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SCRC Article Library: The Procurement Process - e-Procurement: Procurement : A Tutorial

The Procurement Process - e-Procurement: Procurement : A Tutorial

Published on: Jan, 28, 2011

by: Robert Handfield, Ph.D.

The Procurement Process – e-Procurement

e-Procurement
What is Solicitation?
What are Online Reverse Auctions?
Benefits of e-Procurement

e-Procurement

e-Procurement is the term used to describe the automation through web-enabled tools of many elements of the procurement process this includes:

  • The issue, collection, and analysis of solicitations
  • Execution and analysis
  • Award of business via reverse auction

e-Procurement tools usually have the following key elements:

  • Solicitation development tools
    • RFI
    • RFP
    • RFQ
  • Reverse auction capabilities

What is solicitation?

Solicitation is the process of seeking information, proposals, and quotations from suppliers. While solicitations can be verbal, quality and consistency is enhanced if the process is formalized as a written or electronic document.

Solicitation RFx

Request For Information
RFI
An open enquiry that spans the market seeking broad data and understanding
Request For Quotation
RFQ
An opportunity for potential suppliers to competitively cost the final chosen solution or solutions
Request For Proposal
RFP
Based on the RFI, a business requirements-based request for specific solutions to the sourcing problem

What are online reverse auctions?

  • Auctioning is a mechanism for obtaining the lowest price for the supply of a product or service.
  • In an on-line reverse auction, suppliers have the opportunity to reduce their bids to win the business.
  • Using web technology, suppliers connect to the procurement system to bid anonymously against each other.

h2. Benefits of e-Procurement

  • A virtual elimination of paperwork and paperwork handling
  • A reduction in the time between need recognition and the release and receipt of an order
  • Improved communication both within the company and with suppliers
  • A reduction in errors
  • Lower overhead costs in the purchasing area
  • Purchasing personnel spend less time on processing of purchase orders and invoices, and more time on strategic value-added purchasing activities

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