The Importance of 5 Rights of Procurement

Procurement incapabilities and aspects cost the organization a huge price either in the form of delayed purchases or any transaction dispute. Attempting to accelerate the procurement process with outdated tools becomes an issue within the organization’s bottom-line.

Here the primary task of the procurement process is to give the right inputs for the organization’s process. The five rights of procurement include:

Right Quantity

Right Quality

Right Place

Right Time

Right Price

The procurement Rs can be also termed as key performance variables or procurement factors. The importance of achieving the 5 Rs are as follows:

Right Quantity: The term right quantity refers to procuring a sufficient amount of products to meet the demand and lessen the excess stock by forecasting demand, inventory management, etc. Insufficient quantity can lead to stock-outs, will lose credibility in sales as well as goodwill, etc.

Right Quality: Poor quality of product will only lead to incurring higher costs, loss of goodwill, and damaged reputation. Right product quality has aspects like reliability, quality conformance, safety, etc. It should be suited to the needs of internal as well as external stakeholders.

Right Place: Right place refers to the place of delivery point. The arrival of products in a safe and secure way can be done by distribution planning, packaging, transportation, etc. Unhandled goods or goods delivered at the wrong place will cause unnecessary damage to goods and also add up in the transportation cost.

Right Price: Right pricing is minimizing the procurement cost in order to maximize the profit. This can be done by continual price discovery, supplier price analysis, competitive pricing and, future negotiations. Without achieving the right pricing, profits will decline while the material and supply costs will rise.

Right Time: Securing the delivery of goods at the delivery point at the stipulated timeline can be done by demand and supplier management.

Therefore, it is must that a supplier should follow the 5 R approach for the smooth flow of the procurement process within the organization.

The 5 Important Steps to Effective Procurement

Thinking about the present competition available, it's essential that organizations embrace new ways of thinking, techniques, and procedures while procuring materials and that will make them "best". Here are the 5 most important steps towards an effective procurement in an organization:

Visibility: The first step to effective procurement is to get good spend visibility on what materials the organization is buying and how much is spend across all your purchases. Progress can’t be tapped without spend visibility. 

Control: Users should get to see and control what they see and buy. The way to do this is to set up controls on local buyings with automated technology to ensure the utilization of negotiated rates and invoice bills is efficiently processed. 

Efficiencies: Here the aim is to make the procurement process more efficient by speeding the procuring activity across all aspects of the process. This step ensures the streamlining of the automated procurement process and the supply chain to eliminate errors and waste if any.

Savings: The aim of step 4 is to generate savings for a procurement group.  The traditional supply chain management model relies on manual processing of negotiating with a supplier to provide the lowest pricing. This brings in to implement a good supplier relationship management platform for a smooth flow of supplier management.

Create Value: The last step is about creating value.  For procurement to add value the focus must be on improving financial conditions, improvement of quality, and improving efficiency by utilizing the resources properly and effectively.

The expense of acquiring, and working together, is on a consistent ascent. Organizations have begun to see procurement management as their top need since it takes up an enormous share of their general spend. 

E-Procurement Opportunities in India

Electronic Procurement (also known as e-Procurement) is the way of using the internet to make it easier, faster, and less expensive B2B (business-to-business) purchase and sale of supplies and service over the Internet. 

E-procurement is something beyond a system for making purchases on the web. An appropriately executed framework can interface organizations and their business forms legitimately with suppliers while having interaction between them. This incorporates management correspondence, bids, questions and replies, past prices, and various emails sent to numerous participants. 

An efficient e-procurement system enables an organization to its interactions with its most crucial suppliers. E-Procurement provides built-in monitoring tools that help to control costs and guarantee the most extreme vendor performance. The e-procurement system allows managers to confirm pricing, and leverage previous agreements to assure each new price quoted is more competitive than the last price.

With all the advantages that are accomplished from E-procurement, the organization can fundamentally expand ROE (return on equity) and ROI (return on investment).

Other impacts of e-procurement are increased efficiency due to market competition, procurement monitoring, fewer errors due to automated procedures, etc.

E-procurement, for purchasing immediate products and services, is a successful procurement framework, causing a ripple effect in purchasing circles. The specialist organization assumes a pivotal job in offering to source and procuring that fulfill client needs and give an abundant worth expansion to the services that are provided. 

Before, traditional techniques for procurement offered little transparency and lesser fulfillment of negotiation with providers. E-procurement offers the advantages of more transparency, more extensive geographical reach and lesser time of negotiation, easy purchasing, and better supplier evaluating. 

Additionally supported reserve funds can be accomplished through mechanized, simple to-utilize purchasing, managing invoices, and supplier enablement abilities. Realizing item numbers, offer costs and contact focuses can assist organizations with finalizing negotiations while different providers are battling to accumulate their important information.

