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Developments in technologies have made it possible for organizations to improve efficiency and save money in many areas of the business. Procurement -a vital part of supply chain management- is one of those areas that has been significantly impacted by the new technologies. Rather than using traditional, paper-based methods for acquiring goods and services, organizations have begun to take advantage of technology-enabled acquisition of goods and services. Looking for ways to improve operating efficiency and cut costs, supply chain managers have looked to electronic procurement (E-procurement) systems and methodologies to aid them in this effort. Moving away from the traditional tactical view of procurement and evolving into more of a strategic role contributed to that development significantly (Smart, 2010). Although there are many different definitions of E-procurement in the literature, E-procurement mainly refers to the use of Internet and related technologies to streamline and perform all operational and strategic procurement activities (Teo et al., 2009). Well implemented E-procurement systems enable users to systematically and efficiently connect with suppliers, resulting in increased productivity, lowered operational costs and optimization of resources. However, decisions to purchase and implement E-procurement systems and methodologies can sometimes be costly and painful. Acquisition of E-procurement tools must be balanced against return on investment.
One of the very first applications of E-procurement systems included electronic data interchange (EDI) which was developed in the 1970s to help companies improve their purchasing process (Wisner et al., 2012). The EDI system which enabled computer-based exchanges of data between buyer and seller has been adopted by a number of organizations since its introduction. However, an EDI system is very expensive and difficult to implement, and often inflexible. As Presutti (2003) noted, implementation cost was a significant barrier to the widespread use of EDI as a large-scale facilitator of E-procurement. The emergence of the Internet in the 1990s offered significant opportunities and opened up new possibilities for companies to be able to perform most purchasing activities online. As a result of the increasing use of the Internet, a number of Internet-based E-procurement applications including e-sourcing, e-catalogs, e-marketplaces, and electronic contracts management systems have been developed. These systems have been in use by many organizations since the 1990s and have become viable alternatives to traditional paper-based systems. Amongst those systems e-sourcing includes forward and reverse electronic auctions, online bidding and tendering (Johnson & Klassen, 2005). E-sourcing helps the buying firm in all stages of the supplier selection process, from prequalification of suppliers through the construction of a comprehensive request for proposal to the selection of the final supplier (Presutti, 2003). Another widely used E-procurement system is E-catalogs that are the electronic representations of information about the products and/or services of an organization (Baron & Shaw, 2000). Therefore e-catalogs provide a passage to sourced products, suppliers and the ordering process which will all lead to increased operating system efficiencies. One of the most common E-procurement applications is e-RFX which is an electronic tool that allows procurement professionals to issue and manage electronic requests for information (eRFIs), requests for quote (eRFQ), and requests for proposal (eRFPs). It is a suite of applications which support buyer analysis of supply markets and suppliers (Smart, 2010). Because of the differences between E-procurement systems, companies should be careful in choosing the one that is most appropriate for them. No matter which application is used, E-procurement is a viable and valuable way of doing business and promises to be something that will soon be adopted by companies large and small (Neef, 2001).