E-procurement and its Impact on Supply Chain Management

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E-procurement
E-procurement change the type of skills and knowledge required of SCM personnel
Supply chain management refers to all the activities used to deliver required quantity of products and
services to the targeted group of people (Christopher, 2016). With increasing competition and
globalized business environment, companies are facing immense pressure to enhance the effectiveness
of the supply chain activities. As a result, use of information technology applications has become
extremely common within the corporate environment. Traditionally, as a prime part of supply chain
management, procurement activities are supported by information technology. Thereafter, innovation
of manufacturing resource planning (MRP) and enterprise resource planning (ERP) have allowed
companies to establish strong connection with the suppliers (Puschmann and Alt, 2005). It has allowed
supply chain professionals to deliver required amount of raw materials for manufacturing activities
directly. In addition, it has allowed supply chain managers to perform direct procurement activities.
According to Hsin Chang, Tsai and Hsu (2013), continuous improvement of internet connectivity
helped organizations to develop procurement of products and services accurately. It has helped
companies to decentralize operational procurement processes as result of high level of transparency
provided by e-procurement system. E-procurement provides six types of applications including e-
tendering, e-sourcing, e-reverse actions, e-informing, web based enterprise resolution planning and e-
MRO (Quesada et al., 2010). Availability of all these applications has changed the way companies
purchase products. As per the article by Chang and Wong (2010), effective utilization of e-
procurement has benefited companies with lower prices, better compliance, lower transactional costs
and speedy processing and delivery.
E-procurement has assisted supply chain managers in developing strong long-term relationship with
the suppliers. Furthermore, increased transparency has eliminated unnecessary expenses related with
supply chain activities. E-procurement has also reduced the time required to perform all the supply
chain activities with minimum error percentage. Such benefits have induced companies to rely heavily
on the e-procurement process for performing supply chain responsibilities efficiently. However,
success of e-procurement depends on various applications including ERP, EDI, XML, email and world
wide web (WWW) (Puschmann and Alt, 2005). E-procurement often induces supply chain
professionals to learn applications of e-procurement, IoT and Oracle. Effective use of all these
technologies requires extensive knowledge of the employees, which was not required in case of
performing traditional procurement activities. It underlines the fact that e-procurement has increased
the demand for technological knowledge among the supply chain professionals. In the present time,
multinational companies have segregated e-procurement actions into different parts including e-
sourcing, e-auctioning, e-reverse action, web based ERP and e-ordering, which allowed these

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companies to recruit professionals with extensive knowledge about a particular action (Quesada et al.,
2010). Thus, e-procurement has created various subdivisions within the supply chain department. In
addition, studies have highlighted the importance of using multiple e-procurement functions for
performing all the supply chain responsibilities successfully. Effective use of multiple e-procurement
action has improved inter-organizational coordination, which in turn reduced the cost associated with
the supply chain activities. In the present time, supply chain professionals need to maintain higher
level of coordination with suppliers and internal departments for accomplishing all the objectives. E-
procurement possesses the capability to deal with complex coordination, which creates positive impact
on the supply chain efficiency.
E-procurement has made supply chain activities heavily reliant on internet and software applications.
In the present time, companies from all sectors have multiple software options through which they can
perform activities like e-sourcing or e-tendering. These software enables supply chain professionals to
maintain contact with suppliers from various locations (Stephens and Valverde, 2013). Therefore,
supply chain professionals do not have to get actively involved in negotiation with suppliers. In fact,
availability of large data will assist supply chain professionals to complete entire sourcing process in
limited timeframe. It indicates the fact that e-procurement has shifted the focus from effective
negotiation to reduce the required time. E-procurement has helped supply chain professionals to
perform documentation responsibilities easily. In case of traditional procurement, supply chain
professionals often take long time for documenting all the details, which provides them lesser
opportunity to perform other supply chain professional activities. Furthermore, it has provided the
opportunity to the supply chain professionals to keep track of the delivered products. It, in turn,
assisted these professionals to accomplish all the responsibilities successfully. E-procurement has
provided extensive data about suppliers, which shifted the job responsibility of supply chain
professionals from sourcing suppliers to the maintenance of strong relationship with the suppliers
(Andreu et al., 2010). Opportunity to communicate with employees from other departments or
suppliers have encouraged supply chain professionals to invest time on relationship building. E-
procurement has also induced supply chain manager to concentrate on developing long-term plans for
ensuring sustainable growth for the organization. Development of effective long-term plans can
certainly assist companies to achieve sustainable growth within the targeted market.
Use of an e-procurement system increase the strategic contribution to an organization
Emergence of e-procurement has provided effective alternative opportunity to the organizations in
performing all the operational responsibilities effectively. In the present time, e-procurement plays an
extremely important role in reducing the traditional cost of an organization. However, Wei and Wang
(2010), have mentioned that e-procurement provides greater benefits at the strategic level rather than at
the operational level. E-procurement has shifted the way companies interact with their suppliers, as