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Impact of an eMarketplace in Procurement Process

The primary focus of a procurement process in the last several years has been to reduce cost through digitising the process, and most organisations have successfully implemented a well-defined procurement process on an electronic platform. In the early days, digital onboarding of each and every person was a challenge. However, thanks to a revolution of mobile technology and access to Internet, even the masses have become familiar with the digital world. This shift has helped in faster adoption of eProcurement platforms by all users so far.

Procurement practices in Indian PSUs have been driven by rules and guidelines laid down by various government agencies. Current procurement processes are complex and time consuming. But a paradigm shift is likely to take place soon with the introduction of government eMarketplaces. As a result, necessity of indent process, tendering for each and every purchase of goods and services may not be required at all. Now buyers can visit the eMarketplaces, choose and buy items very easily and in an efficient manner, which is quite similar to general people purchasing from eCommerce sites.

Changes in policies and processes are likely to take place in order to support this approach. Some of the existing procurement processes may not exist in future at all and GFR 2017 guideline is one such change which has already been modified to support that. The imminent rollout of GST will eliminate taxation complexities. Purchase of MRO items by many government organisations will take place through eMarketplaces eliminating locally controlled purchase processes.

Despite having many benefits, this approach has a drawback too. A centralised eMarketplace reduces the scope of negotiation between buyer and seller. Item specification and price published by seller is fixed. But, buyers often want to customise the specification slightly to suit their needs and also bring down the price based on modified specification, volume of order, etc. If the buyer does not get such flexibilities or benefits in the eMarketplace in terms of offer or product, then it would be difficult for them to participate.

Another challenge would be the supply chain management. For example, larger organisations often buy common items in large quantities and want the seller to supply different quantities to various plants directly. This reduces operational cost of the buyer even after managing purchases centrally. Supporting distributed delivery for single order would be a key success factor for eMarketplace.

There would be various such challenges before eMarketplace is adopted successfully but undoubtedly this is a big trend.

In general, there is no doubt that procurement habits are evolving and evolving very fast in India as well as globally. As success of any procurement activity depends largely on timely execution of purchase decisions, an eProcurement solution cannot limit itself only to a PR to PO process which is human-centric too.

An eProcurement solution is expected to support the full life cycle of procurement, onboarding, execution, monitoring and delivery. Supply chain management, managing inventory, sustainable procurement practice and more importantly cognitive procurement is the future.

Authored by

Partha Kumar Chakraborti

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