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CHAPTER 2
THE PROCUREMENT PROCESS
2.7 IMPROVING THE PROCUREMENT PROCESS AND BEST PRACTICES
There are a variety of tools and techniques that the modern procurement
professional can use to improve the sourcing process. In addition, sourcing best
practices exist, within leading organisations, which can be leveraged to improve
existing sourcing processes. This section outlines these tools and techniques,
and provides examples of best practices.
2.7.1 E-PROCUREMENT AND ELECTRONIC PURCHASING
Electronic procurement (also known as e-procurement) is a way of using the
Internet to make it easier, faster and less expensive for businesses to purchase
the goods and services they require. While e-procurement is a general term that
covers a wide assortment of techniques, such as reverse auctions, its overall
goal is to streamline the purchasing process so that businesses can focus more
management time on earning revenue and serving customers.
Implementing an electronic procurement system offers a company many
benefits. Purchases are easier to track because they are done over the Internet
and the company’s managers can easily see who made which purchases without
having to wait to receive a monthly revolving credit statement. Furthermore, many
companies incorporate product specifications into their e-procurement systems.
Also, e-procurement saves time. Buyers do not need to leave their desks or
make phone calls to suppliers in order to place orders; they simply go through
the Internet. And, because suppliers receive the order almost immediately, they
can fulfil and ship it much faster than with the traditional procurement methods.
E-procurement does not work for all items purchased by a firm. Items of strategic
importance to the firm are typically not purchased using e-procurement, for
example, specially designed engines for a package transportation vehicle.
Non-critical items such as, for example, stationery, are better suited to the use
of these types of systems [2].
2.7.2 PROCUREMENT CARDS
Procurement cards are, essentially, credit cards provided to internal users to
allow these internal users to purchase low-cost items without going through the
procurement group to accomplish this. These types of cards work well where
there are low-cost items required on an
ad hoc
basis and/or where an established
supplier for a low-cost item does not currently exist and/or where the supplier
is not covered by some other purchasing system. The users make the buying
decisions up to the value allowed on the procurement card and within the user
department budget allowed for these types of items.
The monetary value of items purchased and covered by procurement cards is
typically low. In these cases, the cost of involving the procurement group in a
supplier search and qualification exercise would typically outweigh the cost of
the item purchased [1].