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A Complete Guide to E-Procurement

The way people live and work has evolved greatly in recent years. It’s no wonder the popularity of e-procurement and digital procurement has soared as an alternative to traditional procurement.  But how do you start with an e-procurement service, and how does the way it’s used differ between sectors? What’s more, are there any good e-procurement tools out there to make life easier? Read on to get the answers to all these questions and more. 

 

In this guide:

 

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What is e-procurement?

E-procurement is the process by which businesses purchase products and services from other businesses over the internet. It’s rooted in traditional procurement, which has helped to connect businesses to the right goods and services for centuries. 

 

E-procurement is the digital equivalent of that. It enables a business to purchase items from a supplier on better terms than they might get through a consumer-facing e-commerce solution. These systems are closed networks to which a supplier needs an invite to take part in the digital procurement. 

 

Key features of e-procurement:

  • The end-to-end process of purchasing goods or services from a third-party supplier 

  • Incorporates identifying needs, sourcing suppliers, putting out tenders and more 

  • Aims to streamline purchasing and establish good relationships with suppliers 

     

The concept of e-procurement has grown as the internet and digital technologies have increased their impact on peoples’ everyday lives — and because of changes in the way people do business. This growth was super-charged as the COVID-19 pandemic triggered a huge shift towards remote working from March 2020 onwards. 

 

Increasingly, organisations are prioritising support for remote work and diversifying supply chains to reduce costs and streamline efficiencies. 

Some 85% of business buyers said the pandemic spurred their organisations to handle more of their procurement online.

— Amazon Business

Who is e-procurement for?

 

E-procurement can work for organisations of all sizes and all sectors. According to a recent Amazon Business survey, 96% of buyers plan to continue leveraging e-procurement long term2. Furthermore, 1 in 3 expect their organisation to make at least half of their purchases online this year. 

 

Let’s look at e-procurement in government, education, healthcare, and commercial businesses to get an idea for how it’s used across different industries. 

Ultimately, the buyer organizations that don’t maximize e-procurement technologies will face significant operational challenges that diminish efficiency and waste precious budget

— B2B Commerce In Evolution report, Amazon Business

Amazon business

E-procurement in government

  • The broad scope of government business demands it procures goods and services across many areas of the public sector — from hospitals, schools, and the police force. Because government procurement uses public money, spending is tightly regulated3. 

     

    The Government provides a digital marketplace for public sector e-procurement support - In-tend Ltd. The platform provides multiple different services and procedures to support public sector users in their e-procurement processes. These include:

     

    • E-Tendering
    • E-Contracts Management
    • Spend Control
    • E-Auctions  

  • Top 5 government procurement priorities:

     

    • Job creation in disadvantaged areas
     
    • Investing in skills and training opportunities
     
    • Encouraging the growth of local economies
     
    • Supporting the fight against climate change and environmental waste 
     
    • Considering the wider benefits of public spending  

40% of government buyers said increasing efficiency within the procurement department was a top priority this year.

— Amazon Business

Amazon business

E-procurement in education

  • The Department for Education (DfE) manages procurement for early years education, schools, and universities. Procurement in the education sector is all managed through the e tendering portal, Jaggaer.

     

    The pandemic ushered in an era of remote learning with around 60% of key stage education dependent on parent schooling for the first nine months of 20204. After all schools and education centres were closed (with only some exceptions) in March, educators had to be flexible about what they taught and where.

     

    What can Amazon Business do for Education organisations?

  • Top 5 education procurement opportunities:

     

    • Drive economic growth
     
    • Improve educational standards and experiences across the country
     
    • Enable the support of disadvantaged children
     
    • Provide the best start in life for all children
     
    • Recover from COVID-19 impacts on education

‘Digital purchasing supports both online and traditional educational institutions by providing easy access to supplies that can be shipped to multiple locations— campuses, schools, and directly to students.’

— Rob Green, Amazon Business

Amazon business

E-procurement in healthcare

  • Healthcare is the biggest sector of public sector procurement. NHS procurement faces consistent high demand for its services and, therefore, essential medical goods. Healthcare itself is just one of the services that the NHS procures for – and the main one at that. For example, services include:

     

    • Healthcare – including the buying of medical equipment, such as PPE and ventilators
    • IT – financing systems and equipment for surgeries and hospitals
    • Facilities management – such as cleaning equipment and services

     

    As the NHS is a large public-funded network or multiple sectors, Clinical Commissioning Groups (CCGs) are in charge of procuring local services for individual areas. Goods, on the other hand, are often procured in bulk and distributed to health service organisations and providers by the NHS Supply Chain.

     

    What can Amazon Business do for healthcare organisations?

