Policy Circle, August 27, 2021
By George Cheriyan and Madhu Sudan Sharma,
Online shopping has already become the preferred mode of buying all sorts of goods and services for individuals. Online aggregator platforms sell vehicle, electronics, healthcare products, garments, vegetables, groceries, travel bookings, and many more. The Covid-19 pandemic has caused huge disruptions in supply chain management due to the imposition of lockdown measures and movement restrictions. E-procurement of goods, services and work has become more important since it is the speediest way to meet the needs of governments.
Electronic procurement, or e-procurement, is the purchase and sale of supplies, equipment, works and services through a web interface or other networked systems. E-procurement implementation is an attractive win-win solution for governments, since it results in cost cutting, introduces different sourcing practices, and delivers other quantifiable benefits. It boasts of a suite of innovative features – all designed to bolster the efficiency, effectiveness and value for money.
E-procurement platforms are technology-driven online portals that are owned and operated by the governments and, in some cases, private entities. Government entities/ businesses register on these platforms and state their requirements to get a list of registered bidders who digitally bid for the sale. The contract is given to a bidder as per the procuring entity’s considerations.
Through e-procurement, a lot of complicated and cumbersome processes are either eliminated or become streamlined. Through e-bidding, procuring entities can make the purchase simpler for specific raw materials and specialised goods such as machinery, and can easily procure small or large quantities as required.
Forms of e-procurement
E-procurement encompasses a variety of forms — some of them are e-ordering, web-based ERP, e-sourcing, e-tendering, e-reverse auctioning and e-informing. In order to get the most out of these methods, a procuring entity has to apply these methods in a coherent, integral way. Of course, it is not necessary that every procuring entity applies every single one of these categories, but the one is applied, should interact optimally. Fundamentally, e-procurement provides ways of drastically reducing costs in the purchasing process. In that respect, the potential merit of various forms of e-procurement seems largely undisputed.
Some of the methods of e-procurement have received a lot of attention already and they are by now quite well-defined and relatively well-established. Other forms of e-procurement are still quite young and untested. Some of them will mature, others may never reach that state. Some forms of e-procurement that seem quite well-defined and relatively well-developed.
Benefits of e-procurement
There are numerous benefits of the e-procurement. As the electronic handling of tasks supports and simplifies the purchasing process, transaction speed is increased. Also, because of e-enabled relationships with suppliers, procurement cycle speeds up. The e-procurement process eliminates unnecessary activities, allowing entity to focus on more valuable tasks.
Following are the top eleven benefits of the e-procurement: Lower cost, increased productivity, transparent spending, eliminating paperwork, increased transaction speed, standardised buying, reduced errors, data analytics-driven crisis management and better harmony. E-procurement saves public money by preventing duplicate spending, leveraging volume buying, and saves costs associated with paper-based systems. Electronically conducting procurement makes it easier to write and analyse reports on the procurement system, meaning an organization can ensure that its procurement procedures conform to the policies.
Once procuring entities learned the system, e-procurement is less time-consuming than traditional procurement. Records are stored electronically which makes it easier to submit reusable tenders. Meanwhile, use of templates means formats can be filled out more quickly. In e-procurement, everything can be saved and stored electronically.
E-procurement portals are both time-saving and efficient. Since there are lakhs of procuring entities at the national level and across the states, there can be differences in what and how they purchase. Conducting purchasing electronically makes it easier for every department to conform to company procurement standards. Electronic paperwork is streamlined and thus easier to check for errors—there’s no messy printing to get in the way either. Along with this, past orders are more easily referenced, meaning there’s a greater chance that a company can compare orders to ensure new ones are correct.
Automatic data analysis in the source-to-pay (S2P) process is extremely important for businesses, more so in crisis management situations. A good e-procurement platform allows such desired analytics-driven crisis management, helping you deal with the changes more effectively and speedily. Traditionally, the production process and procurement existed in silos. However, with the advent of technology, there is an opportunity to ensure better harmony and coordination between these two functions.
Innovations as game changers
GeM is the short form of one stop government e-market place hosted by the directorate general of supplies and disposals (DGS&D) under the ministry of commerce and industry, where common user goods and services can be procured. GeM is for marketing with minimal efforts and for bids / reverse auction on products / services. GeM eliminates human interface in vendor registration, order placement and payment processing, to a great extent. Being an open platform, GeM offers no entry barriers to bonafide suppliers who wish to do business with the government.
At every step, SMS and e-mail notifications are sent to both buyers, head of organisation, paying authorities as well as sellers. Online, cashless and time bound payment on GeM is facilitated through integration with PFMS and State Bank Multi Option System (SBMOPS); web-services integration is being extended to payment systems of the railways, defense, major PSUs and state governments. Seamless processes and online time-bound payment, which is also mandated by the department of expenditure, has given confidence to the vendors and reduced administrative cost involved in pursuing officers for timely payment.
The e-procurement system is almost well established at the central and state levels. However, there is a need to make it a well-established form of public procurement at all district, blocks and Gram Panchayats. This will need a lot of initiative, innovations and investment before e-procurement can become a tool for a transparent and efficient model of public procurement.
(George Cheriyan is Director and Madhu Sudan Sharma Senior Programme Officer at CUTS International, a global public policy research and consumer advocacy group based in Jaipur.)
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