Ethiopian Defence University

College of Engineering

Department of Logistics and Supply Chain Management

Instructor Information
Name: Berhe G.
Office Location: Research and Community Service
Phone NO.: +251-967-261091
1
Email: [email protected]
 Ecommerce and Supply Chain Information System

Chapter Four
Concepts of E-procurement
Outline:
4.1. Introduction
4.2. What is e- procurement?
4.3. Overview of e-procurement
4.4. E-procurement tools
4.5. Types of e- procurement
4.6. E-procurement system
4.7. Public e-procurement
4.8. Benefits of e- procurement
4.8. Challenge and risks of implanting e-procurement

procurement 2
 Introduction to Procurement
• The terms procurement and purchasing are often mixed up, and
sometimes treated as the same thing. However, it is important to
draw some distinctions in between them.
• A procurement process is divided into six sub steps:
1. Standardizing and specifying the procurement
2. Selecting the supplies for products and services
3. Carrying out contract negotiations
4. Ordering the products and services
5. Supervising the delivery
6. Subscribing to additional services
• E-Procurement refers to all of the connective processes between
companies and suppliers that are enabled by electronic
communication networks.
• E- procurement includes strategic, tactical, as well as operational
elements of the procurement process.
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 Introduction to E-Procurement
• Strategic E-Procurement:
• Strategic e-procurement involves long-term planning and decision-
making to align procurement activities with organizational objectives.
• It focuses on developing procurement strategies, policies, and supplier
relationships to optimize procurement outcomes.
• Strategic e-procurement may include activities such as market research,
supplier evaluation and selection, contract negotiations, and supply chain
optimization.
• Tactical E-Procurement:
• Tactical e-procurement involves the execution of procurement activities
based on the established strategies and plans.
• It includes activities such as requisition management, purchase order
processing, supplier management, and contract compliance.
• E-procurement systems streamline and automate these processes,
enabling efficient order placement, supplier communication, and
document management.
• Tactical e-procurement aims to ensure compliance with procurement
policies, cost control, and timely delivery of goods or services.
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 Introduction to Procurement
• Operational E-Procurement:
• It focuses on day-to-day transactional activities related to purchasing and
supplier management.
• It includes tasks such as supplier onboarding, catalog management,
electronic bidding, invoice processing, and payment management.
• E-procurement platforms facilitate these operational processes by
providing online catalogs, electronic bidding systems, automated invoice
matching, and electronic payment capabilities.
• It aims to improve efficiency, reduce manual efforts, and enhance
transactional accuracy and speed.

• Operational, administrative, and market-oriented activities are combined

with e-Purchasing whenever these include electronic aid.
• E-Purchasing is just one part of e-Procurement; it refers to the technical
transaction elements of the purchase. 5
 What is e-procurement?
• E-procurement refers to the electronic exchange of information and
transactions between buyers and suppliers for the purpose of purchasing
goods, services, or works.
• It involves the utilization of technology to digitize and automate
various procurement activities, replacing traditional paper-based
methods.
• E-procurement enables organizations to streamline their procurement
processes, enhance collaboration with suppliers, and achieve cost
savings through improved efficiency.
• The administration of procurement processes takes place over so called
e-procurement systems which optimise procurement strategies and aid
in the achievement of procurement goals.
• E-procurement (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 (EDI)
6
• Enterprise Resource Planning (ERP)
 Introduction to Electronics Procurement (e-Procurement)

• Specifically, e-procurement is a crucial element of Procurement

4.0, an innovative approach that employs digital solutions and
technologies in the procurement process to enhance efficiency,
accuracy, agility, and compliance.
• With the help of e-procurement systems, procurement processes
are simplified and optimised through digital platforms.
• This fosters interactive collaboration among all parties involved
in a supply chain.
• E-procurement systems ensure automated, cross company
networking along the entire supply chain, from start to finish.