  • Top 5 healthcare procurement priorities:

     

    • Partner and collaborate with trusts
     
    • Focus on cost improvement while delivering high value
     
    • Increasing resilience and capacity to cope with high demand
     
    • Streamline the NHS Supply Chain data strategy
     
    • Invest in the future by focussing on long-term benefits  

The number one pain point for healthcare buyers is gaining access to suppliers that meet their business needs.

— Amazon Business

Amazon business

E-procurement in commercial businesses

  • Commercial businesses have always needed supplies and services to operate. From stationery and staplers to cleaners and cloud solutions. The procurement of such goods goes back to the beginnings of business. For decades, these processes have centred on a desire to save money and boost efficiency. 

     

    But, in recent years, priorities have shifted. Of course, any business still wants to save money and work more efficiently — but the pandemic brought big changes. For example, in April 2020, just a month after the first lockdown was announced, 46.6% of people spent some time working from home6. Furthermore, this number had only dropped slightly by January 2022 – with 36% of employed adults saying they’d worked from home at least once over the last week7.

     

    The adoption of remote and hybrid working meant commercial businesses had to change their procurement strategy – now many workers are not constrained to a physical office space.

     

    What can Amazon Business do for commercial organisations?

  • Top 5 commercial procurement priorities:

     

    • Improving sustainability 
     
    • Supporting local businesses within our community 
     
    • Increasing efficiency and increasing supply chain diversification 
     
    • Supporting remote work 
     
    • Streamlining the purchase process for stakeholders outside of procurement  

‘We are coming up with new and innovative ways to empower commercial businesses to reinvest in their communities and support small and minority-owned businesses.’

— Petra Schindler-Carter, Amazon Business

How does e-procurement work?

 

E-procurement make it easier for businesses to get the products and services they need. Like traditional procurement, it works by creating a closed network to pair buyers with suppliers.

 

An e-procurement system brings together buyers and suppliers and makes it easy for them to do business.

 

But not everyone can purchase from an e procurement supplier. You must be a registered business to join a network and its website. And by creating an exclusive network, the e procurement provider can streamline the procurement process.

 

E-procurement simplifies areas such as:

  • Sourcing products
  • Negotiating terms
  • Making purchases
  • Tracking orders
  • Updating records

‘Procurement leaders can drive efficiencies across their organizations by integrating digital solutions such as purchase order and invoice storage and sharing, approval workflows, expense management, and enhanced security protocols across departments.’

 

— B2B Commerce In Evolution report, Amazon Business

Amazon business

It’s like Amazon, for your business. Get the same smooth shopping experience at work as well as at home.

Learn more

What are the types of e-procurement?

The e-procurement process covers several types and various stages — much the same as traditional procurement. Here we have captured the main options for and potential stages of digital procurement.

  • Amazon business

    E-sourcing

    Establishing what the buyer requires and scoping out potential suppliers with a view to pre-qualifying.

  • Amazon business

    E-tendering

    The e-tender process is the formal tendering stages. RFI (request for information), followed by the RFP (request for proposal) and then seeking quotes.

  • Amazon business

    E-auctioning

    An e-auction is a digital platform which enables bidders to compete in real-time to win a project.

  • Amazon business

    E-ordering

    The requisition stage, where a formal request is made to the supplier for its services, and purchase orders are raised.

Functions of e-procurement

 

The main functions of e-procurement for business include:

 

  • Automating laborious and time-consuming tasks to expand resource within your team
  • Centralising procurement through one platform to improve transparency and access
  • Live updates of procurement to enhance comms and simplify the process
  • Aiding collaboration and boosting transparency across tracking and reporting
  • Creating a space for multiple partners and stakeholders to simply and quickly negotiate deals

Benefits of e-procurement tools and software

Amazon Business e-procurement tools and software can help you to reshape your buying process. Explore some of the key benefits of this solution.   

  • Purchasing optimisation

    Purchase smarter and simpler with the power of Amazon for your business. Explore bulk volumes. Easily add new users. Ensure every buyer gets what they need.  

     

    • Increase access to selection and deals. Choose between multiple offers from sellers competing for your business at the most comprehensive online store for business purchasing. 
    • Quickly and securely onboard suppliers. Add new users as and when you need them in a few simple steps. Empower buyers with single sign on (SSO) access to Amazon Business. 
    • Simplify purchasing operations. Benefit from the full purchasing power of Amazon Business with intuitive tools for budgeting, fulfilment, and replenishment. 

  • Improve spend intelligence

    Get savvy about your spending with Spend Intelligence from Amazon Business. Gain insights to improve efficiency and better manage cash flow with these powerful tools. 

     

    • Discover purchasing insights. Understand your purchasing patterns like never and channel that insight around spend into smarter purchasing decisions. 
    • Scale buying through compliance. Empower your buyers with a safety net so when they’re purchasing, they’re doing so within your policies and compliance commitments. 
    • Manage cashflow. Ease your cash flow with flexible payment options. Take up to 55 days to pay without incurring interest with an Amazon Business line of credit or pay by invoice.  

