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Lecture 2 - Forms of E-Procurement

This document discusses various forms of e-procurement including e-sourcing, e-informing, e-ordering, e-auctions (reverse and forward), e-tendering, and e-payment. E-sourcing allows organizations to search globally for new suppliers, products, and services using the internet. E-ordering allows employees to electronically request, order, and receive goods. E-auctions involve suppliers bidding against each other online to win contracts, with the goal of decreasing prices in reverse auctions. E-tendering facilitates the entire tendering process electronically. E-payment automates invoice processing and payment to reduce delays and errors.

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296 views20 pages

Lecture 2 - Forms of E-Procurement

This document discusses various forms of e-procurement including e-sourcing, e-informing, e-ordering, e-auctions (reverse and forward), e-tendering, and e-payment. E-sourcing allows organizations to search globally for new suppliers, products, and services using the internet. E-ordering allows employees to electronically request, order, and receive goods. E-auctions involve suppliers bidding against each other online to win contracts, with the goal of decreasing prices in reverse auctions. E-tendering facilitates the entire tendering process electronically. E-payment automates invoice processing and payment to reduce delays and errors.

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E-PROCUREMENT

PST 06208

Department of Business Studies


Forms of e-Procurement
Learning Objectives
Explain the application of the following in
procurement;
 E-sourcing,

 E-informing,

 E-ordering,

 E-auction (Reverse & Forward auctions),

 E-tendering,

 E-payment.
Forms of e-Procurement
 The e-Procurement consist of many modules
that may be interlinked sub-systems used
individually or in combination, in order to
accomplish functions relating to the
procurement processes.
E-sourcing
 Sourcing involves searching for potential
suppliers.

 E-sourcing is a form of e-procurement that


helps organizations in identifying new
suppliers, products and services using Internet
technology.
E-sourcing cont…
 Using e-sourcing, companies can search on a
global level for suppliers, products & services,
which were completely unknown for the
buying organization.
E-informing
 This is not directly associated with stages in
the procurement process.

 It involves the process of gathering &


distributing procurement information both
from internal & external parties using internet
technology.
E-ordering
 E-ordering is the process in which employees of
an organization can electronically request, order
& receive a variety of products.

 This involves creating & approving procurement


requisitions, placing purchase orders, as well as
receiving goods & services ordered by using
software systems based on internet.
E-ordering cont…
 Employees use a so-called ordering catalog
system to fulfill their needs.

 The ordering catalog system is an electronic


catalog containing certain selected
(contracted) suppliers, selected products &
services & the agreed purchasing prices of
products & services.
E-auction
 E-auction means an online, real-time dynamic
auction between a PE and a number of
suppliers/buyers who compete against each
other to win the contract by submitting
successively lower priced bids in case of
reverse auction or submitting successively
higher bids in case of forward auction, during
a scheduled time period.
E-auction cont…
 E-reverse auction is used in the procurement
of standard goods for which specifications can
be determined with precision, where price or
quantity is the only determinant & where there
exist significant numbers of potential
tenderers.
E-auction cont…
 Suppliers can enter bids at which they think
they can win the order.
 Suppliers may outbid each other with the
result that the price will decrease as the
auction passes.
 E-reverse auctions usually have a certain
timeframe in which they take place & at the
end of this timeframe one supplier with the
lowest bid will win the order.
E-auction cont…
 E-forward auction is applied in the disposal
by tender of goods whose specifications can
be described precisely & whose salvage value
have been established.
E-tendering
 E-tendering involves carrying out all traditional
tendering activities in an electronic form.

 It involves the use of electronic means to


facilitate the complete tendering processes,
which include advertising, submissions,
evaluations & award of contract for supply of
goods/service.
E-tendering cont…
 E-tendering supports the selection stage in the
procurement process.

 A PE prepares a tender notice that invites


Tenderers to submit priced offers & advertise
electronically to ensure widest reach of potential
tenderers by publishing a tender notice & doing
advertisements online through internet on
official websites.
E-tendering cont…

 Tender documents can be sent online through


e-mail.

 Notification for successful & unsuccessful


bidders can be done online through e-mails.
Benefits of E-tendering
 The major purpose of e-tendering is simply to
provide efficiency of the process by reducing
and/or eradicating the cost associated with
processing tenders manually.
Benefits of E-tendering
 Saves time compared to manual tendering.
 Saves public money in case of public e-tendering
 Reducing the growing rate of corruption
associated with manual tendering
 Workers acquire new skills & experience of the
e-World
 Makes it easier for businesses to obtain tender
documentation & to submit.
E-payment
 e-Payment system involves electronic payment
methods available for settling payments after
completion of transaction.

 Paper invoice & billing processes can be fully


automated through e-procurement.
E-payment cont…
 The payment processing involve invoice
receipt, invoice approval & processing, and
final settlement of payments.

 One of the benefits of e-Payment is that it


eliminates the delays & data entry errors that
characterize traditional payment.
E-payment cont…
 Also the invoice cycle time can be trimmed
through automatic invoice receipt, approval
and payment.

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