What is Electronic Procurement Software?

eProcurement, or electronic procurement, is application software that manages requisitions, sourcing, contracts, status tracking, change orders, receiving, and invoicing.  There is a wide variety of different offerings eProcurement platforms provide.   Some eProcurement software solutions are designed for large enterprises with thousands of users and a complex web of workflows.  In contrast, other eProcurement software solutions are designed for small or medium sized businesses.  However, in both instances, eProcurement systems are fully electronic and thus not reliant on spreadsheets and emails to log and store information. 

To enable these benefits, there is a set of key features that an eProcurement system should have.  Together these cover the full procure-to-pay process, starting with the initial stakeholder request and ending with payment to the supplier.  These features include:

• Roles & Permissions: eProcurement systems allow organizations to define certain roles and permissions for users based on their job and responsibilities. This allows for the separation of responsibilities, such as separating the individuals that can request items from those with the authority to execute purchase contracts.  Procurement dollar value authority can also be established to route purchases above a certain dollar threshold to a certain individual for review and approval.
• Purchase Requisitions: Purchase requisitions allow users throughout the organization to submit requests for goods and services that they need purchased. Requests within an eProcurement purchase requisition system allow users to easily keep track of parts, quantities, budgets, cost codes, technical data, required dates, and any other piece of information pertinent to the request.
• Supplier Management: Rather than everyone having their own contact book and disparate lists of supplier capabilities, an eProcurement system can easily keep track of an organization’s suppliers, their contact information, and all relevant manufacturing capabilities in a centralized location.
• Sourcing and RFQs: Efficiently creating a bid list and sending out a request for quote with the click of a button can save hours on having to manually contact and track each supplier for every single request. It is also easier for suppliers to have all their requests organized for their customers in an intuitive workflow.  After pricing has been submitted, competing proposals are easily compared side-by-side or automatically based on rules setup by the organization.
• Real time data reporting: Rather than the data living on each individual’s desktop, all information about purchase orders, suppliers, and pricing is housed in a secure and centralized database that can be updated and queried in real-time.  This can help ensure insights and subsequent decisions are based on the most accurate and up-to-date data.
• Contracts: Once pricing and lead times are received and a supplier has been selected, the eProcurement system is used to draft, send, and execute the purchase contract. This allows buyers and sellers to easily manage and access their open contracts.
• Approval Flows: Organizations also have the option to set up approval flows when executing contracts. These approval flows can be defined by the roles and permissions given to an individual user along with the dollar authority permitted to approve purchase contracts.
• Contract Change Orders: Once the initial contract is executed, there are a myriad of things that could happen. The buyer could update the engineering drawing, update the quantity needed or the need by date to name a few.  In these cases, the buyer and seller may decide to agree to a contract change order whereby the contract is revised, resent, and executed as the new working contract.  eProcurement platforms can manage all these contract updates and ensure all parties are fully in sync.
• Build Status Tracking: Once the eProcurement purchase order is executed and the supplier starts manufacturing, it will be important for seller to communicate with the buyer on a regular cadence on the latest build status.
• Receiving & Invoicing: Once the goods are processed and received by the buyer, the seller will submit an invoice and the eProcurement software will conduct a 3-way match to ensure that the purchase order, invoice, and receipt are all aligned. If there is a mismatch between any of the records, an error is thrown and the order is not cleared for payment until the issue is resolved.  If all three records match, then the order is cleared for payment.