This second part of an extended note on e-procurement examines the necessary steps after a business decision to go with e-procurement has been made based on the information and criteria covered in Part I.
E-procurement is an integrated system of services and technologies that provides a seamless bridge between buying and selling businesses. The e-procurement process begins at the planning stages within the buying company and extends through to the delivery and collections services of the selling company and the receipt and payment services of the buying company. E-procurement shatters walls, enhances controls, and eliminates time delays in the requisition to receipt process.
About This Note
This Technology Note covering the e-procurement is presented in two parts. The first part covers:
1. The Promise of E-Procurement
2. E-Procurement Myths and Reality
3. Preparing for an E-Procurement Initiative
The second part covers:
4. E-Procurement Architecture
5. Selecting an E-Procurement Partner(s)
6. Implementing E-Procuremen
Procurement automation begins with budgeting and ends with the retirement of capital assets or consumption of raw materials. Failure (or choosing) not to include any of the following dimensions of the process de-optimizes the investment at best and opens the process for subversion at worst. Following are features found in product offerings and customer requests with examples of what each function addresses.
1.
Budgeting - is the basis for Automated Expenditure Authorization for Cost Center-based controls and accounting. When a Requisition is either initiated by an authorized individual or authorized by one, the Procurement Engine should compare the Requisition against Budget Levels and other Authorization Rules then forward it to the supplier for fulfillment.
Budgeting services include:
* Expense items
* Capital items
*
Cost Allocation Rules
2.
Project Structure - is the source of Automated Expenditure Authorization project-related controls and accounting. It establishes approval and authorization routings that override or clarify normal budgeting processes. Where Project Accounting is employed, it also establishes the hierarchy of accounts that will be used to capture project costs.
Project Structure services include:
*
Expense items
*
Capital items
*
Cost Allocation Rules
3.
Purchase Contracting - establishes commitments and agreements between suppliers and buyers. Requisitions, Receipts, and Payments leverage Purchase Contract data to set up Purchase Orders and Validate Billing. Goods Receipt and Payments post attainment of purchase commitments and consumption of sale commitments.
Purchase Contracting deals with:
*
Quantity minimums
*
Commitment levels
*
Expiration dates
4.
Bid Management - involves a series of steps from Request for Information to Purchase and Post-Acquisition activities. These steps leading up to a Purchase Order are time consuming and highly prone to contention. Bid Management is concerned with:
* Request for Bid posting (Open and Directed)
* Supplier response posting
* Standard Terms & Conditions
5.
Approval & Automated Authorization - are two distinct process steps. Approval is a statement of concurrence that no known conditions exist to prevent authorization. Authorization empowers action. A combination of automated and manual intervention steps leads to commitment of a purchase order.
Approval services include:
*
Budget comparison rules
*
Authorization Rules
*
Approval Rules
*
Workflow
*
Escalation Rules
*
Bypass Rules
*
Exception Handling Rules
6.
Requisitioning - initiates the procurement process. The more simple and comprehensive this process is, the more useable and less subverted the entire process will be.
Requisitioning services include:
*
Catalog of standard goods, services and information
*
Standard kits
*
Alternative product selection assistance
*
Order amendment
*
Custom routing
*
Shipping, handling and delivery instructions
*
Price variance allowance
*
Delivery variance allowance
*
Cost allocation
*
Order consolidation and contingency
E-procurement is an integrated system of services and technologies that provides a seamless bridge between buying and selling businesses. The e-procurement process begins at the planning stages within the buying company and extends through to the delivery and collections services of the selling company and the receipt and payment services of the buying company. E-procurement shatters walls, enhances controls, and eliminates time delays in the requisition to receipt process.
About This Note
This Technology Note covering the e-procurement is presented in two parts. The first part covers:
1. The Promise of E-Procurement
2. E-Procurement Myths and Reality
3. Preparing for an E-Procurement Initiative
The second part covers:
4. E-Procurement Architecture
5. Selecting an E-Procurement Partner(s)
6. Implementing E-Procuremen
Procurement automation begins with budgeting and ends with the retirement of capital assets or consumption of raw materials. Failure (or choosing) not to include any of the following dimensions of the process de-optimizes the investment at best and opens the process for subversion at worst. Following are features found in product offerings and customer requests with examples of what each function addresses.
1.
Budgeting - is the basis for Automated Expenditure Authorization for Cost Center-based controls and accounting. When a Requisition is either initiated by an authorized individual or authorized by one, the Procurement Engine should compare the Requisition against Budget Levels and other Authorization Rules then forward it to the supplier for fulfillment.
Budgeting services include:
* Expense items
* Capital items
*
Cost Allocation Rules
2.
Project Structure - is the source of Automated Expenditure Authorization project-related controls and accounting. It establishes approval and authorization routings that override or clarify normal budgeting processes. Where Project Accounting is employed, it also establishes the hierarchy of accounts that will be used to capture project costs.
Project Structure services include:
*
Expense items
*
Capital items
*
Cost Allocation Rules
3.
Purchase Contracting - establishes commitments and agreements between suppliers and buyers. Requisitions, Receipts, and Payments leverage Purchase Contract data to set up Purchase Orders and Validate Billing. Goods Receipt and Payments post attainment of purchase commitments and consumption of sale commitments.
Purchase Contracting deals with:
*
Quantity minimums
*
Commitment levels
*
Expiration dates
4.
Bid Management - involves a series of steps from Request for Information to Purchase and Post-Acquisition activities. These steps leading up to a Purchase Order are time consuming and highly prone to contention. Bid Management is concerned with:
* Request for Bid posting (Open and Directed)
* Supplier response posting
* Standard Terms & Conditions
5.
Approval & Automated Authorization - are two distinct process steps. Approval is a statement of concurrence that no known conditions exist to prevent authorization. Authorization empowers action. A combination of automated and manual intervention steps leads to commitment of a purchase order.
Approval services include:
*
Budget comparison rules
*
Authorization Rules
*
Approval Rules
*
Workflow
*
Escalation Rules
*
Bypass Rules
*
Exception Handling Rules
6.
Requisitioning - initiates the procurement process. The more simple and comprehensive this process is, the more useable and less subverted the entire process will be.
Requisitioning services include:
*
Catalog of standard goods, services and information
*
Standard kits
*
Alternative product selection assistance
*
Order amendment
*
Custom routing
*
Shipping, handling and delivery instructions
*
Price variance allowance
*
Delivery variance allowance
*
Cost allocation
*
Order consolidation and contingency
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