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e-Procurement

July 1, 2009
by root
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An opportunity for cost savings, greater efficiencies

Long-Term Living asked Malcolm H. Morrison, PhD, president and CEO, Morrison Informatics, Inc., a healthcare information technology and data analysis consulting company specializing in post-acute care, to discuss the topic of e-procurement (electronic procurement). By integrating e-procurement into their business plan, many providers are finding operational efficiencies through cost savings, comparative shopping, ease of accessing vendors, faster turnaround times, and ease of use.

Please describe e-procurement.

Morrison: E-procurement is the business-to-business (or business-to-consumer or business-to-government) purchase and sale of supplies through the Internet or other information and network systems. E-procurement Web sites can be used for purchasing goods and services and e-procurement software can automate the purchasing process. Organizations that use e-procurement can automate the procurement workflow and control inventories, reduce purchasing costs, improve delivery schedules, and gain efficiency. The major types of e-procurement are: Web-based Enterprise Resource Planning (ERP)-creating/approving purchasing using Web technology; e-sourcing-identifying suppliers using Internet technology; and e-tendering-sending requests for information and pricing to suppliers and receiving responses using Internet technology.

Does e-procurement represent a new and effective way to reduce purchasing costs?

Morrison: Cost control is a major concern of healthcare and assisted living providers who face increasing challenges to provide quality care while controlling or reducing costs of operations. Materials purchasing has long been recognized as a viable opportunity for cost reduction, and traditionally, group purchasing has been used to reduce and control costs. Today's e-procurement technology permits automation of procurement processes, control and management of purchasing decisions, and use of standardization and efficiency in purchasing decisions.

Is special software required to use e-procurement?

Morrison: While electronic commerce and use of e-procurement is in widespread use by consumers ordering conventional goods and services using the Internet and World Wide Web, procurement software (available from e-procurement software vendors), is advisable for healthcare providers to fully automate the requisition process, reduce the inefficiency of paper processes, ensure internal consistency in procurement procedures and keep and reduce procurement costs. In addition to general e-procurement software for healthcare providers, many vendors will provide proprietary software to assist the provider in electronic purchasing of their products

What are some major capabilities of e-procurement software vendor products?

Morrison: Web interfaces, content control for users, product comparisons, requisitioning, e-quotes, purchase orders, approval process and financial documentation, customized purchasing options, and comprehensive coverage of purchase items are a few major capabilities.
Malcolm H. Morrison, PhD

Malcolm H. Morrison, PhD


Are there some key guidelines to follow when considering e-procurement?

Morrison: E-procurement has been increasing rapidly, including use by group purchasing organizations. However, providers can also access and participate with specialized healthcare e-vendors who can negotiate deep discounts from suppliers. If providers obtain an interface with e-vendors, they can use a purchasing software application to communicate with e-vendor suppliers. Providers should carefully review and evaluate e-procurement options and vendors to determine costs and benefits of increased use of this technology. And, providers should ensure that hardware, software, and Internet connections are functional for e-procurement.

Are there e-business standards that providers should require when using e-procurement?

Morrison: Key standards to look for are:

  • Accurate, complete, and truthful advertising and marketing of products

  • Accurate and accessible information about e-procurement companies and their products and services

  • Complete disclosure of the terms, conditions, and costs of transactions

  • Clear contracting procedures, payment procedures, and providing records of transactions

  • Secure payment methods

  • Clear disclosure of privacy policies

  • Policies and procedures for reporting complaints

  • Clear consumer protection policies

Please summarize the benefits of e-procurement.

Morrison: Key advantages of e-procurement include significant savings from group purchasing discounts, electronic efficiency, significantly faster turnaround times, streamlined shipment and delivery times, and electronic support of comparative pricing and purchasing.

How would you recommend that providers use e-procurement?

Morrison: A good first step would be to inquire with current group purchasing organizations about availability of e-procurement and how it operates. If e-procurement is available, a provider can then consider how effective it will be and review the requirements. Then, a provider can review other e-procurement vendor products and compare capabilities before reaching a decision. Technical assistance in reviewing and evaluating e-procurement is available from professional consultants.

Where can providers obtain more information about e-procurement?

Morrison: Here are a few sources:

  • Chaudhury, Abijit; Jean-Pierre Kuilboer (2002). e-Business and e-Commerce Infrastructure. McGraw-Hill.

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