Purchasing Electronically


Getting Started

Use this section to find quick practical ways of applying technology to streamline your purchasing.

Network your computers
Accounting systems
Sourcing online
Purchasing with suppliers online
Proprietary systems
Payment systems
International purchasing
Security

Network your computers

To purchase electronically, you’ll need a computer network and an ‘always-on’ internet connection. If you plan to handle a lot of your purchasing needs online, then you should invest in a dedicated computer (a server). If several members of staff will be buying online, then it would be worth investing in a broadband connection.


Accounting systems

Online purchasing costs are just one part of the total cost of procurement. Setting up your accounting software to measure these will help you to identify them and make further savings.

  • Use a system that can generate purchase orders with itemised product codes.
  • Use a system that incorporates time sheets to assess the cost of management time.


Sourcing online

If you know exactly what you’re looking for, then you can enter the details into a search engine. This will find references to the product you want on the Internet. There are many different search engines. www.google.co.uk and www.yahoo.com are two of the most popular.

  • A faster means of searching is to look at one of the co-buying services, such as www.buy.co.uk or www.shopsmart.co.uk. These will try to locate the product at the best price.
  • There are several sites – www.buy.co.uk is one – which provide a comparison of utility costs, like phone bills, electricity or gas.
  • Internet directories provide listings of companies categorised by the goods or services they sell.
  • For more commonplace items, online ‘malls’ will give you access to a wide range of retail and wholesale suppliers.
  • There are many auction sites online – www.ebay.co.uk and www.qxl.com are two of the better known. You’ll find some good bargains, especially if you’re looking for second-hand equipment.
  • There are also auction sites dedicated to specific sectors, as well as sites that allow you to publish tender documents. These are easily found through search engines and trade association sites.

For more information go to our Online Auctions Guide.

Purchasing with suppliers online

If you are purchasing via a suppliers web site there are various features you may want to check first.

  • Is the product catalogue updated in real-time? You want to be able to order items without waiting for your supplier to verify that they’re in stock.
  • Does it have an electronic ‘shopping cart’ that selects your most frequently bought items? This feature can save time when you are reordering.
  • For small, regular purchases it can be useful to set up automatic orders. Some sites will notify you via e-mail of such orders.
  • Does the site publish a contact name with telephone details? This could be extremely helpful should you have a problem that can’t be resolved electronically.
  • Does it have a password-protected area that allows you to track orders electronically?
  • Is there a choice of payment methods?
  • Are your suppliers’ savings passed on in the form of discounts for internet customers?
  • Can you track delivery online? Many sites clearly indicate their delivery policy and let you check the status of an order once it is in the delivery process.

Proprietary systems

You may have an existing supplier who wants you to purchase via its proprietary system – this would entail dialling into its computer rather than dialling into the Internet to access its web site. Alternatively, you can be connected to the supplier’s internal network on a permanent basis via an ISDN telephone link, ideally at the supplier’s expense. This would not prevent you from buying other supplies on the Internet.

Payment systems

Company purchasing cards can eliminate a lot of the paperwork and administration associated with buying from regular suppliers. All invoicing is carried out by the own card company or bank. Rather than getting lots of separate invoices, you get a single itemised invoice for all purchases over a set period, including tax details. HM Customs and Excise Notice 701/48 gives more information about VAT reporting requirements.

International purchasing

Look at the possibility of international purchasing – there are a number of good reasons for buying from overseas.

  • Prices might be cheaper.
  • You can compensate for local shortages by sourcing from elsewhere.
  • Choice – some goods simply aren’t available in the UK unless they are imported.

However there are some downsides you need to be aware of.

  • Shipping – physical goods are more expensive to deliver and might take longer to get to you. This needs to be factored in to your costings.
  • VAT and Duty – Customs and Excise add a fair amount to the actual purchase price of goods. Most businesses are able to claim back standard VAT of 17.5% on their VAT return. Duty is not reclaimable in the same way.
  • Local support – if there is a problem with goods sourced cheaply from overseas, it’s not guaranteed that you will be able to sort it out easily.
  • Differing goods – not all goods are identical globally.
  • Differing terms and conditions – consumer and purchasing law differs between different countries.

As long as items such as these are checked and taken into account, there is no reason not to consider international suppliers if you can’t source what you need in the UK.

Security

The vast majority of electronic purchasing is safe and secure. If you’re in any doubt about the security of a web site, check that:

  • the web address begins with ‘https’ instead of ‘http’ – this indicates that you’re logged into a secure server
  • a padlock appears in the bottom right hand corner of the Internet Explorer web browser – this confirms that you’re in a secure area
  • the web site has a statement on its security policy.

This information based on information which is Crown Copyright 2003

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