E-commerce was initially used as an online auction platform with companies like eBay. Since the turn of the millennium, it has become a common platform for consumer purchases (B2C). It offers the convenience of ordering from your own home, access to both local and international products, without the need to travel from store to store for the right product.
In 2020, we saw a new reason for that shift. COVID-19 has resulted in people flocking to online stores and digital meetings, and business purchasing (B2B) is no different.
Online growth is not new for B2B. In 2019, B2B e-commerce grew 18.2% to a 1.9 trillion USD market. It stands to reason that this sector grows in-tandem with consumer-based trends, as the benefits are very similar.
Benefits of B2B E-Commerce
- Ease of Use – Most end-users are already familiar with e-commerce platforms and are comfortable transitioning to B2B e-commerce and e-procurement
- Access – Empower operational staff by providing them with easy and immediate access to make MRO and indirect purchases.
- Inventory Management – Even for businesses that already have EDI or automatic replenishment of inventory, access to e-commerce is useful for unanticipated inventory shortages and repairs.
- Improve Operations – The ability to make immediate spot-buys translates to timely access to necessary materials which in turn improves asset uptime and operational efficiency.
Yet despite the benefits of e-commerce, there is the potential for “dark spend” Dark spend, the spending that flies under the radar and is generally difficult to track, can result in unmanaged overspending. End-users may be able to circumvent standard procurement protocols, and accounting for these purchases can be labor intensive and inefficient.
So how can the procurement office view and control dark spend? Many Chief Procurement Officers (CPO) are implementing e-procurement solutions to manage the supply chain and ensure full spend accountability. This helps to verify that all purchases are made from contracted vendors, approved by the appropriate management, charged to the correct GL codes, and integrated into all reporting and inventory costs. E-procurement systems have a feature called punchout, where access to a supplier’s e-commerce site is directly embedded in the software, making purchasing easy and effective.
For example, an end-user chooses to create an order in an e-procurement system and selects a pre-approved supplier listed in the system. From there, the supplier’s e-commerce site is displayed within the e-procurement system, exactly the same as when directly accessed in a browser. The end-user can then search for the required item, add it to the cart, and review the purchase before clicking the checkout button to take them back into the e-procurement system. From there, all items can be allocated to the proper GL code. Once finished, the order is sent through a predefined digital workflow for approval before being sent electronically to the supplier.
While e-procurement solutions help to improve control and accountability, it can often be challenging to onboard end-users to new applications. It is important to find e-procurement software that makes the end-users’ lives easier, not more complicated. Tofino does that by:
- Combing e-procurement with inventory management and making end-user MRO management easier, from ordering to receiving.
- Integrating maintenance management into the mix to allow for accurate work-order costing when inventory cost is included as well as labor.
- Streamlining the processes that link operations and buying
- Simplifying procurement for operations that use the indirect material, while also putting in guardrails for approved vendors and spend to ultimately save the enterprise time and money.
See how Tofino can help simplify your e-procurement needs. Contact us today to get started.