Challenges Faced by a Business during e-procurement

>> One of the fundamental difficulties for e-Procurement is the foundation of the appropriate and custom strategy. Each undertaking or activity should be established in a cautious, systematic and dynamic procedure. This seems to be an exceptionally troublesome task, requiring an emphasis on numerous viewpoints and procedures, an all-encompassing vision, long haul centre, and targets.

>> The government must also have a proper methodology to beat the boundaries to change. Some portion of the methodology is to participate in a thorough evaluation of the present circumstance, the truth on the ground and the stock of ventures, articulate costs, effects and advantages of a program just as ceaselessly screen and assess the undertaking redesigning. 

>> Getting an exercise from the private sector, e-Procurement must be client-driven and administration situated. This implies a dream of e-Procurement suggests giving more noteworthy access to data just as better, increasingly equivalent administrations and techniques for open and organizations.

>> In a common PSU (Public Sector Undertakings) and Government, the procurement runs into many crores and complexity is innate in e-procurement procedure. What is to be procured is entirely subject to the idea of its business, and in this manner fluctuates as per the businesses.

>> In the present situation, receiving a powerful cost sparing component is vital to any organization's proceeded with presence.  Another significant perspective that the Government and PSU's have to investigate is driving authoritative compliance with negotiated agreements. This would empower Governments to keep and continue their reserve funds.

Top 6 Essential Features for B2B Marketplaces

Being different from the single seller B2B websites, a multi-vendor B2B marketplace highlights one of a kind capacities that empower clients to analyze, communicate, and pick items from the best B2B merchants everywhere throughout the world. 

This idealistic cycle of the developing scale made the B2B marketplace a worthwhile plan of action and gave eCommerce organizations various open doors in each industry. Vendors also get advantage by joining the b2b marketplace as it helps to expand their potential customer base and increase brand exposure.

Unlike B2C marketplaces, the B2B e-commerce portal is a bit complex due to multi-vendor users, making orders in bulk, bidding workflows, etc. 

The top 6 features that are essential for b2b marketplaces are as follows:

>> Multi-vendor portal capabilities: Each vendor utilizing the b2b marketplace shall be permitted to effectively deal with their own organization data, contact details, material pages, material inventory, and also the pricing.

>> Security, Transparency, and Confidentiality: There should be multi-vendor user management available in the b2b platform to easily manage and control their company details and other sensitive details.

>> Responsive to edit PO: B2B buyers will always expect to have a flexible portal where they can edit or revise the purchase order. It can include changing the payment method, shipping address, method of delivery, etc.

>> Filtering and Navigation: Enabling advanced filtering and search will allow b2b buyers to quickly find the required products and also have a smooth buying experience.

>> Manage Pricing: B2B vendors require full command over their eCommerce portal set up just like they would do on their own portal. This includes customizing and managing pricing for their buyers, constant evaluation with their backend systems, etc. 

>> Order Negotiations: B2B sellers-buyers often involve multiple cycles of order negotiations before purchasing the product. So, there must be practices concerning a consistent change from RFQ to formal quote to arrange in B2B eCommerce.

5 Advantages of Digital Procurement Technology

Procurement is simply the management of purchasing the materials involved with the outside merchants. It searches for approaches to verify items at the least cost. It ensures procured items make it securely to the premises. It tallies the money.  

It is not so surprising that something has digital, whether it is for a B2C market or a B2B market. And digital procurement is no different as the advanced analytics and data-driven optimization is leading to better insights, allowing for increased value-chain between all the stakeholders. 

Without a committed department for procuring the materials, activities would slow down. The question here is: what makes digital procurement so different?  The e-procurement benefits are getting progressively obvious as the more extensive comprehension of its numerous utilizations becomes evident.

• Cost Reduction: Expenses can be decreased by utilizing volume, having organized provider connections and by utilizing framework upgrades to diminish outside spend while improving quality and supplier performance. E-procurement takes out desk work, revise and blunders.
• Productivity: The internal employees can get the materials they need through an online purchase requisition and order arrangement. Even the procurement staff can be discharged from preparing requests and dealing with low worth exchanges to focus on key sourcing and improving provider connections.
• Visibility on Spends: Streamlined tracking of transactions ensures the full track of purchase requisitions reports, purchase orders, and the payments that are made.
• Better decision making: The visibility highlights give real-time actionable insight into the procurement process. This helps in taking better decisions and design potential ways to take the possible gains.
• Removing Tedious tasks: Procurement frameworks can mechanize a significant number of the tiresome procedures workers need to trudge through consistently.

