The development of technology and fast internet access allows procurement activities to be replaced by e-procurement. This procurement system is widely used in government agencies, state-owned companies, and private companies in Indonesia. Where e-procurement or known as electronic procurement is the process of procuring goods and services through the internet or other information technology. The e-procurement system is here to facilitate and overcome the weaknesses of traditional procurement. With the new e-procurement system, there are many benefits that can be obtained by businesses, one of which is managing procurement costs more efficiently. In fact, the benefits of the best e-procurement will greatly facilitate businesses to achieve their success. So, what is e-procurement? What are the steps that businesses can take to conduct e-procurement activities? What are the goals and other benefits for businesses? Check out the full explanation in the following article.
What is E-Procurement?
As mentioned earlier, e-procurement is a system of procuring goods and services through electronic media. This is in line with the definition of e-procurement according to the Head of the Government Procurement Policy Agency Regulation No. 4/2012, where e-procurement is the procurement of goods/services carried out using information technology and electronic transactions in accordance with statutory provisions. Meanwhile, according to Willem (2013), e-procurement is the procurement of goods and services using electronic networks (internet or intranet networks) or electronic data change (EDI). In Indonesia itself, e-procurement has been implemented in goods and services procurement activities through the Electronic Procurement System (SPSE) so that all stages of the procurement process can be monitored and evaluated through the available platform.
Difference between E-Procurement and Conventional Procurement
The process sequence of e-procurement itself consists of several stages, starting from ordering, selecting qualified vendors, making payment terms, selecting incoming goods, agreeing contracts, and ending with the purchase of these goods. With a conventional system, companies will find it difficult to do various things related to the procurement process because everything is still manual. And the company will also do various inefficient things such as meetings that must be held face-to-face, announcing vendor winners through newspapers or bulletin boards, and others. Because buying and selling practices that look simple but turn out to be quite complicated, the e-procurement system was created. The goal is to spend as little as possible and get as much profit as possible. One of the differences between e-procurement and conventional procurement is the efficiency in every process and stage of procuring goods and services. E-procurement is easier because it can be done through electronic media and e-procurement evaluation and bidding can be done automatically than conventional procurement. For more details about the differences between procurement and e-procurement, see the following table:
| Procurement | E-Procurement | |
| Vendor Search | Manually performed | Vendor contracts and descriptions are readily available on the website or app |
| Vendor Registration | It is done manually. The organizing committee must prepare the registration process, time and place, and forms or letters related to procurement requirements. | Online registration. The organizing committee simply monitors and checks the number of vendors who register. Vendors only need to login to participate |
| Procurement Meeting | Conducted face-to-face | Done online |
| Procurement Documents | Documents are in hard copy and must be completed and submitted in multiple folders | All documents are digital (PDF/JPEG). Neater and environmentally friendly |
| Product Ordering | Conducted during business days and hours. Buyer and vendor must have a meeting to explain product requirements | Reservations can be made anytime online |
| Administration | Administrative and approval processes are complex because they require signatures, hard copies, and sending between documents | The approval process is online so it can be done anytime. Bosses can also monitor products ordered through the dashboard |
| Payment | Usually done at the beginning of the order | Payment can be made at the beginning, in installments, or at the end after the product is received. |
| Shipping | Shipments cannot be monitored | Shipments can be monitored because they work with an expedition company |
Purpose of E-Procurement
Basically, the use of technology in the e-procurement process serves to facilitate the procurement of goods and services itself. However, specifically there are several other objectives of the electronic procurement system, including:
Accountability
Procurement of goods and services is very synonymous with actions that must be carried out with evidence / signs. With the e-procurement system, it can make management or other things accountable and transparent. In fact, with e-procurement, every stage starting from the initial procurement process to contract implementation can be carried out and reported transparently.
Simplify Audit and Monitoring
Every procurement of goods and services must be monitored in its implementation. With e-procurement, it becomes an easy way to monitor and audit due to the availability and authenticity of data from every activity carried out.
Procurement Efficiency
Efficiency is a major consideration in the utilization of electronic procurement. With e-procurement, operational expenditures for procurement will be reduced when compared to conventional procurement.
Data Availability
Procurement of goods and services from a business activity must be accompanied by complete documents and data. With e-procurement, businesses will get accurate and up-to-date information related to the procurement process.
What are the Stages of E-Procurement Implementation?
The e-procurement stage consists of several processes, namely:
Identification of Goods or Services
In conducting a procurement process, the identification stage is a common stage. This process is done by determining what goods and services are needed by the business in its activities. With e-procurement, the identification process can be done more integrated in a data set consisting of certain information, such as the number of goods to the cost or budget needed.
