What is e-procurement? How can it help improve strategic sourcing?

The concept of improving strategic sourcing can be very ambiguous, depending on how a particular company sets its priorities. In general, businesses organize their materials acquisition plans around sustainability, maintaining a positive public image and reducing operational expenses. These three factors complement each other during the decision-making process. To ensure that each of these elements is being considered, enterprises make it a priority to purchase goods from companies that exercise best practices in regard to ethical and environmental concerns.

Working toward success

What is e-procurement? According to TechTarget, it is the business-to-business acquisition and sale of materials and services over the Internet. Just as the Web has provided consumers with a fast, easy way to access information, it has enabled companies from across the globe to connect and communicate with one another. Websites catering to those interested in optimizing procurement practices provide their members with comprehensive, detailed descriptions of other organizations listed with them.

In addition to knowing what other participating businesses have to offer, an online procurement services site allows buyers and sellers to specify prices or open bids. Most importantly, transactions and contract agreements between organizations can be completed. This expedites the materials acquisition and sales process, making it easier for companies to determine which businesses offer the deals that can best complement their own policies.

Supporting brand names

A corporation's image can mean its success or demise. Matt Scott, a contributor to SupplyChainBrain, acknowledged the detrimental effects distribution scandals can have on a company's business. From the horse meat fiasco discovered in the ready meals of United Kingdom retailers to the exploitation of tin for mobile phones in Indonesia, these public relations nightmares can tarnish an organization's name.

In light of these recent events, some businesses are integrating supplier relationship management technology with e-procurement to obtain thorough oversight of their materials acquisition and transportation operations. This level of transparency can even assure professionals with hundreds of partners that best practices are being executed. Scott outlined a number of necessary steps enterprises should take to promote sustainability throughout all facets of their operations:

  1. Maintain constant contact with all suppliers.
  2. Conduct reports regarding environmental policies, labor issues and ethics on a consistent basis.
  3. Leverage data-collecting technology to chart how practice changes affect overall operations.
  4. Ask partners and subsidiaries to provide detailed plans of how they intend to foster sustainability.

By setting goals, abiding by government regulations and utilizing global sourcing technology to promote best practices, corporations can also expect to witness significant cost savings. For example, executives should install solar panels on one of their suppliers' factories, and then conduct spend analysis to figure out how widespread adoption of renewable energy can cut expenses. This endeavor will also appear attractive to consumers, as it shows an initiative to reduce carbon emissions.

Useful for the public sector

People aren't only paying attention to the procurement practices of private enterprises, either. Individuals from all around the world have scrutinized public organizations for executing poor materials acquisition protocols. How a government obtains goods, as well as which companies it's sourcing from, is a subject constituents criticize quite often. For this reason, legislatures are taking measures to allay consumer concerns.

According to Guardian Media, Dr. Bho Tewarie, Minister of Planning and Sustainable Development for the Trinidad and Tobago government, believes that a bill designed to tighten the country's procurement policy will help officials eliminate corruption in the public and private sectors. In addition to implementing stringent regulations, the nation may benefit from vendor resource management software, which can help quickly identify which organizations are employing unsavory practices.

In order for market participants to survive economically, they should exercise transparency so that the actions of all suppliers, human assets and distributors are accounted for.

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