes also known as supplier exchange) is the business-to-business or business-to-consumer or business-to-government purchase and sale of supplies, work, and services through the Internet as well as other information and networking systems, such as electronic data interchange and enterprise resource planning.
The e-procurement value chain consists of indent management, e-Informing, e-Tendering, e-Auctioning, vendor management, catalogue management, purchase order integration, Order Status, Ship Notice, e-invoicing, e-payment, and contract management. Indent management is the workflow involved in the preparation of tenders. 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. The end result of the stage is taken as inputs for issuing the NIT.
Elements of e-procurement include request for information, request for proposal, request for quotation, RFx (the previous three together), and eRFx (software for managing RFx projects).
Alongside with increased use of e-procurement, needs for standardization arise. Currently, there is one globally developed open extensible markup language based standard framework built on a rich heritage of electronic business experience. It consists of five layers - messaging, registry and repository, collaboration protocol, core components and business processes.
History
It was first used by IBM in the year 2000, when the company launched its Replenishment Management System and Method, designed by Mexican communications engineer Daniel Delfín, who was then the procurement director at IBM's largest production plant, and programmed by Alberto Wario, an IT programmer. The system was designed to solve IBM's complex procurement process for the plant in Guadalajara, Mexico, then the largest personal computer production plant in the World, with a production value of 1.6 billion dollars a year. Three years after the system was implemented, the production of the plant grew to 3.6 billion dollars, after which, the company used the system in its secondary production plants, and later sold licenses to external companies around the World.
Jari Tavi identified three stages in the evolution of e-procurement technology: initial systems were functional for procurement professionals but did not address user need; a second generation used web-based technology and aimed to support end-users as well as meeting procurement teams' needs but lacked flexibility and usability. The third generation secured more of the user-focused flexibility and usability which had previously been lacking.
In the European Union, e-procurement for the public sector was first introduced with the Directives 2004/17/EC and 2004/18/EC of 31 March 2004. These directives, which were subsequently revised in 2014, set up the framework for transparent and equal opportunities for public procurement including the mandatory use of electronic communication for publishing opportunities, the standardization of procurement processes, electronic tender submission procedures, handling of objections etc. for all public procurement made in the EU above certain thresholds.
e-Informing
E-Informing does not directly take part in the purchasing process, this process rather precedes the purchasing. It is the process of gathering and distributing purchasing information both from and to internal and external parties, using the internet technology. Information sharing refers to the extent to which critical and proprietary information is communicated to one's supply chain partner thus more efficiency and high performance of the supply chain. In information sharing, also information quality is considered. That includes accuracy, timeliness, adequacy, and credibility of information exchanged.
This process occurs especially in Enterprise Resource Planning (ERP).
e-Tendering
Electronic tendering ("e-Tendering") is a process for sending and receiving tenders by electronic means, rather than the old paper-based method. Instead of inserting documents into an envelope and posting them, we - and you - will now exchange them securely via the Internet.
e-Auctioning
E-auction is the process of conducting an auction to sell assets, natural resources or other goods through online competitive bidding. Compared to physical auction, electronic auction provides complete transparency and enables more parties to take part.