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  June 1st, 2021 | Written by

How to Optimize Your E-Procurement Process

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  • Behind-the-scenes is where things can go very wrong.
  • Acquisition and procurement teams must have strategies in place for e-sourcing, e-tendering and e-ordering.
  • Leveraging e-procurement systems for active monitoring can go a long way toward improving performance and efficiency.

While modern technology generally vastly improves procurement operations, there still is a right and wrong way to establish an e-procurement program. Behind-the-scenes is where things can go very wrong. Inexperienced managers using ineffective strategies can significantly increase risk. Some things that may happen include data inaccuracies or failure to collect it, improper supply or shortage issues, poorly chosen vendors, and something known as dark purchasing.

To avoid these problems and streamline the e-procurement process, it’s necessary to optimize various aspects of the operation.

Tips to Optimize Your E-Procurement Process

You should already have a strong e-procurement system in place, utilizing various tools, applications, and professionals to ensure the operation is carried out smoothly. You may have had this in place for years, or maybe you’re just starting. In either case, you’ll want to focus on optimizing those programs.

Here are some ways to ensure procurement optimization is happening well and delivering value.

1. Conduct Market Research

Even with digital support, due diligence is necessary. Procurement teams must carry out market research to understand product fulfillment times, vendor or supplier performance, supply chain bottlenecks, and similar factors within the organization. Using tools that specialize in e-sourcing, e-tendering and e-informing practices will provide the most benefits. Most e-procurement solutions centralize supply management — including obtaining and comparing supplies — and aid in the order approval process.

The research also provides the type of information that can be applied to optimize the process. Start by building a comprehensive picture of what each supplier will be doing, how orders will be filled and how reliable the various channels are. It’s also the perfect time to develop risk assessment strategies, so there’s a way to deal with each potential challenge or obstacle.

2. Focus on E-procurement Planning

Acquisition and procurement teams must have strategies in place for e-sourcing, e-tendering and e-ordering. How can the team make sure the inventory is accurately monitored and new supplies are coming in regularly? What’s the plan to deal with damaged, missing, or counterfeit goods?

E-procurement solutions can be used to optimize every stage of the procurement cycle, including:

-E-sourcing

-E-tendering

-E-ordering

-E-reverse auctioning and contracting

-Web-based ERP

-E-informing

Acquisition teams should utilize the tools to plan for the initial stages of procurement and beyond. For example, e-ordering includes support to monitor deliveries, which aids receiving practices. Having that information is always beneficial, but a proper plan will detail how it should be used to inform future events like inventory management, order fulfillment or pass-through shipping to other businesses.

There is also a regulatory component to the entire process, which means understanding the various laws and regulations and how they apply to certain situations. Compliance must be absolute. At least a small portion of the team should be focused on meeting compliance and regulatory requirements, with constant monitoring and revised plans.

The Federal Acquisition Regulations state that the acquisition process should always involve proper coordination throughout an operation using a dedicated procurement plan. Without one, operations could turn disastrous.

3. Master Vendor Research and Selection

Selecting a vendor or supplier is generally an involved process that requires assessing and utilizing various metrics. E-procurement solutions streamline this. For example, electronic catalogs can help with researching, selecting and interacting with vendors — specifically when bidding for orders.

E-cataloguing also makes the landscape more competitive, as suppliers are required to be more transparent and provide comparable quotes.

Above all, it leads to stronger supplier-management dealings through a more effective research and selection process. Proactive supplier development, adherence to approved vendor lists, real-time performance metrics, and up-to-date records and information are available through digital solutions. That makes it easier than ever to manage and keep up with relations.

It’s important to maintain strong management strategies for three major reasons. It helps build long-term relationships, enables a proactive quality management system and includes sub-tier contract flow downs through auxiliary vendors.

4. Incorporate Advanced Metrics and Automate

Leveraging e-procurement systems for active monitoring can go a long way toward improving performance and efficiency.

The best strategy is to have a more proactive approach, dealing with events as soon as you know about them, bracing for impact, and possibly even enabling alternate methods to mitigate losses. Fortunately, real-time data solutions and modern technologies, like IIoT, can make this much easier. Today’s e-procurement solutions also incorporate machine learning and mathematical modeling, both leveraging advanced forms of analytics.

First, you’ll need to ensure you’re working with vendors who have embraced Industry 4.0 and are actively utilizing their own forms of real-time data. Assuming real-time data implementations already exist across your operation, the next step is to unite those data streams and leverage an analytics platform that can identify mission-critical supply trends.

That incoming data can tell you what will happen, when it might occur and what that might mean for your business. Moreover, predictive modeling can help you strategize the actual events and build more successful solutions to the challenges. You can track expenditures, monitor risks new and old, reduce bottlenecks, predict errors, keep up with market demands, and much more.

5. Close Out Contracts for Good

Building long-term relationships is a valuable approach, but you will have temporary terms and contracts too, and there will be times you work with a supplier in a one-off transaction. By combining all necessary tools under a single user interface, e-procurement systems make it simple to deal with the many intricacies of vendor management.

Whether it’s a long-term deal or a temporary one, you should ensure the contract and the acquisition are truly severed at the close of a relationship. You may need to conduct exit interviews, greenlight inspections, double-check contract terms, count inventory or supplies, and so on. Digital tools should help facilitate these interactions and organize, store and recall the data later, especially during critical moments.

Every e-procurement strategy should have a phase or rule that deals with this close-out procedure. Streamlining the process can help sustain your forward momentum when moving to new relationships and beyond. It also provides valuable insights if you ever have to circle back.

Preparing Your E-procurement Teams the Right Way

As a procurement manager or executive, overseeing the operation can be challenging. There are many challenges that need to be addressed along the way.

To do that, you’ll need to conduct the right market research, strengthen planning and master the vendor selection process through deep analysis. You’ll also need to incorporate real-time operations and performance metrics in a meaningful way to power proactive responses. Finally, remember to close out contracts properly, which includes collecting and processing a host of vital information — like exit interviews, greenlight inspections and more.

By preparing your e-procurement crews, you’re ensuring your business can continue, streamlined and successful, even in the face of major supply chain disasters. Therein lies the true value of an optimized process.

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