E-Procurement Advantages



Posted: Thursday, April 13, 2006

by Seth Miller

The Internet has emerged as a cost-effective and reliable medium for performing online business transactions. More and more companies are now adopting this medium for procuring their goods. E-procurement advantages primarily include saving money, time, and extra workload normally associated with paper works. The conventional procurement process usually involves lots of paper processing, which consumes a large amount of time and money. In some instances, the processing cost has been reduced by as much as 85%.

E-procurement is a major component of modern B2B ecommerce and can be applied to a broad spectrum of industries and markets. Many firms have applied e-procurement successfully, reaping benefits often to the tune of millions of dollars. Experience indicates that a firm can enjoy returns that may measure up to 300% of the initial investment in just 3 years. The increasing number of success stories point to the growing recognition of e-procurement advantages. This indicates an increased optimism towards automation in spite of the slowing down of global economy. Some companies have adopted automation at all stages of the supply process to maximize e-procurement benefits.

E-procurement is mostly employed in purchasing small and less expensive items such as office stationery. The traditional approach is still preferred for more expensive products such as complex engineering machinery. However, companies are increasingly recognizing the benefits of online sourcing. Online procurement helps organizations to sketch out optimized plans for managing the supply chain. E-procurement advantages not only include saving money but also the simplification of the whole process. The optimized plans can be communicated quickly to the suppliers thereby reducing the cost and waste usually involved in the supply chain. The advantages of e-procurement include a reduction of overhead costs such as purchase agents, as well as improved control of inventories, and the overall improvement of the manufacturing cycle.
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