Purchasing Electronically

Overview

By purchasing electronically you can reduce prices and increase efficiency.

What are the benefits?

Using electronic processes for your purchasing has many benefits for your company.

• Lower prices - using the Internet to shop around or improving your relationships with favoured suppliers should enable you to drive costs down.
• Reduced procurement costs - purchasing electronically can reduce paperwork and bureaucracy.
• Improved financial controls - electronic purchasing lets you maintain a rigorous audit trail very cost-effectively.
• Reduced overheads - cutting the time spent on administration cuts overheads. Just e-mailing order details will take less time than phoning or posting, and you have a permanent record.
• Improved response times - online purchasing lets you place and track orders 24 hours a day.

Decide on the best strategy

Electronic techniques have the potential to reduce your overall procurement costs significantly. To maximise the opportunities you need to ask some fundamental questions.

• Does your purchasing take place frequently and regularly?
• Does it take place relatively infrequently but involving large sums?

Another key consideration will be your suppliers and their processes.

• What is their delivery record?
• When and how do they require payment?
• What systems do they use?

Establish a formal purchasing policy before you plunge into e-procurement.

• Who in your organisation is best placed to purchase goods? There's no reason to restrict buying online to the purchasing department, particularly for smaller items.
• How long should anyone spend researching prices and buying items?
• Make sure that the cost of researching does not cancel out any savings made, particularly for one-off, small purchases.

It's important to establish a clear e-procurement policy, for both your staff and your suppliers.

• Publish the buying policy on your internal network, so everyone can access the latest version.
• Let suppliers know who is authorised to buy on your behalf - and what they can buy.

This information based on information which is Crown Copyright 2003