Exercise : Individual assignment : write short notes

• Procurement 4.0
• Logistics 4.0
• Umoja procurement
• Ethiopian Electronic Government Procurement System (e-GP)
• Ethiopian Airlines' e-procurement system 7
 Overview of e-procurement
An overview of the key components and stages of the e-procurement process. It
typically involves the following stages:
a) Requirement Identification: Buyers identify their procurement needs and
specifications for goods, services, or works.
b) Supplier Identification: Buyers search for potential suppliers who can fulfill
their requirements.
c) Solicitation: Buyers send electronic requests for quotation (eRFQ) or request
for proposal (eRFP) to the selected suppliers, outlining their requirements
and requesting pricing and other relevant information.
d) Supplier Evaluation and Selection: Buyers evaluate the proposals received
from suppliers and select the most suitable one based on criteria such as
price, quality, delivery time, and supplier reputation.
e) Purchase Order Generation: Buyers generate electronic purchase orders
(ePO) and send them to the chosen supplier, specifying the details of the
purchase, including quantities, prices, and delivery schedules.
f) Order Fulfillment: Suppliers acknowledge the purchase orders, process them,
and deliver the requested goods, services, or works.
g) Invoicing and Payment: Suppliers submit electronic invoices (eInvoicing)
for the delivered goods or services, and buyers review and approve them for
8
payment.
 Steps in e-Procurement: Five Steps You Need to Follow
The process occurs in stages when an organization exchanges information with
external suppliers.:
1. E-Informing: The first stage is called e-informing, which means exchange of
information from one party to another, usually across units and external
parties.
2. E-Sourcing: It refers to pre-qualifying all suppliers, allowing a company to
see which are most qualified for evaluation. This process coincides with
defining your organization's business requirements and organizational goals.
3. E-Tendering: During the third stage, a company makes in-depth assessment
of potential suppliers.
• They may implement strategies to ensure it's transparent in their
assessment.
• E-tendering provides support in the selection phase of tendering and acts
as a communication platform between purchasers and suppliers.
• It covers the complete tendering process, from creating requirements to
contracting.
• E-tendering helps reduce legal errors, provides clear audit trails, and
improves efficiency in tactical procurement processes.
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 Steps in e-Procurement: Five Steps You Need to Follow
4. E-Auction: In a traditional auction, the seller is in control because they set
the contract terms and negotiate prices.
• They sell their items to the highest bidder.
• The buyer can do a reverse auction where they ask for bids from
suppliers and get the lowest by accepting it.
• There are more potential buyers in an online auction or e-Auction, so
sellers can't be as restrictive.
5. E-Ordering: Product ordering is the final step in the e-Procurement process
where a business's employees can access and place orders for products.
• Companies usually use a digital catalog to store their rendered contracts
to make it easier for new employees to find information quickly.

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 4.4 E-procurement tools
• E-procurement employs various tools and technologies to facilitate the
electronic exchange of information and transactions. Some common e-
procurement tools include:
1. Electronic Request for Quotation (eRFQ): This tool allows buyers to send
electronic requests to suppliers for pricing and product information.
2. Electronic Request for Proposal (eRFP): Similar to an eRFQ, an eRFP is used
for more complex procurement needs, allowing buyers to request detailed
proposals from suppliers.
3. Online Catalogs: E-procurement platforms often feature online catalogs
where suppliers can list their products or services, allowing buyers to browse
and select from a range of offerings.
4. Electronic Purchase Orders (ePO): Instead of using paper-based purchase
orders, e-procurement systems enable buyers to generate and send purchase
orders electronically, improving efficiency and accuracy.
5. Electronic Invoicing (e-Invoicing): This tool digitizes the invoicing process,
enabling suppliers to submit electronic invoices and buyers to review and
approve them digitally.
6. Supplier Relationship Management (SRM) Tools: These tools help buyers
manage their relationships with suppliers, including supplier performance 11
evaluation, contract management, and communication.
 4.4 E-procurement Tools and Application
• A traditional procurement process starts with phase requirement definition,
sourcing, solicitation, evaluation, contracting and contract management. In
the internet based this steps are replaced by e-sourcing, e-tendering, e-reverse
auction, e-ordering and web based ERP.
• There are several tools and application which fall under e-procurement some
of them are as follows:
• In Electronic Data Interchange (EDI) system, procurement messages are
exchange between computers of two separate organizations.
• Message is exchange in batch and can be easily transmitted and stored.
• EDI is mostly used for order transmission, order confirmation, logistic
information and order invoicing.
• Enterprise resource planning (ERP) system have separate module to handle
the procurement function.
• Internet based tools and resources help in the process of procurement.
• Some of the common applications are email, internet based EDI, XML
based data exchange via the internet etc.
• Internet provides tools for e-sourcing, e-tendering, e-auctioning, e-
ordering and e-catalogue.
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 4.4 E-procurement Tools and Application
• E-sourcing tool is used to identify potential suppliers during the selection
phase.
• E-tendering tool is used to send out tenders with procurement requirements,
supply schedule, contracting terms, etc.
• E-auctioning tools bring together potential supplier identified during
selection phase under one umbrella to undertake auctioning process.
• E-auctioning tools operate under two separate mechanism, upward price
mechanism for selling organization and downward price mechanism for
the buying organization.
• E-ordering tool is used procurement of office supplies and services; it is
accessible by all employees within the organization and is mainly used for ad-
hoc purchases.
• A web-based ERP tool is used for product-related purchases, is
exclusively used by the procurement department, and falls under a
planned process.
• E-contracting
• E-Invoicing and E-Payment
• Reverse auction : It is a procurement method where sellers compete to win a
contract by submitting progressively lower bids. 13
 4.5 Types of e-procurement System
1. Electronic Data Interchange (EDI)
• One of the best features of the EDI software is that two different
organizations can exchange messages with each other.
• EDI sends messages between organizations, batching the notifications
with other messages.
• It speeds up the process and is essential when working with specific types
of messages, such as order confirmations or invoices.
• It is primarily implemented by close networks, unlike open networks such
as the internet.
2. Enterprise Resource Planning (ERP) Systems
• ERP systems are one of many electronic procurement tools and
applications.
• These software and systems take care of all the administrative tasks a
company might be dealing with, such as the manufacturing process,
logistics, distribution, and shipping invoices.
• ERPs help with sales, delivery, billing production, inventory management
and human resources.

