Essential Technology Application for Public Procurement

Written by Joe Kok Kong Loong, DPSM

by Joe Kok Kong Loong, DPSM

Procurement professionals should identify and implement technology that aides the procurement process and supports the overall strategy of the organization. The technology should create measurable results (linked to Return on Investment) including, reduced transaction costs, improved process efficiency, a reduction or elimination in “maverick spending”, increased contract compliance, improved transparency, reduced cycle times and improved inventory costs. Technology can also increase supplier access to bid opportunities which can result in increased competition, diversity and inclusion of suppliers.

Electronic Procurement

Electronic procurement (E-Procurement) can be defined as the purchase of goods and services that enable the business to run its daily activities or the automation of business processes and procedures with the goal of saving business costs.

Electronic Integration in Business

Enterprise Resourcing Planning (ERP) is a process used by companies to manage and integrate the important parts of their business to implement by integrating all the processes it needs to run a company with a single system. Workflow management system is a complete solution in material e-procurement process. It allows for completely tracking and management of material, goods, services, resource ordered, procured in along with in stock and out of stock items. Some of the key processes include the following area:

o Request for Quotation Creation

Request for Quotation (RFQ) is used to enquiry in the market to obtain quotation from prospective vendors. RFQ can be created with reference to Purchase Requisition, Outline Agreement (Contract) and another RFQ.

o Electronic Bid Submission

Electronic bid evaluation is the process involves the opening and examining of the bids to identify the preferred supplier(s) for the project.

o Reverse Auction

A reverse auction is a type of auction in which the traditional roles of buyer and seller are reversed. Thus, there is one buyer and many potential seller.

o Bid Evaluation

Bid evaluation is the process that takes after the tender submission deadline. It involves the opening and examining of the bids the preferred supplier(s) for the project.

o Vendor Selection

Vendor-selection process being with the gathering data or perform interviews, assemble a team of people who have a vested interest in this particular vendor – selection process.

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o Vendor Management

Vendor management is used when describing the activities included in researching and sourcing vendors, obtaining quotes with pricing, capabilities, turnaround times, and quality work, negotiating contracts, managing relations, assigning jobs, evaluating performance, and ensuring payments are made.

o Catalog Management

Catalog management is a dynamic process where products are organized in a specific way to ensure consistent and high-quality data across all sales channels. An online catalog provides product name, description, hierarchy, price and other related details.

Benefits of E-Procurement Tools

o Better Spend Visibility and Lower Cost

E-procurement structures spend across suppliers and centralized tracking, which helps leverage volume and lower costs for buyer. This allows firms to track cost reductions on a continuous basis and identify and address any compliance track vendor SLAs and implement scorecards. Leading to higher saving and increased productivity from suppliers.

o Operational Performance

E-procurement helps automate internal procurement processes such as purchase order tracking, RFX events and supplier evaluation, leading to higher operational efficiency. Since these activities can be completed without human intervention, it further reduces transaction time and helps expedite downstream processes.

E-Catalogues and Increased Standardization

Electronic catalogues make supplier product offering available electronically and provide buyers more visibility into product and price information.

Internal Integration

E-purchasing eliminates information asymmetries and improves collaboration across internal departments, providing maximum value to the organization.

Global Procurement

E-procurement applications support various currencies, languages and logistic options, providing the ease to source from countries across the globe.

Using Blockchain to Public procurement

Blockchain in Procurement is a technology that creates a decentralized record of all transactions in a network. Using blockchain technology, participants in the network can confirm transactions independently of a third-party intermediary.

The diagram shows possible ways to apply the Blockchain for the non-profit sector.

Using Blockchain to Public procurement

Image taken from SIPMM Zaiton Binte Abu Bakar 20 July 2019: https://www.disruptordaily.com/blockchain-use-cases-non-profit/

Upholding the Images of Charities

Transparency builds trust Donors are not likely to give to charities implicated in wasteful or illegal practices, decreasing whatever good they are doing. The ability to trace funds from their point of donation to the recipient will necessarily crack down on wasteful spending and lift a fog from the philanthropic landscape, exposing fraudulent actors and re-establishing trust for donors who rightfully expect their money to be passed along under true pretenses.

Transforming Digital Transactions with Distributed Databases

Blockchain is no longer a buzz word. It is now used beyond currency transactions. Blockchain is a distributed ledger where data can be added but not copied. It delivers huge operational benefits. With distributed databases, it has the potential to transform all kinds of digital transactions, including those involved in procurement and supply chain and delivers a new level of trust and transparency.

Minimizing Administrative Cost through Automation

Blockchain technology minimizes administrative cost through automation, providing more accountability through traceable giving milestones, and allowing donors to see more clearly where their funds are going, blockchain may be help restore some of the lost credibility to charities that prove worthy of the public’s trust. Some of the methods using data analytics and data mining aimed at reducing administrative cost include vendor consolidation, effective Purchase Order management, effective tender and contract management and internal cost reduction by extensive value chain analysis.

Providing Platform to Reach Ready and Willing Donors

Blockchain-based platform aim to provide charities with a marketplace to reach a ready-to-give audience, taking far fewer fees than traditional marketing and fundraising agencies, providing proof of need and proof of receipt to ensure that the cause is indeed to worthwhile one and that the fund reach the intended party. As a result, more funds can reach the right, needy recipient due to lower administrative fees.

Conclusion

In the future, companies will continue to develop technologies likely to rise to the top of most procurement professionals’ agendas. NPOs must also be vision and results-oriented, adaptable to changing conditions, have a broad base of community support, have strong internal systems and be key champions in change.


References

Zaiton Binte Abu Bakar, ADPSM. (2019). “Essential Strategies for Public Procurement”. Retrieved from https://sipmm.edu.sg/essential-strategies-public-procurement-practices/, accessed 07/09/2019.

Eliza Huang Ziqi, GDPM. (2019). “Digital Procurement for the Banking Sector”, Retrieved from https://sipmm.edu.sg/digital-procurement-banking-sector/, accessed 13/09/2019

DocInfusion. (2018). “What is Business Integration in ERP”. Retrieved from https://docinfusion.com/blog/what-is-business-integration-in-erp/, accessed 07/09/2019.

Malcolm. (2001). “E-Procurement and its practices”. Retrieved from http://www.Operational+Performance+in+e-procurement, accessed 14/09/2019

Neil Miller. (2019). “Indent Workflow Management”. Retrieved from https://kissflow.com/workflow/workflow-management-system-10-must-have-features/, accessed 07/09/2019.

Source Suite. (2019). “Electronic Bid Submission”. Retrieved from http://www.sourcesuite.com/solutions/procurement-opportunity/electronic-bid-submission.jsp, accessed 07/09/2019

Design Building. (2019). “Bid Evaluation”. Retrieved from https://www.designingbuildings.co.uk/wiki/Bid_evaluation, accessed 07/09/2019.

P M Project. (2018). “Vendor Selection Process”. Retrieved from https://project-management.com/the-5-phases-of-the-vendor-selection-process/, accessed 07/09/2019.

Ameer Rosic. (2016) “Blockchain the Technology”. Retrieved from https://blockgeeks.com/guides/what-is-blockchain-technology/, accessed 14/09/2019.

About the Author: Joe Kok Kong Loong has substantive years of experience in the professional field of procurement management, specifically in Public Procurement, where he is Head of Procurement for a local nursing home. Joe is a member of the Singapore Institute of Purchasing and Materials Management (SIPMM), and he completed Diploma in Procurement and Supply Management (DPSM) on September 2019 at SIPMM Institute.

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