Verification and Endorsement
The second stage is the verification stage. In this process, the company will verify related to the procurement of goods, for example, the provider or vendor of goods, the procurement / delivery process, to the price offered. After verifying, the company will authorize the procurement process. By using e-procurement, this authorization process will be more effective and efficient because it does not take time and can be done in an integrated manner.
Booking
The ordering process is a stage that requires a lot of coordination. With e-procurement, ordering can be done automatically and takes less time. In addition, the goods ordered will also be clearer and more organized if the company uses an e-procurement system.
Product Checking
After placing an order, the next step is to check the product order. This is important because e-procurement is based on real time data so you can check whether the product is available or not.
Payment
The e-procurement system also aims to simplify the payment process. For example, with e-procurement, payment for goods can be made automatically because it is connected to software that can collect data on invoices for the purchase/procurement of an item.
What are the Benefits of E-Procurement for Businesses?
With e-procurement, the process of procuring goods and services in business activities is easier. Businesses will get many benefits. Here are some of the benefits that businesses can feel with the implementation of e-procurement:
Avoiding KKN
An electronic procurement system makes it easier for businesses to create and analyze reports. The system can record every procurement process. Procurement procedures and processes are also more transparent. In addition, electronic procurement can also reduce physical meetings that are at risk of Corruption Collusion and Nepotism (KKN), both between vendors and between vendors and buyers. The procurement process can be monitored more clearly, increasing control over irregularities.
Save Time and Cost
Electronic procurement of goods and services can save business operating costs. Costs incurred for procuring goods and services such as accommodation, meeting room rentals, and stamps, stamps, and envelopes can be eliminated. In addition, the e-procurement process saves employees time and effort. All required goods and services are contained in the dashboard and can be accessed online. Transaction history is also recorded in the system, making it easier for businesses to re-procure. The purchasing process can also be done anytime as long as there is an internet connection.
Faster Transactions
An e-procurement system can simplify the process of procuring goods and services. A business does not need to ask vendors about item specifications. All information about the goods and services ordered can be seen in the dashboard. The communication process is also easier so that you can focus on more important business. The transaction process is faster and easier. The procurement admin simply opens the dashboard and selects the goods/services that match the needs. After that, the ordered product will be informed to the supervisor for online approval. If approved, the product will be immediately processed by the vendor and shipped according to the specified time and place.
The Importance of Contracts in the E-Procurement Process
Those who are experienced in supplying all the needs of businesses, private companies, and government agencies are certainly familiar with the term e-procurement. Starting from the provision of stationery, building repairs, vehicles, consulting services, to large-value projects included in e-procurement. The large value of the e-procurement expenditure budget and its importance in business activities, makes this activity need special attention so that there are no disputes or irregularities (corruption) in its application. This is because the Corruption Eradication Commission (KPK) itself states that almost 80% of corruption cases come from the goods and services procurement sector. These conditions require efforts to prevent irregularities in e-procurement, especially through the existence of contract agreements. Contracts are very important in e-procurement because they are a tool used to determine the requirements, rights, and obligations between parties involved in the procurement process. Contracts also provide legal protection for both parties in case of disputes or violations of rights and obligations. Here are some reasons why contracts are very important in e-procurement:
Organizing Rights and Obligations
A contract of agreement ensures that all rights and obligations are understood and carried out by the parties involved. It can also help avoid confusion or misunderstandings during the procurement process.
Providing Legal Protection
Contractual agreements provide vendors and businesses with legal protection in the event of a dispute or breach of contract. If one party does not fulfill its obligations in the contract, then the aggrieved party can take legal action to resolve the dispute.
Reducing Risk
Contact agreements help reduce risk in the procurement process. Contracts can include provisions on quality assurance, delivery time, and price. This helps prevent errors or fraud during the e-procurement process.
Maintaining Good Business Relationships
Contractual agreements can help maintain a good business relationship between the vendor and the company. This can help in building trust and lasting partnerships in business.
KH & Bhinneka Contact
To facilitate the smooth running of business, including procuring goods and services electronically, KH pals can contact Kontrak Hukum & Bhinneka. Bhinneka provides e-procurement services created by the best B2B e-commerce in Indonesia to make it easier for business owners to procure goods and services. Bhinneka’s online procurement system helps improve the efficiency and effectiveness of procurement costs in your company.
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Meanwhile, Kontrak Hukum provides the most complete and affordable service for making cooperation agreement contracts that can ensure the smoothness and security of e-procurement. The service of making an agreement contract at Kontrak Hukum only takes 24 hours to complete and is 100% online without face-to-face. Let’s start your business practically and easily with Kontrak Hukum x Bhinneka! For more information about services that suit your business e-procurement needs, you can contact us at Tanya KH.