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 4.5 Types of e-procurement System
3. Online Bidding
• This is the most popular type of e-Procurement system because it's simple
to use and provides a centralized way to manage bids from different
suppliers. However, online bidding can be slow and cumbersome, and
tracking spending cannot be easy.
4. Email Bid Watching
• Email bid watching is similar to online bidding but allows suppliers to
submit bids electronically through an email notification system. This
system is faster and more efficient than online bidding, but tracking
spending can be more difficult.
5. Piping
• Piping is a more advanced form of e-Procurement that allows suppliers to
submit bids through secure pipes instead of emails. This method is faster
and more efficient than email bid watching, but it can be more
complicated to set up and use.
6. Web-Based Procurement
• Web-based procurement systems are similar to email bidder watching,
allowing suppliers to submit bids through an email notification system.
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 4.6 E-procurement System
• E-procurement systems are comprehensive software solutions that facilitate
the management of the entire procurement process electronically. These
systems typically consist of the following components:
a) Supplier Registration: E-procurement systems provide a platform for
suppliers to register their information, enabling buyers to maintain a database
of approved suppliers.
b) Purchase Requisition: This component allows buyers to create and submit
electronic purchase requisitions, detailing their procurement needs.
c) Purchase Order Management: E-procurement systems automate the
generation, approval, and transmission of electronic purchase orders to
suppliers, ensuring accurate and timely ordering.
d) Contract Management: These systems assist in managing contracts with
suppliers, including contract creation, negotiation, and monitoring.
e) Supplier Performance Evaluation: E-procurement systems enable buyers to
evaluate and track supplier performance based on predefined criteria,
facilitating data-driven decision-making.
f) Analytics and Reporting: These systems provide comprehensive data analysis
and reporting capabilities, allowing organizations to gain insights into
spending patterns, supplier performance, and cost-saving opportunities. 16
 4.6 E-procurement system
• An e-procurement system is a comprehensive software solution that facilitates
the management and automation of the entire procurement process
electronically.
• It provides a centralized platform where buyers and suppliers can collaborate,
exchange information, and conduct procurement activities efficiently.
• Here are the key components and functionalities of an e-procurement system:
a) Supplier Registration and Management:
• E-procurement systems allow suppliers to register their information,
qualifications, and capabilities electronically.
• Buyers can manage and maintain a database of approved suppliers, including
their contact details, certifications, and performance metrics.
• Supplier management features enable buyers to evaluate and categorize
suppliers based on predefined criteria.
b) Purchase Requisition:
• E-procurement systems provide a user-friendly interface for buyers to create
and submit electronic purchase requisitions.
• Buyers can specify the details of their procurement needs, such as item
descriptions, quantities, delivery timelines, and budgetary information.
• Purchase requisitions undergo an approval workflow, ensuring compliance
17
with organizational policies and budgetary constraints.
 4.6 E-procurement system
3. Purchase Order Management:
• E-procurement systems automate the generation, approval, and
transmission of electronic purchase orders (ePOs) to selected suppliers.
• Buyers can create purchase orders based on approved requisitions,
specifying the item details, quantities, prices, delivery locations, and
terms.
• Purchase orders are electronically sent to suppliers, eliminating manual
paperwork and enabling real-time tracking of order status.
4. Vendor Management:
• E-procurement systems facilitate the management of vendor relationships
and interactions.
• Buyers can maintain vendor profiles, track performance metrics, and
communicate with vendors through the system.
• Vendor management features enable buyers to monitor contract terms,
evaluate supplier performance, and resolve issues efficiently.

