E-procurement

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E-procurement (electronic procurement, sometimes also known as supplier exchange) is the business-to-business or business-to-consumer or business-to-government purchase and sale of supplies, work, and services through the Internet as well as other information and networking systems, such as electronic data interchange and enterprise resource planning.

The e-procurement value chain consists of indent management, e-Informing, e-Tendering, e-Auctioning, vendor management, catalogue management, Purchase Order Integration, Order Status, Ship Notice, e-invoicing, e-payment, and contract management.[1] Indent management is the workflow involved in the preparation of tenders. This part of the value chain is optional, with individual procuring departments defining their indenting process. In works procurement, administrative approval and technical sanction are obtained in electronic format. In goods procurement, indent generation activity is done online. The end result of the stage is taken as inputs for issuing the NIT.[citation needed]

Elements of e-procurement include request for information, request for proposal, request for quotation, RFx (the previous three together), and eRFx (software for managing RFx projects).

Alongside with increased use of e-procurement, needs for standardization arise. Currently, there is one globally developed open extensible markup language based standard framework built on a rich heritage of electronic business experience. It consists of five layers - messaging, registry and repository, collaboration protocol, core components and business processes.[2]

History[edit]

It was first used by IBM in the year 2000, when the company launched its Replenishment Management System and Method, created by Mexican engineer Daniel Delfín, who was then the procurement director at IBM's largest production plant, and Alberto Wario, an IT programmer.[3] The system was designed to solve IBM's complex procurement process for the plant in Guadalajara, Mexico, the largest IBM laptop producing plant in the World, with a production value of 1.6 billion dollars a year. Three years after the system was implemented, the production of the plant grew to 3.6 billion dollars,[4] after which, the company used the system in Germany, and later sold using licenses to other companies around the World.

In the European Union, mandatory e-procurement took place in 2018. This means that any communication within public procurement processes must be fully electronic.[5][6]

In the public sector[edit]

E-procurement in the public sector is emerging internationally. Hence, initiatives have been implemented in Ukraine, India, Singapore, Estonia, United Kingdom, United States, Malaysia, Indonesia, Australia, European Union.

Public sector organizations use e-procurement for contracts to achieve benefits such as increased efficiency and cost savings (faster and cheaper) in government procurement[7] and improved transparency (to reduce corruption) in procurement services.[8][9] E-procurement in the public sector has seen rapid growth in recent years. Act 590 of Louisiana's 2008 Regular Legislative Session requires political subdivisions to make provisions for the receipt of electronic bids.

E-procurement projects are often part of the country's general e-Government efforts to better serve its citizens and businesses in the digital economy. For example, Singapore's GeBIZ was implemented as one of the programmes under its e-Government masterplan.[10]
The Procurement G6 leads the use of e-procurement instruments in Public procurement.

An example of successful reform is shown by Ukraine Prozorro. The result of collaboration between Ukrainian government, business sector, and civil society. This system was developed by the international anti-corruption organization, Transparency International Ukraine, with the help of volunteers, NGOs, business community and state bodies of Ukraine, the WNISEF fund, the EBRD and other partners[11].

Vendors[edit]

This field is populated by two types of vendors: big enterprise resource planning (ERP) providers which offer e-procurement as one of their services, and the more affordable services focused specifically on e-procurement.


Benefits[edit]

Implementing an e-procurement system benefits all levels of an organization. E-procurement systems offer improved spend visibility and control and help finance officers match purchases with purchase orders, receipts and job tickets.[12] An e-procurement system also manages tenders through a web site. An example is the 'System for Acquisition Management (SAM)' which on July 30, 2013, combined information from the former Central Contractor Registration and Online Representations and Certifications Application (ORCA),[13] in the United States.[14]

In the case of government procurement, the benefits might be efficiency, transparency, equity, fairness and encouragement of local business. Because e-procurement increases competition, lowers transaction costs, and has potential to minimize time and errors in the bidding process, efficiency is achieved. Because of easier accessibility and openness of the internet, more people can attain earlier informations, which increases transparency. Neutrality to location and time ensures equity and fairness. [15]

See also[edit]

References[edit]

  1. ^ "The Complete Procure to Pay Cycle".
  2. ^ United Nations, Asian Development Bank, & Korea (South). (2006). E-procurement. [Bangkok]: United Nations Publications. pp. 22-23.
  3. ^ "Replenishment management system and method". Daniel Arturo Delfin Farias, Ruben Alberto Wario Romo, International Business Machines Corp. 2000-11-14.
  4. ^ "Expansión Magazine. Compras Inteligentes".
  5. ^ Directive 2014/24/EU of The European Parliament and of The Council of 26 February 2014 on public procurement and repealing Directive 2004/18/EC. [online]. [Accessed 17 March 2019]. Available from: https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32014L0024&qid=1552850266102&from=EN
  6. ^ Directive 2014/25/EU of The European Parliament and of The Council of 26 February 2014 on procurement by entities operating in the water, energy, transport and postal services sectors and repealing Directive 2004/17/EC. [online]. [Accessed 17 March 2019]. Available from: https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32014L0025&qid=1552850266102&from=EN
  7. ^ "Government procurement news from FutureGov". FutureGov.
  8. ^ "Combating corruption in the EU through e-Procurement".
  9. ^ Mettler T, Rohner P (2009). "E-Procurement in Hospital Pharmacies: An Exploratory Multi-Case Study from Switzerland". IJournal of Theoretical and Applied Electronic Commerce Research. 4 (1): 23–38. doi:10.4067/S0718-18762009000100004 (inactive 2019-02-19).
  10. ^ "Singapore E-Government Action Plan I Programmes". Archived from the original on 2011-09-05.
  11. ^ "Ukraine\'s economy ministry to launch state property lease system in 2019". www.thepaypers.com. Retrieved 2019-02-19.
  12. ^ "What is e procurement?"
  13. ^ "CIRAS - Government Contracting CCR and ORCA". Iowa State University Extension and Outreach. Retrieved 27 June 2013.
  14. ^ "CCR Moving to SAM". U.S. Department of Health and Human Services, Health Resources and Services Administration. Retrieved 27 June 2013.
  15. ^ United Nations, Asian Development Bank, & Korea (South). (2006). E-procurement. [Bangkok]: United Nations Publications. pp. 6-7.