Consumers aren’t the only ones buying everything online. Most businesses are doing the same. E-procurement, or electronic procurement, is now the mainstream way businesses purchase goods and services for their operations. With multi-layer supply chains, rapidly changing market dynamics, and heightened demands for transparency and sustainability, it’s no surprise most have ditched manual, paper-based procurement. By digitizing and automating processes, e-procurement offers businesses the tools they need to handle the intricate demands of today’s business environment.
And with AI, e-procurement is becoming an even stronger tool. The complete automation of time-consuming tasks, access to real-time spending and supplier analyses, and data-driven sustainability tracking are just some of the few ways AI is helping procurement professionals master modern business buying.
What is e-procurement?
Electronic procurement, also known as e-procurement, is the process businesses use to purchase goods and services through digital platforms and technologies. It includes sourcing, purchasing, contract management, and supplier management, all conducted electronically to maximize efficiency and control over the entire procure-to-pay process.
E-procurement uses:
- A digital platform to centralize data and workflows.
- Automation to streamline routine tasks like purchase orders, approvals, and invoice matching.
- Supplier management tools to quickly evaluate, select, pay, and manage suppliers.
- AI spend analysis to track and report data in real time, ensuring transparency and cost control.
- Built-in compliance to enforce procurement policies and regulatory requirements.
As a result, e-procurement enables businesses to assess complex metrics, negotiate in dynamic markets, and align purchases with corporate strategies. It also strengthens the relationship between buyers and suppliers and optimizes internal business processes. It’s no wonder e-procurement is so popular worldwide. From 2019 to 2022, more than $1 trillion in sales went through an e-procurement platform.
The 5 Areas of E-Procurement
Modern e-procurement has come a long way from its origins. In its early stages in the 1990s, e-procurement primarily focused on digitizing and automating basic procurement activities like invoicing. These systems were standalone and used to address one specific task, but over time, they gained the ability to integrate with ERPs. Cloud-based solutions soon became common, and now, comprehensive platforms have advanced features such as real-time spend analysis, compliance monitoring, and strategic sourcing capabilities. Most companies use some form of e-procurement solutions for their procurement management strategy today.
The next revolution for e-procurement is AI. Utilizing AI in procurement enables predictive analytics for demand forecasting, real-time supplier risk assessments, and intelligent decision making based on data insights. As businesses prioritize sustainability and ethical sourcing, AI also plays a vital role in monitoring supply chains for compliance and environmental, social, and governance (ESG) goals. Looking ahead, AI will become more adaptive. We could see AI autonomously running simple, routine sourcing events or as a virtual assistant, providing strategic guidance rather than merely answering queries for procurement professionals.
Benefits of e-procurement
E-procurement is one of the most effective ways to enhance efficiency, transparency, and cost-effectiveness in modern procurement processes. According to a Levvel Research and Coupa survey of more than 300 procurement decision-makers, the top three business improvements from implementing e-procurement were better control and security (56%), faster time-to-fill cycle (56%), and department productivity (55%).
But, its advantages extend beyond operational improvements, providing strategic value to organizations. Some of the most valuable benefits include:
Cost savings
E-procurement gives companies real-time visibility into what happens before, during, and after money is spent. That level of transparency enables procurement leaders to identify areas of unapproved spending and find ways to consolidate and bulk-purchase goods. It also allows greater control over the intake and requisition process so leaders can stop non-compliant spending before it happens. Consolidating several purchasing systems and adopting one e-procurement platform helped AkzoNobel, a leading paint manufacturer, standardize and control the procurement process across its global operations, saving millions of euros.
Improved efficiency
Automating time-consuming tasks like purchase order generation, invoice matching, and approval workflows frees procurement and accounts payable (AP) teams to focus on more high-value work. Automation and digitization of processes also minimize errors, accelerate the procurement cycle, and lower administrative costs associated with manual documentation and communication. Automation is how Honor, the world’s largest at-home care network, processes thousands of invoices across 12 countries with just a two-person AP team.
Better supplier relationships
An e-procurement platform streamlines interactions with suppliers and fosters better relationships. A centralized system makes it easy to onboard and manage suppliers from one place while also collecting data about the supplier’s performance. Collaboration tools on a platform, like PO and forecast collaboration, enable businesses and suppliers to work together to quickly solve problems, such as unexpected material shortages or natural disasters that impact delivery timelines.
Enhanced transparency
E-procurement makes it easy to create an audit trail by centralizing data and recording each step in the procurement process with digital tools on one platform. This is critical for heavily regulated industries and publicly traded companies. Talos, a leading offshore oil and gas exploration company, uses e-procurement to centralize data and produce an audit trail in the case of an audit request from regulators. The company can pull a transaction or payment report within seconds.
