The e-procurement system automates and expands the manual buying and selling processes, from the creation of an application right through to payment to suppliers. The term “e-procurement” includes operational department ordering systems, e-markets and vendor websites.
Relevance for trade facilitation
In the digital age, commercial firms are increasingly using electronic systems to more efficiently, predictably, transparently and securely manage their supply chain. E-procurement systems provide up-to-date information on the status of customer needs. They allow you to enter into an agreement with the seller about the automatic shipment of materials when the stocks of the buyer reach the lowest point. This also applies to the request for quotations when buyers can track incoming offers until a supplier is selected. E-procurement provides predictability, as sellers know what to expect, and can analyze the progress of an order, often in real time. In real time, you can also monitor the status of goods. The system displays the goods as delivered, accepted and processed for payment, while the seller does not need to call and request information in the accounting department. Electronic exchange and storage of data instead of using paper documents contribute to increased transparency and accuracy.
Electronic systems can be used for the following procurement functions:
Electronic application: creating and approving purchase requisitions, and placing purchase orders using software based on Internet technology;
electronic supplier selection: identification of new suppliers for a specific category of procurement requirements using Internet technology. This may require the creation of “electronic catalogs”, that is, the creation of electronic lists of products and suppliers;
electronic tenders: placing notifications about electronic tenders / electronic requests for the acceptance of tender bids, receiving tender bids and offers and informing about awarding contracts via the Internet;
electronic reverse auctions: receiving, evaluating bids and tender proposals, as well as purchasing goods via the Internet (this may or may not be part of the electronic bidding system);
electronic administration: collection and distribution of procurement information from both internal and external parties, tracking and acceptance of goods and authorization of payment using Internet technology;
Integration of these functions into the financial system of the buyer will allow processing electronic invoices.
Implementation method
The installation and implementation of an e-procurement system requires action in a number of areas. The technology itself does not ensure successful implementation of the initiative. All players within the supply chain need to make the necessary changes in the organization of their work, which requires commitment and management support, as well as changes in the management system. If existing procurement practices and procedures conflict with the objectives of the new initiative, the implementation of an electronic system requires the reorganization of existing procurement practices. It is very important to determine the level of integration between e-procurement solutions and existing information systems, including the financial management system for processing payments to suppliers / sellers in real time (electronic invoices). You may need to conduct a Business Process Analysis (BPA). Moreover, the ongoing analysis of the benefits derived from predetermined key performance indicators (KPIs) is vital to maintaining the business model for such systems. Understanding and learning from end users are key factors in ensuring that they will consider e-procurement as their preferred method of purchasing goods.
E-procurement systems require different systems of buyers / sellers to be able to exchange information and electronic documents electronically. This entails the use of common standards. The XML language (extensible markup language) is the basis of such standards. The XML standard defines the content in the course of communications, as well as when choosing a common format for trade data. The development of an e-procurement system in an open environment will allow linking it with other systems to achieve mutual compatibility, which will simplify its improvement. Due to the legal nature of the order and payments, the system must have mechanisms for identifying and authenticating the user who places the order (electronic signatures).
The use of electronic technology in international trade transactions requires the adoption of a legislative and regulatory framework, both at the international and national levels. Many countries involved in international trade have already passed legislation adapting their legal systems to innovations in electronic commerce. UNCITRAL developed the Model Law on Electronic Commerce, the Convention on the Use of Electronic Communications in International Contracts and the Model Law on Electronic Signatures. Moreover, the UNECE, through UN / CEFACT, has adopted a number of relevant recommendations. In particular, Recommendation No. 26 and Recommendation No. 31 offer sample agreements between trading partners to enhance the legal security of their trade relations. They also consider the need to adapt national legislation in favor of electronic data interchange (EDI) in international trade transactions, including the use of electronic signatures. UNECE Recommendation No. 32 proposes a Code of Conduct for the exchange of electronic trade documents.