What is Online Procurement?

Also known as electronic procurement or e-procurement, online procurement is the process of ordering and selling goods and services using the Internet. This type of ordering may be accomplished using a branded access page that is established by the vendor for a specific customer, or through a general ordering site put in place by the vendor. The main purpose of online procurement is to expedite the order placement, processing, and delivery of goods and services.

There are several different types of online procurement in use today. Some have to do with preparing to place orders, while others are focused on order placement itself. With each of these applications, the idea is to streamline the tasks usually handled by purchasing agents, allowing them to conduct research and place orders in less time.

For customers, online procurement systems usually include functions that are known as resource planning tools. These tools make it easy to identify what is needed, create requisitions for those items, and generate purchase orders once a vendor for those goods or services is identified. Software of this nature helps to simplify the in-house processes used by many businesses to qualify vendors and set up regular ordering of necessary items based on usage.

Companion tools to the online procurement process include software that helps to identify new potential vendors. This tool can assist in performing cost comparisons with existing vendors to see if the same type and quality of goods and services can be obtained at a more competitive unit cost. Software of this type usually includes tools that make it possible to query potential suppliers in regard to pricing on various goods based on volume purchasing.

Another component that is found in many Internet-based purchasing procurement systems is tracking capability. This allows customers to see when an order was received and determine if it is currently in process or has been filled and is now en route. It is not unusual for procurement programs of this type to include a projected delivery date, based on the current status of the order. This handy tool can eliminate the need for purchasing agents to make frequent phone calls to vendors in order to find out how the order is progressing and when delivery can be reasonably expected.

From the vendor perspective, the use of online procurement strategies makes it easier to receive and begin processing orders in a more timely manner. At the same time, the support functions that allow clients to see the current status of the order mean less time spent tracking down information for clients. This allows the vendor to concentrate more on getting the order prepared and on the way.

The efficiency of online procurement has changed the way many companies do business. Clients can adjust their volume ordering so that they maintain smaller inventories of raw materials, which in turn means less taxes to pay. Vendors can process more orders concurrently, which helps to increase business volume. With some services, online procurement means immediate delivery with services such as teleconferencing, long distance, and electronic materials such as e-books.