Data analytics
Centralized processes and data also enable advanced analytics. This provides insight into spending patterns to identify areas of cost savings, demand forecasting to avoid overstocking or shortages, market trends to strategically time purchases, and supplier performance and risk to build better supplier relationships. AI-driven insights are how Members 1st Federal Credit Union benchmarks its performance against others in its industry and makes more informed operational decisions, leading to a 50% reduction in invoice processing time and millions of dollars in savings.
Compliance and risk mitigation
E-procurement alerts companies to supplier risk by using AI to cross-reference domains and databases, making supplier historical data readily visible. Depending on the e-procurement platform, the supplier database could be large and extensive or smaller. More suppliers mean a better sourcing experience and more in-depth risk profiles. Built-in compliance that comes with digitizing processes is another risk mitigation tool. The Leukemia & Lymphoma Society uses e-procurement to spot high-risk activity to ensure the company only works with trusted suppliers.
Sustainability
By leveraging digital tools and real-time data, businesses can align procurement practices with their sustainability and ESG goals. E-procurement supports sustainable sourcing, allowing businesses to track and verify the sustainability practices of their suppliers. The American Red Cross uses e-procurement to hit its diversity, equity, and inclusion (DEI) goals, increasing its spending with diverse suppliers by 35%.
Certain tools, like a digital twin, enable businesses to track carbon emissions across their supply chains, too. This gives them the power to find alternative, less carbon-intensive routes or adjust the location of distribution centers to lessen their carbon footprint. Microsoft used digital twin technologies to optimize logistic routes and reduce its emissions by 60% when creating new data centers for AI technologies.
How e-procurement works
E-procurement digitizes and automates the entire procurement process, empowering the organization to source, order, and pay for goods and services more efficiently. Let’s use an eyewear company as an example. They’re preparing for next season’s new eyewear line. Here’s an overview of how an e-procurement platform would work for them.
Step 1: Identify the need
The process begins with identifying what goods or services are needed. The eyeglass line has unique requirements: polycarbonate lenses, flexible steel for the frames, and multiple color options. The procurement team starts by using demand forecasting tools to identify optimal quantities of each material. Then, those requirements, such as quality standards and delivery timelines, are input into the e-procurement platform.
Step 2: Requisition
Next, a formal request to procure items is created. The team submits a digital requisition for the different materials so it can be approved. Other employees outside of the procurement team need to procure items as well. They use a guided intake and requisition workflow to submit a request to ensure it aligns with company procurement policies.
Step 3: Approval workflow
Requisitions are routed to the appropriate stakeholders for approval. E-procurement tools automatically route requests based on predefined rules, such as department, budget, or item category, to ensure quicker and policy-compliant approvals. If an approver misses a request deadline, the platform will automatically send a reminder.
Step 4: Supplier identification and sourcing
Suppliers are then evaluated and chosen based on cost, quality, and reliability. The platform provides a database of pre-vetted suppliers and tools to compare suppliers, issuing electronic requests for proposals (RFP).
The eyeglass company issues RFPs for titanium suppliers and UV-blocking glass suppliers. Once the suppliers fill out the forms, the platform enables the procurement team to compare them side-by-side. One supplier’s sustainability ratings are excellent, and another offers bulk discounts, making them the top choices. When they select the suppliers and sign the contracts, the terms and conditions are automatically uploaded into the platform.
Step 5: Purchase order creation
Once the suppliers are selected, a formal purchase order (PO) is created. The e-procurement platform automatically generates POs with prefilled details from the requisition, approval, and contract process, reducing errors and ensuring standardization.
Step 6: Receive goods and services
The suppliers deliver the requested materials. The platform tracks order status, updates delivery timelines, and manages communication with suppliers to ensure on-time fulfillment. The eyeglass company also confirms that the delivered goods match the order specifications and uses the platform to cross-reference delivery details, such as received quantities, quality, and condition, against the purchase order.
Step 7: Invoicing and payments
After the delivery of the goods or services is confirmed, the supplier submits an invoice for payment through a supplier portal. The platform automatically does three-way matching (matching the PO, goods receipt, and invoice) to ensure accuracy and prevent overpayment or fraud. Once the invoice is confirmed, a payment is made to the eyeglass company’s supplier through an automated payment workflow. Electronic integration between the e-procurement platform and external financial systems ensures quick and accurate payments are made. Virtual cards are another way businesses can streamline payments for one-off transactions.
