Procure or die
Procurement functions can make or break a businesses performance. Good tracking systems ensure efficiency, and reduce the opportunity for fraudulent activities.
In-fact, procurement fraud within industries such as the Canadian construction industry have seen an average loss of $628,500 a year from procurement-related fraud.
Not only will good procurement processes protect your businesses bottom line, good procurement functions will improve buyer-supplier relationships. And as the buyer-supplier relationship improves, so will their supply chains performance.
But how can firms achieve heightened success in their procurement processes.
A group of Taiwanese researchers believe that web-based e-procurement is one of the best ways of positively influencing supply chain performance (Hung et al, 2013).
What is web-based e-procurement?
Web-based e-procurement involves numerous activities from facilitating necessary procurement processes, as well as improving information share amongst supply chain partners (Hung et al, 2013).
Web-based e-procurement adds significant advantages from reducing purchasing process costs, reducing purchasing time, and developing better communication amongst key-partners (Hung et al, 2013).
The act of reducing costs, transaction times, and improved communication leads to a strategic advantage that operates on an inter- and intra-organizational level.
Furthermore, web-based e-procurement software tends to be universal and applicable for everyone using the software within the supply chain. Because the software involves using web-clients, the necessity for specialized software is less required.
What are the benefits of web-based e-procurement?
The benefits of web-based e-procurement can be broken into both tangible and intangible benefits for an organization.
The tangible benefits involve the benefits that directly affect primary activity costs. For example, web-based e-procurement will reduce transaction costs and transaction time, which then positively influences buyer performance (Hung et al, 2013).
Web-based e-procurement can also lower inventory levels and shorten time-to-market cycles, improving an organization’s supply chain through lean and agile practices.
Web-based e-procurement will also include intangible benefits that focus on reducing administrative time in monitoring procurement purchases, enhancing budget controls, and improve business process integration (Hung et al, 2013).
Overall, web-based e-procurement software was found to improve both buyer and supplier performance. E-procurement software would do this by developing enhanced partnerships, and improved information sharing (Hung et al, 2013).
Wei-Hsi Hung, Chieh-Pin Lin, Yi-Ming Tai, Chin-Fu Ho & Jau-Jeng Jou (2014) Exploring the impact of Web-based e-procurement on performance: organisational, interorganisational, and systems perspectives, International Journal of Logistics Research and Applications: A Leading Journal of Supply Chain Management, 17:3, 200-215, DOI: 10.1080/13675567.2013.837431