The Pros
For Buyers
The pros of e-procurement for buying organizations have already been discussed, but these are worth looking at again. For ORM and the majority of MRO, whether an enterprise solution or a subscription to an ASP or a trading portal, all purchasing can be done by employees from the desktop, saving hours of comparison browsing and misordering. This approach frees up purchasing specialists for work on strategic sourcing, and also provides an easy and effective alternative for maverick buying. Overall, these desktop requisition systems for indirect goods save time, and through reduced labor costs, on-contract buying, and best-price purchasing, also save money.
E-market exchanges and auctions—again, particularly within the context of high-volume, low item-cost indirect goods—enable companies to quickly and efficiently participate in real-time bidding in a negotiated commerce environment while realizing cost efficiencies through reduced purchasing costs, access to dynamic market pricing, reduced sourcing cycle time, lower cost of sales, greater access to new geographic markets. In summary, these e-procurement systems promise
lower transaction costs
faster ordering
greater choice of suppliers
increased efficiency of standardized purchasing processes
less maverick buying
the ability for buyers to use their intranet to search for and purchase contract-based and “spot” items from a vast supplier community
elimination of much of the inefficient paperwork and unnecessary, repetitive steps involved in procuring complex equipment and services
improvement and streamlining of the workflow of operators and vendors through features such as online project management and knowledge management
For Sellers
Internet-based e-procurement has even more benefits for suppliers, because it seldom requires a large investment in order to participate, and particularly with the industry-focused portals, it allows them to expand their markets, eliminate restrictive, vertical market focus, and many would contend, to compete on merit (that is to say, price and not relationships). For the majority of suppliers, the advantages include:
Expanding sales. By providing electronic catalogs online, directly to the employees and buyers enterprise-wide, or via the e-hubs and electronic trading communities, suppliers are able to greatly expand their sales volumes. This should help reduce sales process costs by nearly 25%. Moreover, suppliers can redefine the focus of their sales forces toward a more consultative sale, and W.W. Grainger estimates vendors could see incremental sales gains of 10% to 20% by selling online.[1]
Reducing operating costs. Once a supplier’s systems are able to transfer and receive business data directly to and from the buyers, the supplier can create orders much more quickly and minimize the time and cost of transcription errors so common with paper-based processes.
Improving performance. Linking to a customer directly and collaborating to ensure accurate and on-time delivery provides better service and lower overall procurement costs to the customer, and can result in much more collaborative buyer-seller relationships. As a preferred supplier, or if the buyer begins to provide forecasts of requirements to its vendors, the supplier can begin to predict and prepare for individual buyer requirements well ahead of time.