The notion that a company can transform itself into an “e-business” by simply installing and using a piece of software is wrong and dangerous.  Instead, companies must incorporate e-business concepts into their overall business strategies.  Done well, an e-procurement initiative requires changes in strategy, organization, process and systems.

The following “before and after” worksheet will help you understand where technology can help you with information consolidation, advertising, product catalogues, purchase orders, requisitioning, approval, inventory, shipping, receiving, billing, payment, routing, tracking, and customer service. 

Benefits of An E-Procurement Strategy:  Before and After

Key Business Function / Before “E” / After “E”

Info. Consolidation / Staff “hoarded” information / MIS centralizes information for all to see

Advertising / offline, mass market, expense / online, targeted, less expensive

Product Catalogues / paper-based, storage and distribution problems / online, multiple photos possible, less expensive

Purchase Orders and Requisitioning / sent via mail or fax, difficult for the customer to determine actual costs / online software helps the customer determine costs before ordering, and allow easier submission and receipt of purchase orders

Approval / difficult to prove final approval authority given in person, via fax, etc. / online approval allows for system integration, more coordinated processing, and ease of tracking approval process for accountability

Inventory and Shipping / paper-based, not coordinated with other software-based programs within the company to offer "Just In Time" delivery / online inventory systems allow customer to order directly from the web site, and easier coordination among departments to more quickly fill customer orders

Receiving / see above

Billing and Payment / non-automated systems are costly and result in human errors / online billing systems are coordinated, automatic, and less expensive.

Online systems offer customers the chance also for online payment which automates the payment process within the company, thus reduce expense and human error

Routing and Customer Service / Telephone-based customer service, not usually coordinated within the company, customer service agent very important to answer customer query / Internet-based customer service, coordinated, but often not as satisfying to the customer because of delay in response, and automated online responses which do not answer specific customer questions

Tracking / Customers were often unable to track the details regarding shipment of their order / Online tracking systems significantly reduce customer queries

In order to benefit most from the establishment of an e-procurement system, it is important that the e-procurement plan is seen as part of a company's overall business strategy.  Consequently, you will need plan and manage it as a single, company-wide initiative.