  • Accelerate growth

    Grow faster, smarter by leveraging the power of Amazon Business to expand your operational capabilities. 

     

     

    • Fill operational gaps. As your organisation expands and grows, call on Business Prime’s network of partners to ensure operational needs are met.  
    • Integrate across your organisation. Simplify the purchasing process for your buyers by working with procurement tools already integrated with Amazon Business. 

  • Organisation-based solutions

    • Enterprises. Making changes to your procurement can boost your operational efficiency and make procurement easier for everyone involved by empowering teams to make responsible purchasing decisions.  
    • Education. Cost and compliance are key drivers in education procurement. Protect against excessive spending with pre-approved budgets and promote best practice with buying policies.   
    • Small businesses. When you’re running a small business, time and money are everything. Spend less time on purchasing with custom buying lists and purchase from thousands of sellers using one system. Learn more   
    • Non-profits. Compliance is crucial for non-profit organisations. The Spend Visibility tool highlights buyer compliance issues and improves budgeting decisions and transparency. Learn more 

Remote working has trigged an e procurement revolution. Explore how procurement shifted online with our exclusive report.

Read the report

Challenges of e-procurement

E-procurement comes with some strong advantages, but it’s not the ideal solution for every type of organisation. Here are some potential disadvantages to consider:

  • Tech-dependent. E-procurement is a tech-based solution. If the tech fails, it can lead to issues around process and due diligence. Invest in a platform with a global reputation for stability and security to minimise risk.
  • Engagement issues. Any new system brings process changes, which can be difficult to get your team on board with. Choose a platform that is known for its intuitiveness, user-friendly features, and comprehensive support.
  • Complexity and integration. Not all systems are compatible with one another. And systems that fail to communicate are a big fail. Choose a platform that can be integrated with a wide range of procurement tools. 

How to get started with e-procurement

Amazon Business can help you to streamline your e-procurement process and make it run more efficiently. With deep integration with existing procurement platforms, Amazon Business gives you the opportunity to run procurement from one platform, enhanced and powered by the suite of Amazon tools.

 

Amazon Business Punchout

To integrate your e procurement with Amazon Business you need to set up Punchout. With Punchout you can:

  • Simplify the buying experience
  • Drive compliance with invoice integration
  • Increase visibility into your spend

 

Setting up Punchout Integration in Amazon Business

  1. Open Your Account dropdown
  2. Select Business Settings
  3. Click Groups under Members heading
  4. Click Add Group to create Punchout group
  5. Select Individual or Shared Payment Methods and Individual or Shared Address
  6. Click the newly created group
  7. Go to System Integrations > Configure Purchasing System
  8. Select your purchasing system, then hit Save 

‘We didn’t compromise our approval system, didn’t reinvent the wheel, or drastically change any of our existing systems. Instead, we seamlessly integrated Amazon Business with our purchase-to-pay ecosystem to order what we need in a scalable way.’

— Nassim Kefi, Procurement Advisor, ExxonMobil

Learn more about setting up Punchout Integration

E-procurement jargon buster

When talking about e-procurement there’s a lot of terminology to get your head around. Here are some of the key terms you might encounter:

  • Cash Flow. The net amount of cash and cash equivalents coming in and out of a business. Money coming in is termed inflows, money going out is termed outflows.  
  • Requisition. A standardised accounting document which makes a formal request for an item or service required by a business, such as supplies or raw materials.
  • Request for Proposal (RFP). Formal document created by a business inviting people to submit bids for a project. Generally, details the project, its goals, and contract terms.  
  • EBITDA. Stands for Earnings Before Interest, Taxes, Depreciation, and Amortisation. Is used to show the overall financial performance of a business and measure profitability.
  •  Addendum. An addendum can be added to an existing contract to amend or update the terms of conditions. Typical addendums include changing dates and amending payment schedules.

E-procurement: frequently asked questions

  • Who uses e-procurement?

    Businesses of all sizes and across all sectors use e-procurement. Large commercial companies and small-to-medium businesses all require goods and services, albeit to a different scale, for their business to function. The same too for government departments, healthcare providers, and non-profit organisations such as charities.

  • What are the types of e-procurement?

    There are several e-procurement models. These include e-tendering, which is all about sourcing suitable providers and then submitting RFIs (request for information) and RFPs (request for proposal). Another option is e-auctioning, where a web platform enables potential suppliers to bid on a project in real time.

  • What is the difference between e-procurement and e-commerce?

    E-commerce is how everyday people shop online. There are no limits on who can buy, and the same sites and deals are available to everyone. E-procurement is a business-to-business service, where one business buys from another. With e-procurement, the purchase platform is closed, with access limited to those businesses who have been invited to take part.

Discover more about e-procurement

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