Eskom Procurement Book 2015

THE PROCUREMENT PROCESS

2.7 IMPROVING THE PROCUREMENT PROCESS AND BEST PRACTICES There are a variety of tools and techniques that the modern procurement professional can use to improve the sourcing process. In addition, sourcing best practices exist, within leading organisations, which can be leveraged to improve existing sourcing processes. This section outlines these tools and techniques, and provides examples of best practices. Electronic procurement (also known as e-procurement) is a way of using the Internet to make it easier, faster and less expensive for businesses to purchase the goods and services they require. While e-procurement is a general term that covers a wide assortment of techniques, such as reverse auctions, its overall goal is to streamline the purchasing process so that businesses can focus more management time on earning revenue and serving customers. Implementing an electronic procurement system offers a company many benefits. Purchases are easier to track because they are done over the Internet and the company’s managers can easily see who made which purchases without having to wait to receive a monthly revolving credit statement. Furthermore, many companies incorporate product specifications into their e-procurement systems. Also, e-procurement saves time. Buyers do not need to leave their desks or make phone calls to suppliers in order to place orders; they simply go through the Internet. And, because suppliers receive the order almost immediately, they can fulfil and ship it much faster than with the traditional procurement methods. E-procurement does not work for all items purchased by a firm. Items of strategic importance to the firm are typically not purchased using e-procurement, for example, specially designed engines for a package transportation vehicle. Non-critical items such as, for example, stationery, are better suited to the use of these types of systems [2]. Procurement cards are, essentially, credit cards provided to internal users to allow these internal users to purchase low-cost items without going through the procurement group to accomplish this. These types of cards work well where there are low-cost items required on an ad hoc basis and/or where an established supplier for a low-cost item does not currently exist and/or where the supplier is not covered by some other purchasing system. The users make the buying decisions up to the value allowed on the procurement card and within the user department budget allowed for these types of items. The monetary value of items purchased and covered by procurement cards is typically low. In these cases, the cost of involving the procurement group in a supplier search and qualification exercise would typically outweigh the cost of the item purchased [1].

2.7.1 E-PROCUREMENT AND ELECTRONIC PURCHASING

2.7.2 PROCUREMENT CARDS

41 CHAPTER 2