Electronic purchasing (e-purchasing), automates and extends manual buying and selling processes, from the creation of the requisition through to payment of the suppliers. The term e-purchasing encompasses back-office ordering systems, e-marketplaces and supplier websites.
Relevance to trade facilitation
In the emerging digital era, businesses increasingly use electronic systems for more efficient, predictable, transparent and secure management of their supply chains. E-purchasing systems provide up-to-date information on the status of buyers' needs. They allow the establishment of an agreement with a seller to automatically ship materials when a buyer's stock reaches a low point. This also applies to the solicitation phase where buyers can track incoming offers prior to supplier selection. Electronic purchasing provides predictability as sellers know what to expect and can review an order's progress, often in real time. Also, the status of the goods can be followed in real time. A product will show as having been delivered, accepted and processed for payment without the seller having to call and request information from accounting staff. Transparency and accuracy is facilitated, with data exchanged and stored electronically instead of through paper-based documents.
Setting-up and implementing an e-purchasing system demands intervention in a number of areas. Technology alone does not ensure successful adoption of the initiative. All players in the supply chain need to make necessary changes to the way they work, which requires top management commitment and support, as well as change management. Where existing buying practices and procedures contradict the objectives of the new initiative, implementation of an electronic system requires re-engineering of existing purchasing processes. It is very important to determine the level of integration between e-purchasing solutions and existing information systems, including the financial management system for processing online payment to suppliers/sellers (e-invoices). Performing a Business Process Analysis (BPA) may be appropriate. Furthermore, continuous measurement of the benefits delivered, through pre-identification of key performance indicators (KPIs), is vital to sustain the business case for such systems. End-users' uptake and training are key factors in ensuring that that they will view e-purchasing as the preferred way to buy goods.
E-purchasing systems require various buyers/sellers systems to have the electronic capability to exchange information and electronic documents. This entails common standards. XML (eXtensible Markup Language) is emerging as the basis of such standards. The XML standard defines the content in communication and in the selection of general trade data format. Development of an e-purchasing system in an open environment will enable it to be linked to other systems for interoperability and this simplifies its upgrading. Because of the legal nature of order and payments, the system must have mechanisms for identifying and authenticating the user who places the order (e-signatures).
The use of electronic technology in international trade transactions needs an enabling legal and regulatory framework at both international and national levels. Many countries involved in international trade have already passed legislation adapting their legal systems to the developments of electronic commerce. UNCITRAL has developed a Model Law on Electronic Commerce , a Convention on the Use of Electronic Communication in International Contracts and a Model Law on E-Signature. Furthermore, UNECE, through UN/CEFACT, has adopted a number of relevant recommendations. In particular, Recommendation 26 and Recommendation 31 provide model agreements between trading partners for enhancing the legal security of their trading relationships. They also discuss the necessary adaptation of national legislation to favour Electronic Data Interchange (EDI) in international trade transactions, including the use of e-signatures. UNECE Recommendation 32 provides a Code of Conduct for the exchange of electronic trade documentation.
Governments and suppliers to public entities increasingly rely on electronic systems for cost savings and improved efficiency and transparency of public procurement processes. Examples of such systems are:
- EU Pan-European Public Procurement Online (PEPPOL)project on developing and implementing technology standards to align business processes for electronic procurement across all governments within Europe, which aims to expand market connectivity and interoperability between e-Procurement communities,
- EU SIMAP ,the electronic portal providing information on public procurement in the European Union, and
- GeBIZ, the electronic portal where suppliers can conduct business with the Singapore Government.