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 4.6 E-procurement system
5. Contract Management:
• E-procurement systems include contract management capabilities to
streamline the creation, negotiation, and monitoring of contracts.
• Buyers can create and store contract templates, track contract milestones,
and manage contract amendments electronically.
• Contract management features ensure adherence to contractual terms,
support compliance, and enable effective contract administration.
6. Catalog Management:
• E-procurement systems often incorporate catalog management
functionalities.
• Buyers can access online catalogs provided by suppliers, containing
detailed product or service information, pricing, and availability.
• Catalog management features allow buyers to search, compare, and select
products or services from approved suppliers, simplifying the
procurement process.

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 4.6 E-Procurement System
7. Invoicing and Payment Processing:
• E-procurement systems support electronic invoicing (e-Invoicing) and
automate the invoicing and payment processes.
• Suppliers can submit electronic invoices, which are automatically matched
against purchase orders and goods receipt information.
• The system facilitates invoice approval workflows, tracks payment status,
and integrates with financial systems for seamless payment processing.
8. Analytics and Reporting:
• It provide comprehensive analytics and reporting capabilities.
• Buyers can generate reports and analyze data related to procurement
activities, supplier performance, spending trends, and cost-saving
opportunities.
• Analytics and reporting features enable data-driven decision-making, identify
areas for process improvement, and support strategic procurement initiatives.
9. Integration with ERP Systems:
• E-procurement systems can integrate with enterprise resource planning
(ERP) systems.
• Integration ensures seamless data flow between procurement and other
organizational systems, such as finance, inventory, and accounting.
• ERP integration enhances data accuracy, eliminates duplicate data entry,20and
enables end-to-end process visibility.
 Models of e-procurement
• There are various models or approaches to implementing e-
procurement systems.
• These models can be categorized based on the level of system
integration, the involvement of external service providers, and the
extent of collaboration between buyers and suppliers.
• Here are four common models of e-procurement:
1. In-House or Self-Hosted Model:
• In the in-house model, organizations develop and maintain
their e-procurement system internally.
• The organization sets up the necessary infrastructure, such as
servers, databases, and software, to host the e-procurement
system in their own IT environment.
• They have full control over the system's customization,
security, and maintenance.
• This model provides maximum flexibility and customization
options but requires significant investment in IT resources 21and
expertise.
 Models of e-procurement
2. Vendor-Hosted or Software-as-a-Service (SaaS) Model:
• In the vendor-hosted or SaaS model, organizations subscribe to
an e-procurement system provided by a third-party vendor.
• The vendor hosts the e-procurement system on their servers
and provides access to the system via the internet.
• Organizations pay a subscription fee based on usage or a
predetermined period.
• The vendor is responsible for system maintenance, upgrades,
and security.
• This model offers a cost-effective solution with reduced IT
infrastructure requirements and allows organizations to quickly
implement e-procurement without significant upfront
investment.

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 Models of e-procurement
3. Consortium Model:
• In the consortium model, multiple organizations collaborate to
implement and operate a shared e-procurement system.
• The organizations pool their resources and requirements to
develop a common e-procurement platform.
• Each organization retains its autonomy and maintains control
over its procurement processes and data.
• The consortium model enables cost sharing, knowledge
sharing, and collective bargaining power with suppliers.
• It is commonly adopted by organizations within the same
industry or geographical region to streamline procurement
practices and promote standardization.

