What Is E-Procurement?
More than just a digitization of buying and selling, e-procurement represents a radical re-envisioning of the way that government goes about IT procurement and other forms of purchasing in order to meet the mission of citizen service.
“e-procurement is taking the procurement process itself — from requisition and sourcing, all the way to the end of the process with payment — and making that an electronic, online process,” says Shane Caudill, director of Virginia’s e-procurement Program, eVA.
“It’s taking that entire procurement business process and putting it into software, an electronic format,” he says.
True e-procurement will effectively automate all activities related to government purchasing.
“It includes everything from suppliers registering to bid to building sourcing events, inviting suppliers, suppliers’ bidding online, evaluating bids and proposals, awarding to a contract or purchase order, and building the contract and managing it,” says Bob Sievert, NASPO CIO. “And it’s all done in this system electronically.”
The approach promises to “streamline and automate” the public procurement process, says Andrea Patrucco, assistant professor of supply chain management at Florida International University College of Business.
For state and local governments, “it goes beyond the traditional automation of order delivery and invoice cycles,” he says. “Today, it encompasses the digitalization of all procurement activities, including requisitioning, sourcing, bidding, payment and invoicing.”
An e-procurement strategy can potentially add more rigor to the purchasing process. Suppose an employee needs to order office supplies, for example.
“The e-procurement system is going to integrate with the finance system to check the budget and get approvals,” Sievert says. “And there are tools for reporting and spend analytics to give insight from an operational perspective, like workload, as well as from a strategic standpoint: Where are the taxpayer dollars going, where can we leverage state spending?”
e-procurement delivers “predefined rules based on the type of product or service that you’re buying, your level of authority, the dollar values,” Caudill says. “The system is routing that to the appropriate checks and balances, and it’s all happening electronically.”
All of this “allows you to get more with the state dollars, to do analysis and be smart about spending,” he says. “With manual processes and piecemeal systems, they don’t have the data all in one bucket in a way they can categorize it and analyze it. E-procurement gives you all that.”
What’s the Difference Between E-Commerce Websites and EDI?
For state and local entities exploring a move to e-procurement, it’s important to understand some key pieces of terminology. There will likely be talk about e-commerce websites, as well as electronic data interchange, or EDI. It’s helpful to know what these are, in terms of e-procurement, and how they operate.
The e-commerce website is the place where buyers interact with the system. It is “all about buying electronically, most typically via a shopping cart. I’m shopping, picking, buying and paying, and it’s sent it to me,” Sievert says.
On an e-commerce site, “I’m conducting a very specific transaction,” Caudill says. In Virginia, “we have catalogs that allow our end users to go into a supplier’s website to buy goods like office products. Then, we bring those items out of that e-commerce site into our e-procurement system for those approvals.”
EDI refers to a specific format for the digital exchange of information. It is “a standardized approach for the electronic exchange of documents between buyers and suppliers,” Patrucco says.
“EDI follows specific standards like ANSI X12 or UN/EDIFACT. It is just one of the data formats that can be used within an e-procurement platform, which may also use formats like HTML, XML or others,” he says.
The important thing to know is that both of these, together, contribute to the whole of e-procurement.