Search

FAQ: What is eProcurement or Procure-to-Pay (P2P)?

Matthew Joe Fisher
Nov 27, 2016
3 min read

Here are a few ways I'd explain eProcurement or Procure-to-Pay...Super Mario World Question Mark Block.png

1) simply to an eight year old

2) succinctly to someone during an elevator ride

3) in detail for a new supplier

1) Explained to an Eight Year Old...

It's how some people at work use their computer to buy the stuff they need for their job.

2) Described During an Elevator Ride...

If getting off on the 5th floor - It's when companies/organizations use software to help their employees purchase (procure) some of the goods and services they need to run their business.

If getting off on the 25th floor - With eProcurement, users search catalogs, add stuff to their cart, submit a request for purchase, it gets routed for approval, and then if approved an order is sent to suppliers. Procure-to-Pay also includes processing invoices and finally paying the suppliers.

3) For a New Supplier...

Your larger customers buy lots of stuff from lots of suppliers. Buying all that stuff from so many places can get pretty inefficient and costs them money. They invest in eProcurement software and dictate purchasing policies in an effort to streamline and save money.

When a customer says they use eProcurement and that they need you to comply with their requirements, it typically means one or more of the following asks:

Provide an eCatalog or PunchOut Website - Your customer may ask you to provide either an electronic catalog or PunchOut capable website with the products and/or services you're contracted to provide to them with the agreed upon discounted prices. If an eCatalog, they'll give you a catalog template you'd need to upload your catalog content in. They'll load your catalog into their eProcurement system and ask you to keep your catalog up-to-date periodically. If you already have a PunchOut capable website or are willing to go PunchOut, they'll integrate your website with their eProcurement system via cXML, OCI, or oagXML (see a complete list here) so they can browse/search your offerings, add it to your cart, and then transfer the cart back to their eProcurement system (essentially retrieving a quote). Some buyers require internal eCatalogs, some prefer PunchOuts, and most typically have a combination of both.

Electronic Purchase Orders - They'll likely also ask you to receive purchase orders from them electronically, typically via eMail, cXML or some other EDI flavor/standard. Usually, they don't care which method you use, but they'll prefer you to integrate the PO with your back-end / fulfillment system in an effort to reduce error and delivery times. They'll also typically provide you access to a web based portal to view all your purchase orders as well.

Electronic Invoices - They more than likely will require you to transmit your invoices to them electronically, either via cXML, EDI, or even by you using their portal to manually "flip" or convert the PO into an invoice. More so than POs, they will care very much how you get them your invoices as they will not want to manually process your paper, fax, or email invoices.

Purchase Order Acknowledgements and/or Advanced Ship Notices - They may also ask if it's at least possible for you to acknowledge receipt of their POs and/or maybe even ask you to let them know when/how they can expect delivery of their order. Most customers don't force suppliers to support PO acknowledgements or ASNs.

Other Descriptions...

A few other more formal descriptions from other people via a quick Google search...

Wikipedia (although I'm not crazy about it)

"E-procurement (electronic procurement, sometimes also known as supplier exchange) is the business-to-business or business-to-consumer or business-to-government purchase and sale of supplies, work, and services through the Internet as well as other information and networking systems, such as electronic data interchange and enterprise resource planning"

TechTarget

"Electronic procurement, also known as e-procurement, is the business-to-business (B2B) requisitioning, ordering and purchasing of goods and services over the internet."