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Understanding the procurement process

Before the advent of e‑procurement, organisational purchasing processes had remained sim‑

ilar for decades. Table 7.1 highlights the  paper‑  based process. It can be seen that it involves 

the  end‑  user selecting an item by conducting a search and then filling in a paper requisition 

form that is sent to a buyer in the purchasing department (often after authorisation by a 

manager, which introduces further delay). The buyer then fills in an order form that is dis‑

patched to the supplier. After the item is delivered, the item and a delivery note are usually 

reconciled with the order form and an invoice and then payment occurs. Procurement also 

includes the transport, storage and distribution of goods received within the business – this 

is referred to as ‘inbound logistics’.

 IFO‑  Basware (2012) published a study of the global adoption of e‑invoicing in busi‑

nesses of all sizes in key markets, surveying 908 finance professionals from the US, UK, 

Sweden, Norway, Germany and Finland. Amongst the respondents, an average of around 

5,000 invoices are received and sent each month.

The report shows a continuing increased adoption and use of e‑invoicing and automated 

payment processing, with 73% of respondents using electronic invoicing to some degree 

in 2012, compared with 59% in 2011.  Sixty‑  seven per cent of respondents believed that 

e‑invoicing can help to achieve the goal of improving operational efficiencies, compared 

with 50% in 2011. Faster invoicing cycles and reduced invoice costs are the top two e‑invoice 

benefits experienced by respondents.

However, the challenges of implementing e‑invoicing solutions are highlighted by a con‑

tinued reliance on rudimentary ‘electronic documents’ and manual processes, with 58% of 

respondents receiving invoices as PDF attachments, with a further 13% avoiding automated 

processes altogether. There is a lack of focus on invoice scan and capture deployment; 53% of 

respondents still scan and capture physical invoices in‑house, with an additional 26% opting 

not to scan invoices at all. Overall, levels of fully automated e‑invoicing are increasing but are 

in need of improvement. Only 15% of respondents state that the majority of e‑invoices are 

sent out electronically (up from 9% in 2011).

Activity 7.1 explains how the procurement process can be simplified through e‑procurement.

Table 7.1

Process flow analysis for traditional procurement (typical cycle time,  

5

1

⁄

2

 days)