Guiding Principles To Follow When Implementing an E-Procurement Solution

With change happening at multiple levels—from changing processes, to implantation of new routines, to the need to learn new skills, you need to be prepared to manage, and mitigate, the disruption.

We recommend several guiding principles to keep in mind as you implement your new e-procurement solution, configure processes, and request customizations:

• Adhere closely to industry standard practices: E-procurement process best practices are generally well established, with clear process flow guidelines, document structures, competitive bidding formats, and transparency guidelines. These generally mirror manual processes, with some simplifications arising from increased transparency of the digital medium. We recommend following pre-defined best practices as closely as possible.
• Minimize complexity of processes: Complex procurement processes, with numerous approvals and complicated conditionalities, substantially add to procurement process time, increasing delays and limiting organizational agility. The major advantages of a digital process include heightened transparency, automated audit trail, and increased process compliance. These advantages can be used to simplify processes and increase speed and flexibility.
• Minimize complexity of documents and forms: Complex requisitioning documents and forms increase work for both procurement users as well as the suppliers responding to queries, leading to greater human error and increased rework. Utilizing simpler forms focused on the most important structured information required improved buyer-supplier communication and results in improved process efficiency.
• Minimize complexity of functionality: 80% of the financial benefits of e-procurement arise from running a standardized, digital procure-to-pay process. Additional functional modules provide numerous ancillary benefits, but add to the cost and time of user training, and system maintenance. We recommend utilizing the minimum necessary functionality and expanding to additional modules only if critical path processes are affected.
• Anchor to ground realities: Procurement teams rely on a number of processes to ensure competitive purchasing from reliable suppliers. These range from simple 3 quotation sourcing to advanced, multi-stage tendering. While functionality can be provided to cater to any process design, there are limits to how effectively suppliers, particularly those in the local market, are able to engage on more complex bidding formats. We therefore recommend using the simplest bidding formulas that continues to ensure a competitive and transparent result.
• Adopt a fit-for-purpose approach: All types of procurement is not conducive to being run through e-procurement. Petty purchases, for example, where there is limited price negotiation potential and the overall transaction value is low, are best conducted directly and documented subsequently. Similarly, very large ticket capital equipment purchases, which require extensive negotiation or customization, and where top management involvement is high, may also not benefit from an overly structured e-procurement process. Therefore, we recommend always determining the procurement medium and approach that best fits the purpose and context.