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 Models of e-procurement
4. Integrated Supply Chain Model:
• The integrated supply chain model involves deep integration of e-
procurement systems with the systems of suppliers and buyers.
• It aims to establish a seamless flow of information, transactions, and
collaboration across the entire supply chain.
• The integrated model enables real-time visibility into supplier inventory,
demand forecasting, and order fulfillment.
• It facilitates automated order processing, inventory management, and
payment reconciliation, reducing manual intervention and enhancing
supply chain efficiency.
• The integrated supply chain model requires strong collaboration and
technological integration between supply chain partners.
• Organizations may choose a specific e-procurement model based on factors
such as their budget, IT capabilities, procurement requirements, and strategic
objectives.
• It is essential to evaluate the advantages, challenges, and compatibility of each
model with the organization's needs before implementing an e-procurement
system. 24
 4.7. Public e-procurement
• Public e-procurement focuses on the application of electronic systems and
technologies in the procurement processes of government entities.
• It is characterized by specific considerations, including:
a) Transparency and Accountability: Public e-procurement emphasizes
transparency and fairness in the procurement process to promote public trust
and accountability.
b) Compliance with Regulations: Government entities must adhere to specific
regulations and guidelines while implementing e-procurement systems to
ensure legality and fairness.
c) Vendor Registration and Qualification: Public e-procurement systems often
require suppliers to register and undergo qualification processes to ensure
their eligibility for government contracts.
d) Tendering and Bidding: Electronic tendering and bidding processes are used
to facilitate open competition and provide equal opportunities to suppliers.
e) Contract Management and Performance Monitoring: It enable the creation,
storage, and tracking of contract documents, including terms and conditions,
milestones, and deliverables. Contract performance monitoring features
allow government entities to track supplier performance, ensure compliance
with contractual obligations, and facilitate timely contract renewal25 or
termination.
 4.7. Public e-procurement
f) Reporting and Audit Trail:
• Public e-procurement platforms generate comprehensive reports and
maintain an audit trail of all procurement activities.
• Reports may include information about procurement spending, contract
awards, supplier performance, and compliance with regulations.
• The audit trail ensures transparency and provides an evidence trail for
auditing and investigations, if required.
g) Integration with Government Systems:
• Public e-procurement systems often integrate with other government
systems, such as financial management systems and electronic document
management systems.
• Integration ensures seamless data exchange, eliminates duplicate data
entry, and facilitates end-to-end process integration.
• It enables government entities to have a holistic view of procurement
activities and ensures data accuracy and consistency.

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 Electronics Government Procurement (e-GP)

• According to the World Bank (2003b), e-GP is defined as:

• “the use of information technology (especially the internet) by
governments in conducting their procurement relationships
with suppliers for the procurement of works, goods, and
consultancy services required by the public sector.”
• The handling of all procurement processes—fully electronic and
integrated—is referred to as end–to-end e-procurement or
straight-through e-procurement.
• E-GP is important because it has the capacity to increase the
transparency and efficiency of government procurement, which
represents a large portion of Government expenditure.
• Due to less human interference, e-GP can ensure compliance with
procurement policies and contribute to reducing the opportunities
of corruptive and fraudulent practices.

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 Electronics Government Procurement (e-GP)

• The development of efficient and transparent public procurement

systems can result in public trust and political return and be
incorporated in a broader procurement reform process.
• E-GP covers a broad range of applications such as
• Online information portals for the publication of business
opportunities,
• Contract awards, and other procurement related information;
interactive e-Tendering portals with download/upload
• Facilities for bidding documents/bids; and
• Fully automated procurement transactions for catalogue-based e-
Purchasing including
• e-Reverse Auctioning: Online reverse auctioning, is a
procurement method in which sellers compete online to provide
goods or services at the lowest price
• e-Ordering,
• e-Invoicing, and
• e-Payment. 28
Electronics Government Procurement (e-GP)

