E-Procurement

Presented by

Mr. Randeep Mathur

Date: 07.05.2013

Introduction to Purchasing/Sourcing

Purchasing is the process of making available product

Right Quality Right Quantity Right Time Right Place Right Packaging Right Price Right Service

This is also known as the 7Rs of Purchasing.

Introduction to e procurement

Use of electronic media to conduct one or more activities involved in purchasing.

Involves B2B, B2C or B2G purchasing.

Involves sale/purchase of Services & Products.

Generally uses a 3rd party software platform to conduct the activity.

Types of Purchases

Indirect Purchases - Do not directly go into production of the finished good or service but are required for running the business.

a) ORM purchases (Operating Resources Management) Non-critical goods & services Low value

b) MRO purchases (Maintenance Repair & Operations) Critical goods and services Required for upkeep and running of the function

Direct Purchases – Directly involved in the production of finished goods. Generally industry specific, standard materials. Mission critical materials and lot of time and effort is spent in the purchasing of these items.

Steps involved in Manual Purchase process

1. Specify Requirements

2. Create Requisition

3. Requisition Approval

4. Obtain offers from Suppliers

5. Evaluate offers from Suppliers

6. Select supplier

7. Complete Purchase Order (PO)

8. Approve PO

9. Send PO to vendor

Cont.

Steps involved in Manual Purchase process

10. Check order status

11. Receive Shipment

12. Review Invoice

13. Process Exceptions

14. Approve Payment

15. Send Payment

16. Process Returns

Limitations in Manual Purchase process

Process inefficiencies

Potential for errors

Non compliance with purchasing policy/maverick buying

Lack of leverage

Sub optimal sourcing effort

Lack of transparency

Advantages over Manual Purchasing

Improved process efficiencies

Reduction in errors

Better compliance

Improved sourcing

Transparency

Structured Approval Matrix

Market Making

Time Saving

Types of E-auction

Reverse Auction – Buying (where sellers compete) Simple Reverse Auction

Rank Only Rank with Lead Bid

Dutch Reverse Auction Index Based Reverse Auction (Amount/percentage) Bid Transformation

Forward Auction – Selling (where buyers compete) Simple Forward Auction Dutch Forward Auction

Continental Carbon India LtdContinental Carbon India Ltd

Bid Summary: DocBid Summary: Doc228325775228325775 – – ““  PTFE Acid Resistant Membrane PTFE Acid Resistant Membrane Filter Bags Requirement for CCIL -Filter Bags Requirement for CCIL -Reverse Auction-2012 ”Reverse Auction-2012 ”

Dec 21, 2012

Simple Reverse Auction- Example 1

11 11

Bid Summary

Total no. of suppliers: 3 (All 3 incumbents, All well approved and qualified by

CCIL) No. of Lots: 1 No. of new suppliers participated: 0 Total no. of bids: 39 Average Responses per supplier: 13 Auction Running Time: 54 minutes No. of Bid Extensions(overtimes): 23 Historical Price: INR 21.45 Lacs ( L1’s price- Pre Auction ) Lowest Bid: INR 20.25 Lacs Savings: INR 1.19 Lacs (5.58%)

Supplier participation / Screenshot – Lot1

12

S.I. Lot

Historic Price (L1's Price Pre

Auction )Leading

Bid

Savings (w.r.t.

Historic) Savings % L1 Supplier L2 Supplier L3 Supplier

1

PTFE Acid Resistant Membrane Filter Bags 2145000 2025400 119600 5.58

Industrial Filters &

Fabrics Pvt. Ltd

Hitemp Filters Pvt.

LtdMahavir

Corporation

Bid Graph for Lot 1: PTFE Acid Resistant Membrane Filter Bags

13

Continental Carbon India Ltd.Continental Carbon India Ltd.

Bid Summary:   DocBid Summary:   Doc223176782223176782 – – Main Event – 1 Inch Globe Control Main Event – 1 Inch Globe Control Valve- Requirement for CCIL”Valve- Requirement for CCIL”

November 29, 2012

Dutch Reverse Auction- Example 2

15 15

Bid Summary

Lot1 Quantity Lot) : 1 Historic Price (INR) : 2.60 Lakh Lower Ceiling Price (INR) : 2.15 Lakh Upper Ceiling Price (INR) : 2.57 Lakh Accepted Price (INR) : 2.40 Lakh Spend : 2.60 Lakh Savings (INR) : .19 Lakh   Savings % : 7.39 %   L1 Supplier : Emerson Process Management Event type : Dutch

Total Spend(INR) : 2.60 LakhTotal Savings(INR ) : .19 LakhSavings % : 7.39%

Supplier participation/Screenshot – Lot 1

16

S.I. Name of Participant

Pre bid Offers

Lower Ceiling

Price Upper Ceiling

Price Accepted Price

Savings Savings %

1Emerson Process

Management 287872.9

215890 257400

240796 19204 7.39%

2 Koso India 416383.32      

3 Dembla Valves 628728.26          

Thank you!!