E-procurement preferences must be completely acknowledged when the frameworks and procedures to oversee it are well set up. Software tools are needed to create procurement documentation of electronic requests for information (e-RFI), requests for proposal (e-RFP) and requests for quotation (e-RFQ).  

8 Steps to Successful e-Procurement Process

Electronic procurement or simply e-procurement refers to the acquisition of products or services on the web. e-Procurement helps in saving the time, efforts and various procurement cost as it turns the manual procurement to the automated procurement process. 

Here are the 8 steps for implementing a successful e-Procurement process: 

e-Procurement

• Define the business objective: Any organization that is operating its business must identify its objectives that they want to achieve from an e-procurement solution. A clear and well-defined business objective ensures the successful planning of strategy.
• Analyze the current procurement process: By reviewing the current procurement process of the organization, one can easily identify the major gaps in the procurement process and can specify the areas of improvement.
• Preparing a revised procurement strategy: At the point when the organization composes the updated procurement methodology, they should keep in mind that the acquisition procedure merely includes a joint effort of people within and outside the business. Hence, an organization should consider internal and external factors, technology, etc. while developing a realistic strategy for e-procurement.
• Do ensure support from management: If the management supports the implementation of e-procurement, it will get the essential attention, active participation of all the stakeholders, and the required number of resources.
• Measure success by KPIs: Against each objective of e-procurement implementation, a KPI (Key Performance Indicator) should be developed. A good KPI provides real-time status of each objective.
• Review the optimal e-procurement solution: After all the processes, the next step is to evaluate and review the e-procurement solution vendors and select the best alternative that meets the requirement of your organization.
• Execution of e-Procurement solution: After selection of best e-procurement solution vendor, it is time to set a well-thought project plan that is done along with the vendor to ensure the success of the implementation of an e-procurement solution.
• Measurement of e-procurement success: Post-implementation, the last step is to measure the success and check how the objectives are met.

To ensure e-Procurement achievement, you ought to have clear business objectives, defined processes, adequate assets, and reasonable desires. You should choose the correct e-procurement method, appropriate usage plan, execution of preparing system and post-execution exercises.

Choosing e-Procurement over Traditional Procurement for Your Business

Procurement is the most necessary business process for every organization, whether small-medium enterprises or large organizations. In this new digital world, organizations are trying to find ways to adapt to the conversion of business processes. In the private sector, procurement is viewed as a strategic work function that operates to boost the organization's profitability.  It is also efficient because it helps in managing the raw material costs and helps in identifying better sources of supply.

Today, e-Procurement has modified the approach businesses get & provided a lot of required pay visibility into indirect spend management. Procurement management technology has now become an important factor as it has streamlined all the purchases under one interface and reduced most of the organization’s efforts. 

Procurement has made it easy for buyers to log into the online catalogs and compare it with various vendors. Purchase Order (PO) activity has become more instant as buyers can confirm the availability of materials with suppliers in real-time communication.  

With e-procurement, organizations will save time as its machine-driven facility quickens the internal processes in terms of sourcing. No doubt, negotiation and obtaining the simplest and best price will be completed in a mere few clicks.

E-procurement helps reduce the effort of organizations since it permits easy accessibility to additional suppliers, which opens additional prospects and choices. Online traditional procurement, e-procurement helps to connect with suppliers not only locally, but also globally.

With more standardization in procurement technology, buyers can now easily access catalogs online, allowing them with greater accessibility. eProcurement solutions can allow in greater scalability to grow with the buyers and sellers. So, for a business to grow and expand into today’s market, definitely eProcurement can be the first step towards productive business. 

The Future of E-Procurement in India

Most items are procured via dedicated e-procurement portals that enable the registered buyer to browse for different suppliers of the products or services. Where most of the e-procurement platforms are set for e-auction where a buyer bids on the items he wants to procure, others follow a different approach where all the products and services are displayed with a specific price attached to it.

There is a rise in the e-procurement market as the b2b buyers now make their purchases online. They search, identify, and purchase over the internet for their respective businesses. “68% of B2B buyers now purchase goods online”- (According to 2014 State of B2B Procurement Study — Acquity Group)

With an e-procurement solution, the long procure-to-pay cycle can be made more effective as well as efficient. Organizations should also focus on flexibility, usability, and automation. This will help buyers to easily purchase the items while on the job and will empower a wider opportunity to adopt the e-procurement solutions.

E-Procurement is at the center of increasing the longer-term success of B2B E-Commerce. Automation and online shopping experiences are essential currently within the B2B sector. A slow rising adoption rate remains to be the most important obstacle for E-Procurement, but if organizations start to give an additional focus to the usability, flexibility, and automation of their systems and supply end-to-end final payment and settlement, then it is not so long to see an increase in adoption of e-procurement platforms and a true worth of e-procurement can be seen.