E-procurement is a comprehensive integrated IT network that encourages purchasing discipline and leverages group buying power for all procurement responsible people in an organization.
E-procurement systems consist of the following tools: automation of internal ordering processes, online catalogs from approved vendors, and an electronic Request for Proposal process that leverages online auctions (e-auctions) to accumulate bids on providing goods and services for a specific project.
According to a study done by the Aberdeen Group, companies that move to electronic procurement accrue the following benefits:
- Reduced off contract spend by 64%.
- Reduced prices by 7.3% for spend brought back onto contract.
- Reduced requisition-to-order cycles by 66%.
- Reduced requisition-to-order costs by 58%.
- Increased total spend under management of procurement group by 20%
Using e-procurement controls on spending are easier to implement reducing maverick spending. These systems consistently lower the total cost of acquisition.