Step 8: Performance evaluation
Since the entire procure-to-pay process happens in one central system, the supplier’s and even the eyeglass company’s performances can be accessed for future procurement decisions. The platform collects data on supplier reliability, quality, and compliance. There’s also information on the eyeglass company’s supplier information management cycle time, electronic PO processing rate, requisition-to-order time, and more, so they can track and boost operational performance. AI can provide actionable insights into ways to improve.
Using e-procurement for direct and indirect spend
Now that the eyeglass company has efficiently e-procured the direct materials they need, they can create products for their new line and are ready to go to market. But how will they promote their new products? Marketing costs, which fall under indirect spending, are another component they’ll need to consider. E-procurement can also help.
Eyeglass Company’s Spend Management Breakdown
| Aspect | Direct Spend | Indirect Spend |
| Impact on the business | Directly affects eyeglass quality and output | Supports operations but does not directly impact the eyeglass product |
| Examples | Raw materials (steel for the frames, etc.), manufacturing components (coating for the lenses, etc.), and equipment (glass melter machine, etc.) | Office supplies for corporate headquarters, IT services for the customer website, travel expenses for employees, and marketing initiatives for product launches |
| E-procurement benefits |
|
|
Direct spend
Direct spend is the money spent on goods, materials, and services that directly tie to the production of an organization’s products or services. It typically includes raw materials, components, or outsourced manufacturing. These expenses are essential for core business operations and directly impact the organization’s revenue generation capabilities.
E-procurement helps:
- Strengthen supplier collaboration by automating workflows and sharing data through a centralized platform.
- Optimize inventory management by tracking inventory across multiple locations and using predictive analytics to forecast demand and align procurement with production schedules.
- Enhance sourcing value by facilitating a competitive bidding process for high-value purchases and consolidating spend across business units for better negotiation leverage.
- Simplify contract management by automating contract creation, integrating terms into the purchasing process, and tracking milestones and renewal deadlines.
Indirect spend
Indirect spend is the money spent on goods, services, and activities that support the organization’s operations but are not directly involved with the production of goods or services. It typically includes operational costs like leasing an office space, administrative expenses, and maintenance services. These expenses are necessary for running the business but do not directly impact revenue generation as much as direct spend.
E-procurement helps:
- Streamline requisition and approvals with a user-friendly interface for employees to request goods and services or upload expense reports with automated approval chains.
- Provide insights into indirect spending patterns, track vendor projects, and identify cost-saving opportunities.
- Consolidate vendor catalogs for easier product selection and cost comparison.
- Reduce administrative overhead by automating processes for invoicing and payments.
E-procurement platforms are tailored to meet the distinct challenges of both direct and indirect spend. By automating workflows, improving supplier collaboration, and offering data-driven insights, these platforms help organizations manage both categories more effectively.
Strategies for successful e-procurement adoption
Successful e-procurement adoption requires more than just implementing a platform. Often, the biggest hurdle is getting employees and suppliers to embrace the change from manual to electronic processes. In a Level Research and Coupa survey asking organizations which barriers prevented their organization from adopting an e-procurement solution, the most common reason was that the procurement team felt current processes worked.
Procurement departments often have tight-knit cultures that can create a siloed effect. Key stakeholders can even be protective over team members and processes, fearing new tools will disrupt their current state and loosen control over their procurement strategy. However, e-procurement actually helps strengthen the enforcement of their policies across the organization. Getting buy-in will be critical for a seamless e-procurement transition.
Here are some key strategies that can help.
Effective change management
What are the specific pain points the e-procurement platform will address? How is it going to impact the employee’s day-to-day tasks? What KPIs, like procurement cycle times or the preapproved spending rate, will you track to set clear goals? It’s important leadership communicates the reasons behind the change, the benefits, and expectations around the adoption.
Gradual implementation
Depending on resource availability and organizational readiness, decide between a phased rollout or a company-wide, one-time deployment. If you don’t have the internal resources and stakeholder commitment to support a company-wide deployment, perform an initial rollout with stakeholders who have the largest impact on the goals you defined in your business case. These stakeholders can help validate business benefits and increase adoption in subsequent phases. A good place to start is to roll out AP automation since it tends to be one of the most time-consuming business processes.
Training and support
Ensure training resources are available to employees during deployment. Assign a main point of contact for all training questions and create a resource PDF that contains all the essential information they’ll need to get started. It’s also important to partner with an e-procurement software vendor that offers training sessions, an online resource center, and personalized support.
