E-procurement vs traditional procurement system

Procurement is one of the most important business processes for SMEs and traders. Procurement systems play not just one but a variety of roles like playing a strategic function in improving an organization’s profit margins, making an impact on the overall cost, streamline processes, identifying better sources of supply, etc.

The procurement process has changed over time and now in the 21st century, the procurement system is not what it used to be. It has gone through a makeover and is now known as the e-procurement system or electronic procurement system.

Even though the system has gone through a change still there are many factors because of which traders and common people get confused between the traditional and e-procurement systems. So, below is an analysis of all the major differences between the two systems and certain benefits that both of them carry:

Traditional procurement system

This is a very common method that is used mostly in the construction industry. This is a procurement system where the work distribution is done physically. A team takes care of the design and cost and a contractor is appointed to carry out the bidding process. This contractor prepares the tender documents based on all the specifications and the bills and then the tender is awarded to the lowest tenderer. After this, the contractor takes full responsibility for the labour and raw materials which also includes works of the sub-contractors. Some advantages of the traditional system are :

• High quality of work

This system usually comes up with closer control of the work. Also, due to the presence of multiple options provided by the consultants and contractor, the client can compare and decide as to which budget and design might suit him the best.

• Low cost

In the Traditional system, all tenderers produce a tender base through which the client gets the best or the lowest price available in the market. Here, the construction cost is more accurate because it is based on the complete designs and details.

• Long term use

It is easy to adopt as it has been used for a very long time now so all the major role players are familiar with the risks and the methods to solve problems if any during the procurement process.

Electronic Produced system

An e-procurement system can be described as an effortlessly seamless system in which the whole process is automated, which takes the smart procurement process to another level of efficiency and robustness. Although, the advantages of an e-procurement system become more evident when used still, here are some advantages listed below.

• Cost reduction

This system is cost-efficient because it eliminates the need for paperwork because of which there is no wastage of time, improved transportation or logistics, and many other benefits as well.

• Tracking supplies

This system can efficiently track the correct position of orders and also tell the expected time of delivery of the supplies which becomes a mark of surety.

• Better Administration

A consistent process of approvals and formal workflows makes it certain that each transaction is bound by an agreement. Through this system, there is a considerable enhancement in the company’s control over the procurement process.