What if you could optimize every step of your procurement process, from product selection to supplier invoice processing? E-procurement solutions make this possible. These solutions, viewed as catalysts for the transformation of procurement processes, are opening up new perspectives for companies. Let’s break it all down for you in this article.
I. E-procurement and its place in the procurement process
What is e-procurement?
Electronic procurement refers to the dematerialized management of procurement carried out by businesses from their service providers, as well as all of the technologies and computer-based solutions used to automate and improve the procurement process.
This fully digitized process replaces paper correspondence and phone calls. Procurement teams save time and improve their productivity!
What is the difference between S2P, P2P, S2C, and e-procurement?
Navigating these terms can be challenging, but they actually refer to different steps in the procurement process.
Source-to-Pay, Source-to-Contract, and Procure-to-Pay
Source-to-Pay encompasses the entire Procurement-Finance process. It is divided into two parts: Source-to-Contract and Procure-to-Pay.
Source-to-Contract refers to all of the actions carried out by the company upstream of the procurement itself:
- supplier sourcing: launching a call for tenders, negotiating, and selecting the best supplier;
- entering into a contract: signing a contract and managing its life cycle;
- supplier management: listing and evaluating suppliers.
Procure-to-Pay refers to all stages of procurement, from the procurement request to payment of the invoice.
The role of e-procurement
E-procurement solutions make it possible to digitize and automate a number of Procure-to-Pay steps, including:
- product selection and availability via catalogs or marketplaces;
- online procurement requests;
- procurement approval;
- issuing purchase orders, sending them automatically, and tracking deliveries;
- receiving invoices and forwarding them to the accounting department.
II. How e-procurement works in 5 steps
#1 Document a procurement request
This step involves identifying the need. Internal customers use the e-procurement solution to view the products and services offered by the suppliers that the company has selected and listed.
They access this information through a catalog, a marketplace, an electronic form, or a Punch-Out. Once they have requested a product or a service, the request goes through an approval process.
#2 Approve the request
The procurement department or other relevant department reviews the purchaser’s documented request. They may refuse the procurement in some situations, such as if it is not justified or violates the internal procurement policy.
#3 Send a purchase order to the supplier
The e-procurement solution automatically issues and sends a purchase order to the listed supplier.
#4 Receive the delivery and create a receipt slip
The company receives the delivery from the supplier. Of course, the receiver checks that it matches the order that was placed, including:
- the quantity of products delivered;
- their condition;
- satisfaction with supplied services, if applicable.
Comments may be included on the receipt slip that is issued upon receipt of the order.
#5 Automatically process the supplier invoice
The order is validated with the supplier. This automatically triggers the invoice, which is then sent to the customer before, during, or after the delivery.
The final step of the e-procurement process is automated reconciliation of the purchase order, the receipt slip, and the invoice, which triggers the creation of the payment slip.
Summary
E-procurement makes it possible to approve, automate, and streamline procurement and to reconcile documents generated by the various parties involved in the process: internal purchasers, buyers, suppliers, accounting, and possibly even the quality department. All while preventing errors and improving efficiency!
III. Different benefits for different internal players
For each department…
Procurement
E-procurement allows buyers to:
- increase efficiency due to faster processing and indirect procurement management
- improve visibility due to processes being centralized within a single tool, including:
- procurement requests, their amount, and their characteristics, which reduces unapproved procurements and makes it easier to control spending,
- inventory levels and replenishment needs,
- compliance with the internal procurement policy and with the supplier’s contractual terms.
- improve supplier relations. Service providers benefit from increased order visibility and faster payment times.
Finance departments
For the finance department, e-procurement provides more visibility into expenses, resulting in better cash management and budget monitoring. As an added benefit, digital tools provide reliable audit trails!
When it comes to supplier payments, your teams will have a better idea of when bills are due thanks to digitized procurement processes and centralized information. You then reduce the financial risks associated with fraud, errors, and late payments… and the negative reputation those risks can cause.
Purchasers or internal customers
E-procurement also means simplifying orders. Internal users enjoy electronic processes similar to those they encounter in their daily lives, with fast, intuitive tools (like online catalogs) that save time and boost productivity.
… and for the company
The dematerialization of procurement processes also allows the company to save time, eliminate paper records, and respond more quickly to expressed needs!
More specifically, it provides the following benefits:
- increased operational efficiency for all parties involved in the procurement process;
- stronger controls due to:
- order traceability,
- better compliance with procurement policies,
- audit trails for invoices,
- easier budget monitoring, etc.;
- reduced costs due to:
- improved visibility of expenses,
- optimized procurement management and streamlined procurement,
- simplified negotiations with suppliers,
- limited penalties for late payments by service providers,
- reduced paper consumption, etc.
“We’ve seen two major benefits from eliminating paper-based procurement processes : increased productivity and
compliance with payment deadlines.”
Sipan Grigorian
Supplier Division Manager, Eclor
“We appreciated the availability of Fluxym’s consultants and their thorough understanding of our needs. They guided us through the entire project, from the specification phase to deploying the solution and providing user training.”
Emmanuelle Guay
Accounts Payable Manager, Clarins
Deploying an e-procurement tool requires strategic support. This includes selecting and deploying the right electronic platform, as well as the crucial step of engaging stakeholders, developing monitoring processes, and creating standard documents (e.g., purchase orders, delivery slips, receipt slips).
Thinking about adopting an e-procurement solution? Choose a partner who understands your needs and is familiar with the available solutions.