Supplier onboarding best practices
You’ll have to get your suppliers to use the technology, too. Ensure you convey the benefits to suppliers, such as communicating more easily, confirming POs seamlessly, and getting paid faster. Look for an e-procurement platform that won’t charge your suppliers any additional fees, uses automated workflows to onboard suppliers quickly, and provides clear guidelines for system use to boost adoption.
Essential features of e-procurement software
Choosing the right e-procurement software is critical for achieving operational efficiency and alignment with organizational goals. According to a survey of businesses of all sizes, the top three features of their e-procurement software include requisition workflow and PO management (68%), receiving and reconciliation management (60%), and supplier information and risk management (50%). Below are some essential features to consider when evaluating procurement platforms and software providers.
User-friendly interface
A platform with an intuitive, easy-to-navigate interface encourages user adoption across all departments. Look for simple requisition and approval workflows, guided purchase experiences that surface preferred vendors for non-procurement professionals, and mobile-friendly access for employees uploading expenses on work trips. Coupa’s AI Total Spend Management platform offers easy-to-use tools and AI-driven workflows for every step in the procurement process, making it a top choice for businesses. As a leader in the e-procurement space, Coupa holds a Gartner Peer Insights rating of 4.7 out of 5.
“In our selection process, it became very clear around usability studies that Coupa had an enhanced user experience compared to other platforms.”
— Robert Christmas, Financial Director, AstraZeneca
Intake and requisitions
Help requesters and approvers streamline the intake process with guided requests that embed procurement policies and real-time budget visibility in the workflow. It’s also helpful if requesters and approvers can track their POs in real time so everyone stays in the loop during the procurement process. Coupa researches users to build the best user experience, guiding them through each step. AI also surfaces preferred vendors and products and sends requests with predefined approval chain rules. Top-performing companies that use Coupa achieve a requisition-to-order cycle time of 3.8 hours.
Procurement automation
Automation reduces manual workload, speeds up processes, and minimizes errors. Find a platform that automates requisition creation, approvals, order generation, and invoice matching. You’ll want to ensure it has alerts and notifications for approvals, renewals, and compliance issues.
Built-in compliance
Preset approval workflows based on organization rules, real-time alerts for policy violations, and audit trails for all procurement activities are how built-in compliance features can help you enforce internal policies and external regulations. Compliance-as-a-Service is another way to automatically ensure invoices and payments meet all regulatory requirements. With Coupa, users have built-in compliance with tax laws in over 50 countries.
Advanced supplier management and risk tracking
A centralized supplier database is critical to managing suppliers and tracking their performance. Look for software that offers a self-service supplier portal so suppliers can be onboarded quickly, confirm POs, provide updates to delivery times or materials, and receive automated alerts if information is missing from an invoice. Another feature you’ll want to consider is AI-driven risk monitoring that continuously tracks your vendors across several risk domains and alerts you to issues. Coupa provides real-time dashboards and alerts, giving you a comprehensive view of your supplier base.
AI analytics and tools
You’ll want AI analytics and tools to identify cost-saving opportunities, improve decision making, and bolster efficiency. Predictive and advanced analytics can help you forecast demand more accurately, provide more profound supplier risk assessments, and deliver reports across spend by category, department, or supplier.
AI also supports digital twin technology that helps companies track their sustainability efforts across their supply chains, and spot and stop fraud. SpendGuard™ is Coupa’s AI-powered fraud prevention tool that reviews each transaction and ensures accurate payment details, proper invoice matching, and that each payment generated by the ERP goes to the correct account. It can detect possible fraudulent activity and alert users across 25 different risk areas.
Generative AI is the next frontier in e-procurement, with over 50% of companies saying they see opportunities to use it for their procurement process, according to The Hackett Group research. Personalized chatbots that can handle tasks and answer queries are already being deployed on some platforms, like Coupa.
Scalable and customizable
As the business grows, so will operational needs. Choosing software that can easily scale and adapt as the company expands is important. You’ll want the ability to customize workflows, report formats, and user permissions. A modular design that enables you to add and integrate new features, supports multi-currency and multi-languages, and includes cross-country tax regulations ensures you won’t spend more money and time ripping and replacing e-procurement technology as you grow. Coupa’s platform is designed for all businesses — from small startups to large enterprises. It offers compliance for several countries, support in multiple languages, and extensive integration capabilities.
“When it came to rolling out Coupa in Thailand, I think they were extremely surprised that Coupa supports the Thai language. Finally, a solution that can adapt to our language.”
— Vincent Teyssier, former Director, Head of Procurement Technologies — Strategy & Transformation, Telenor
Gain a unified view and control of all direct and indirect spend with Coupa’s industry-leading AI procurement platform, and navigate the complexities of today’s business environment with confidence.
