Procurement and purchasing are related, but with a very small difference. Procurement is a process that involves the selection of services and goods needed by a business, sourcing and also negotiations whereas purchasing is the way goods and services are ordered. In other words, procurement can be termed as the process of getting items from a supplier. E-procurement is the same process but this time it is done online. The sub-categories of e-procurement and purchasing include:
E-procurement is a process and the first stage is e-sourcing. It is defined as finding new suppliers of the required commodity or service using the internet. The organization uses the internet to research about the different potential suppliers and their credibility and quality of service provided. Online reviews are essential in this stage of procurement.
Once a reliable supplier has been found, e-tendering is the next thing to do. In this category, the organization communicates with the supplier and sends them requests. There are two requests sent, namely; Request for Price (RFP) and Request for Information (RFI). RFI is requesting information from suppliers electronically and RFP for the charges required when getting the goods and services.
There are no transactions between the organization and the suppliers. The qualifications and capabilities of suppliers are scrutinized. Information that is handled about the supplier includes their ability to deliver the goods and services on time and also their financial status.
This is like an online auction for the required goods and services. The purchasing company tries to source for items at a lower price. The company has to get the best price to avoid losses. The internet is essential in this category since the negotiations are electronic. The company also bargains for other better conditions such as delivery.
E-MRO and Web-based ERP
E-MRO and ERP involve buying and supplying goods and services. Both are essential e-procurement software. The applications are useful in approving purchases. They also help place orders and receive goods and services that were ordered. The apps make e-procurement possible and they help in controlling standards, pricing and supplier management.