29
 Electronics Government Procurement (e-GP)

• E-GP can improve the quality of government procurement

outcomes, at a lower cost and with historical track records which
can be audited more easily.
• By improving accessibility and interoperability of the government
procurement information, e-GP makes possible:
1. Improving transparency, accountability, and fiduciary compliance
with less opportunity for corruptive or fraudulent activities.
2. Increasing business access and competition for government
expenditure (creating commercial benefits for businesses; price
and quality gains for the government),
3. Improving efficiency and reducing processing costs by integrating
and automating workflow processes for transactions and other
supply chain management activities.
4. Increasing and facilitating access to real time and historic
information for management and audit (enabling better decision
making, planning, monitoring and reporting).
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 Key e-GP project objectives include the following:
• Economy: Significant savings in the cost of items procured and/or
enhancements in their quality have been reported.
• Efficiency: Reductions in transaction costs, primarily from electronic
workflows and automated transaction processing, are a key source of
cost savings for government.
• Effectiveness: With e-GP, transaction data from electronic transactions
is recorded automatically and used to generate various real-time
analytical reports.
• Such reporting on public procurement expenditure has traditionally
been found lacking:
• “If public sector organisations cannot articulate their spending
effectively, they cannot manage their spending effectively’’.
• Increased accessibility. Online publication of tender notices in a
centralized web portal allows suppliers to search and locate tender
opportunities with minimal effort.
• It is becoming increasingly common to make tender documents
available as free downloads.
31
 Key e-GP project objectives include the following:
• Enhanced transparency and accountability:
• Suppliers, governments, and the general public each have the ability to
track and monitor all procurement activities at any stage of the process
in real time.
• Key transparency features here include enhanced public access to up-to-
date policies, information on bidding programs, standardized
documentation and lodgement of bids, progress of bid evaluation, and
announcements of outcomes.

• Economic development:
• In encouraging a more rapid take-up of online technologies by businesses,
and thereby promoting economic development, e-GP can be
instrumental.
• The adoption of e-commerce will reduce the cost of transactions
significantly for government and supplier communities alike.
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 Key e-GP project objectives include the following:

• Cross-border commerce:
• An e-GP system provides a business development tool for both
governments and supplier communities by providing access to
information and opportunities locally, regionally, and internationally.

• Equitable and inclusive:

• Online publication of tender notices, e-bidding, and e-payment level the
playing field for micro, small, and medium-sized enterprises when
competing with large enterprises for public procurement opportunities.

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 E-GP Technical Requirements and Specifications
• To realize its full benefit, an e-government procurement (e-GP) system
has to be interoperable with multiple external systems (such as those of
banks, certification authorities, and suppliers) and internal back-office
systems (such as those of the treasury and for income taxes).
• The exchange of information between the e-GP system and the
external systems during different phases of procurement should be
seamless.
• Technical considerations related to e-GP implementation include
information security, interoperability, reliability, scalability, and
availability.
• Apart from ensuring reliability, it is also recommended that
governments establish mechanisms to handle potential system
disruptions by applying Business Continuity Planning (BCP) and
Disaster Recovery Plans (DRPs).
• Key system components of e-GP that should be included in any risk
management strategy include content management, access control
management, workflow management, and system integration.
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 E-GP Technical Requirements and Specifications
• The information issues of authentication, authorization, confidentiality,
integrity, and nonrepudiation also need to be addressed within the risk
management framework, along with virus protection and other security
threats.
• Authentication: Involves the presentation and verification of credentials,
such as usernames, passwords, digital certificates, biometrics, or
hardware tokens to prevent unauthorized access and protect against
identity theft or impersonation.
• Authorization is the process of granting or denying access rights and
permissions to authenticated entities based on their roles, privileges, or
security policies
• Confidentiality ensures that information is protected from unauthorized
disclosure or access.
• Integrity ensures that data or information remains accurate, complete,
and unaltered throughout its lifecycle.
• Non-repudiation ensures that the originator of a message or transaction
cannot deny their involvement or the authenticity of their actions.
• The e-GP system should also include performance measures to assist with
administration, establish maintenance criteria, and generate performance 35
standards.
 E-GP Technical Requirements and Specifications
• Security: Security requirements and standards are crucial, especially
since e-GP systems are used to handle high value transactions in an
internet environment.
• Security should be implemented and audited holistically, not only
from a software implementation point of view, but also from the view
of the processes associated with e-GP implementation
• Encryption of Bids: A bid submitted by a supplier typically contains
technical details and sensitive commercial bid information.
• The commercial bid information submitted has to be kept secured
(encrypted) until the commercial bids are opened on or after the due
date for commercial bid opening specified upfront during tender
preparation.
• Security Governance: Implementation of security in an e-GP system
must be administered under a strong governance framework.
• For example, data backup policies, supplier and government user
identification creation, and changes in security settings on the server
side have to be performed as per approvals accorded by the
36
government.
 E-GP Technical Requirements and Specifications
• Authentication: User authentication is central to the operation of e-GP.
• Prospective bidders want confirmation that bid documents made
available through the e-GP portal are authentic.
• Similarly, government users require assurance that a bidder participating
in a tender is authentic and does not have a duplicate identity in the
system
• Public-Key Infrastructure: One of the most common approaches for
supporting digital signatures is use of public-key infrastructure (PKI) to
ensure that commercial aspects of the service are only accessible to users with
a verified identity, e-GP may also provide information on procurement
requirements, procurement entities, updates, and other areas to all the users
of the system without verifying the identity.
• Authorization: Strong systems have to be put in place to ensure that
assignment of privileges to a user is properly performed in an e-GP system.
• Authorization levels are defined at the system level and also at the
workflow-based specific process level.
• Users can access only those services or data corresponding to their role
and access rights. All workflow activities will be stored in an audit log.
37
 E-GP Technical Requirements and Specifications
• Confidentiality: An e-GP system should be designed to ensure that the data
exchanged between entities is not intercepted or accessed by an unauthorized
third party.
• Strong internal management policies and governance systems have to be
put in place to ensure that confidentiality is not breached.
• Integrity: An e-GP system should have built-in controls to ensure that data
exchanged between entities has not been modified or tampered with by a
non-authorized third party.
• Integrity of data transfer is validated by generation and verification
processes at source and destination of transfer.
• Non-Repudiation: A key requirement in e-GP is that once users take certain
actions (e.g., bid submission or approval of technical bid evaluation), they
should not be denied by the system at a later point in time. 38
 4.8 Benefits of e-procurement

