E-procurement : definition and models

E-procurement, or electronic procurement, is a method of centralized management of purchases and supplies, used by many companies. This system offers numerous advantages, especially regarding the purchasing processes between a company and a supplier. It greatly simplifies exchanges between each actor.

Furthermore, e-procurement saves considerable time through the automation of the most time-consuming tasks and helps better control expenses. The term “procure-to-pay” can also be used to refer to all steps related to the online purchasing management of a company. The e-procurement method represents one of these phases and is itself divided into several models.

• The Main Street Model: also known as the sell-side model. Each supplier sets up their own catalog of products and/or services through software or an extranet network. This sales-oriented model allows the buyer to navigate from one catalog to another to discover offers that may interest them. It also allows for easy comparison of prices from different suppliers.
• The Traveling Salesman Model: contrary to the Main Street model, this model is more focused on purchasing rather than selling. It can also be referred to as buy-side. Through this model, the buying company can create and maintain its own catalog and negotiate offers with each supplier in advance.
• The Marketplace Model: this is the ultimate in e-procurement methods due to the advantages it offers. The marketplace is a platform that connects professional buyers and sellers in one place. This is referred to as a marketplace, which can come in two different models: horizontal and vertical (portal and vortal in English). The horizontal marketplace offers various types of products while the vertical marketplace focuses on a specific niche.

E-procurement marketplace: the rising trend among large corporations

The different functions of B2B marketplaces

A marketplace resembles an online commerce platform, where buyers connect with sellers. The sellers are individuals (such as Leboncoin, for example) or professionals (most of the time) who want to sell products or provide services. To ensure the smooth operation and perfect management of the marketplace, a percentage is taken from transactions and redistributed to the operator of this platform.

There are three main types of B2B marketplaces:

• The circular economy marketplace, which promotes the sale of second-hand products and is mainly used in C2C
• The network marketplace, which allows, among other things, to group together the entire offer of franchise networks
• The e-procurement marketplace, which is the ideal meeting place for sellers and buyers

Currently, it is this last model that is gaining ground in the B2B sector. Companies particularly appreciate the e-procurement marketplace because it allows them to digitize their processes and, ultimately, simplify purchases and payments made with their suppliers. Moreover, thanks to the use of this type of platform, their procurement can be done more quickly than usual. It becomes easy to access all products offered by different suppliers, but gathered in a single catalog.

The advantages of an e-procurement marketplace in a large corporation

Can you guess the common point between Leroy Merlin, Métro, and the Rungis Market?

These three major players have opted for the e-procurement marketplace to simplify their online procurement system. It is a model that is gradually imposing itself within the procurement departments of most companies. It must be said that the advantages offered by the implementation of an e-procurement marketplace are numerous…

• Streamlining procurement purchases: the catalog brings together a wide choice of products and services, with fewer stock and logistics issues. The payment process is optimized, thus improving the user experience.
• Time savings and ease of use: the e-procurement marketplace offers buyers an experience similar to that encountered in their personal online purchases. They can easily analyze the offers of each seller.
• More time for strategic tasks: freed from the time-consuming aspects of their work, such as supplier control, contract negotiation, or expense control, procurement teams can focus on tasks with higher added value. They are notably able to manage procurement risks or take care to maintain strategic relationships with vendors.
• Reduction of administrative costs: controlling orders and managing invoices become low-cost tasks thanks to the centralization of suppliers on the platform.
• Better expense control: the marketplace allows for easy price comparison from one supplier to another, without having to browse through all the e-commerce sites of these suppliers.
• Self-regulation of supplier prices: since they become direct competitors on the platform, sellers align their prices and do not need to negotiate separately with the buyer.

In summary, large corporations seem to have every interest in creating an e-procurement marketplace if they want to revolutionize their daily lives. The opportunities offered by this type of platform are numerous and, among other things, allow them to benefit from centralized supply and significant cost reduction. Margins are increased, and teams can allocate more time to the strategic aspects of the company.

Would you also like to digitize your procurement systems?

Lundi Matin, a software publisher and specialist in the design of marketplaces, supports companies wishing to launch a high-quality B2B platform. Our experts stand by your side from start to finish of your project, helping you set up a high-performing marketplace. You will thus become the operator capable of configuring its main functions, mastering its use perfectly, and managing technical support.