eProcurement can streamline the supply chain and drive real process improvements.
eProcurement is not new. It’s been around since the early 1990s when market analysts and protagonists alike predicted a revolution in how future business-to-business transactions would take place.
Those early predictions may have been somewhat premature, as adoption levels remain modest to this day.
But with more intense pressure on industry competitiveness and a greater acceptance of software as a service (SaaS), more organisations are looking to eProcurement as a potential source of process efficiency and supply chain value.
“eProcurement is very well-established in certain sectors, manufacturing for instance, but moving fast into organisations of all sizes and industries,” according to Alan Phelan, CEO with SourceDogg, a provider of cloud-based eSourcing software.
“Once organisations experience the benefits of automating their processes in one area, they very quickly understand why as much of their transactional and sourcing processes as possible should be automated,” he said.
Darren Lynch, supply chain lead at Accenture Ireland has also seen increasing usage of the technology, particularly by larger organisations.
“Over the past 12 to 18 months we’ve seen the mandated adoption of eProcurement. eSourcing and eAuctions are driving competitive tension into the supply chain and the resulting need for suppliers to engage buyers in eProcurement. It has also resulted in more visibility and interaction between supply chain partners and the provision of real time information to decision makers through mobile technology, allowing for further collaboration between supply chain partners,” he said.
eProcurement allows organisations to automate certain elements of the buying process and collate better quality procurement data. For example, by regularly going out to the supply chain with a Request for Information (RFI), organisations can gather proof of competence information and insightful financial data, significantly reducing the amount of questions in their Requests for Quotation (RFQs).
For their part, suppliers can engage more with the tendering process and concentrate on the commercial aspects of the deal.
So why has eProcurement been so slow to take off? Phelan believes that cost is one of the major factors.
“Until recently eProcurement software was limited to the very large corporates. Prices ranged from several hundred thousand euro per annum to several million per annum. This has changed now with SaaS and with our software. For example, companies can start with one €700 licence,” he said.
eProcurement has well-established appeal for certain industries according to Prof Edward Sweeney, former director of learning at the National Institute for Transport & Logistics and current head of engineering systems and management at Aston University in Birmingham.
“Our evidence suggests that the adoption of eProcurement and other enabling technologies has been greatest in the CSO-defined ‘modern’ sectors such as electronics and life sciences,” he said. “The more ‘traditional’ sectors are lagging behind. Perhaps not surprisingly, there is also evidence that larger firms are more likely than their SME peers to be adopters. In short, there are pockets of excellence but significant room for improvement exists,” he said.
But the extent of eProcurement’s impact on the supply chain is questioned by others including Prof Wallace Ewart OBE, head of graduate business school at Griffith College, Dublin.
“The area of deepest effect will be using eProcurement to help the staff in the organisation feel they have control over their choice of goods. This would involve creating a market place feel similar to Amazon. If this happens then eProcurement will be able to impact the organisation directly. Other than this it is still limited to a few transactions within the supply chain,” he said.
But Phelan believes that a major opportunity exists for organisations of all sizes to capitalise on the benefits eProcurement offers.
“Overall, I believe the supply chain performs more effectively with eProcurement, delivering better quality goods and services to the customer for less cost and in a more transparent fashion than traditional methods,” he said.