E-procurement is a system that allows a company to manage the basic purchasing process online. It also allows a company to manage daily business transactions between their suppliers and vendors (B-to-B). This system can also be established between business-to-consumers and business-to-governments. Before e-procurement, those who were in charge of the buying process conducted their business primarily over the phone and fax. However, e-procurement allows a firm to now take control of this process in a much more efficient and quicker manner. E-procurement can be implemented by an automated system that users can buy and install from "ERP" software or it can be set up manually. This system allows the automation of the buying and selling process to take place. Many of the references have stated that e-procurement has been essential to the supply chain management portion of their businesses. E-procurement is the basis of Electronic Data Interchange (EDI) and Enterprise Resource Planning (ERP).

To better illustrate, an e-procurement system allows the daily transactions of goods and services to take place on eBay. An individual or company can sell their goods or services online for a certain amount of days. Individuals can bid as much as they want until the specified time limit ends and the highest bidder wins the item. Individuals can also “buy-it-now” which allows him/her to pay a set price that is set by the seller. An online payment system like PayPal is also implemented in order to handle the financial transactions that take place to ensure that payments are received before an item is shipped out. This payment system is an example of e-payments. Overall, an e-procurement system allows eBay to connect sellers and buyers around the world together.

According to an article by Steven R Leonard, Ford serves as another great example of adopting an "e-procurement system." They have stated in this article that before e-procurement systems, the employees would have to sift through catalogs to buy items which became not only costly but very inefficient. The old fashioned method of purchasing raw materials and supplies cost the company roughly $15.5 billion annually. With the new system, it allowed many of the buying and selling processes to become automated internally and externally. For example, it would take days for an employee to put a purchase order in to get approved by upper management. However, with the help of the e-procurement system, employees could simply log online to the system and buy items from a set of pre-approved selected vendors which helped the process move along much more efficiently. Overall, with the help of the internet, companies like Ford and many others have been able to reduce overhead costs while speeding up their supply chain process.

Other types of "e-procurement" according to Wiki:

  • Web-based ERP (Enterprise Resource Planning): usually a software that can automatically produce purchase orders for companies
  • E-MRO (maintenance, repair, overhaul): usually a software that can automatically produce purchase orders to let companies know what supplies to buy for the maintenance, repair, and overhaul process that is separate from their daily business
  • E-sourcing: using the internet to scope out new potential suppliers for a particular product and/or category
  • E-tendering: is the process of sending and receiving a request to get more information that is relevant to the buying process (such as prices)
  • E-reverse auctioning: using information technology (IT) to buy goods/services from suppliers, lowest bidder wins, guidelines and limitations are set by the seller
  • E-informing: can help efficiently organize the way the exchange of information is sent (usually by e-mail) between two companies
  • E-marketsites: is a community that specifies which vendors suppliers should choose

Summarized Benefits:

  • Good for reducing overhead costs for any business
  • Can automate buying and selling process
  • Keep relevant information organized: previous prices, buyer's information, product information
  • Helps with making management decisions
  • Easier to scope out potential vendors and suppliers
  • Gives real-time information on all transactions with time stamps
  • Control of inventory levels
  • Can seek information on all vendors in one place
  • Can connect vendors and supplies together worldwide
  • Helps companies manage their time more efficiently