• E-procurement has the ability of improving supply chain management, and

providing real-time information on what is going on in the supply chain
(known as visibility of the supply chain), starting with the customers’ needs
• Implementing e-procurement can yield several benefits for organizations,
including:
• Improved Efficiency: Electronic systems streamline procurement processes,
reducing manual efforts, paperwork, and processing time.
• Cost Savings: E-procurement eliminates manual errors, reduces
administrative costs, and enables organizations to negotiate better prices and
terms with suppliers.
• Enhanced Supplier Relationships: E-procurement promotes collaboration and
communication between buyers and suppliers, leading to improved
relationships and potential long-term partnerships.
• Data Analysis and Insights: E-procurement systems provide robust analytics
and reporting capabilities, allowing organizations to gain valuable insights
into procurement patterns, supplier performance, and cost-saving
opportunities.
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 4.8 Benefits of e-procurement
• Streamlined Compliance: E-procurement systems help organizations adhere
to regulatory requirements and ensure transparency and fairness in the
procurement process.
• Increased transparency and accountability
• Real time visibility and analytics
• Electronic document exchange
• Supplier collaboration and communication
• Improving the payment process, and sellers’ savings due to expedited
payment cycle.
• Online catalogues and supplier portals
• Streamlined requisition and approval workflow
• Cost savings and efficiency
• Compliance and auditability
• Integration with enterprise system
• Lowering purchase per item prices through activities such as product
standardization, reverse auctions, volume discounts, and consolidation of
purchases from fewer suppliers.
• Improving information flow and its control (e.g., price comparisons).
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 4.9 Challenges & risks of implementing e-procurement
• While e-procurement offers numerous benefits, its implementation can pose
certain challenges and risks, including:
a) Resistance to Change: Employees and stakeholders may resist adopting new
technologies and processes, requiring change management efforts and
training.
b) Technological Barriers: Organizations must invest in suitable IT
infrastructure and systems to support e-procurement, including software,
hardware, and network capabilities.
c) Data Security and Privacy: E-procurement involves the electronic exchange
of sensitive information, requiring robust security measures to protect
against data breaches and unauthorized access.
d) Supplier Integration: Integrating suppliers into e-procurement systems can
be challenging, particularly for small suppliers with limited technological
capabilities.
e) Regulatory Compliance: Organizations must ensure that e-procurement
processes comply with relevant laws and regulations, such as data protection
and procurement regulations.

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 4.9 Challenges & risks of implementing e-procurement
f) System Complexity and Integration: Implementing an e-procurement
system requires careful planning and integration with existing enterprise
systems, such as ERP, to ensure smooth operations.
g) Dependence on Technology: Organizations must be prepared for potential
technical issues or system downtime, which may temporarily disrupt
procurement activities.

• To address these challenges and mitigate risks, Organizations should

• Develop comprehensive implementation plans,
• Provide training and support to users,
• Conduct thorough risk assessments, and
• Establish appropriate security measures.

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E-Procurement

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End of Chapter Four
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