What Are Electronic Orders? Benefits and Success Cases in Europe
An electronic order is an order generated and sent in electronic format. The order, also called a purchase order or a PO, is a document that serves as proof of a request for goods or services from a supplier in accordance with the conditions agreed upon by the parties involved in the transaction.
Electronic orders are a type of message sent using EDI (electronic data interchange) systems. They are used to complete a flow of electronic messages that automate the purchasing process: ordering, delivery notification and invoicing.
Many business sectors are implementing electronic ordering systems for both B2B and B2G communications.
The advantages of e-ordering are derived from the overall benefits of working with EDI solutions. They are fully scalable, meaning they can be expanded to include new messages as a company’s needs change.
Implementing EDI is a logical next step following implementation of an e-invoicing system. Using EDI, you can flexibly integrate different types of messages required for electronic transactions with trading partners. Once the EDI communications infrastructure has been configured, adding new document types like orders is a natural evolution of the EDI flow.
EDI is designed to automate the integration of commercial documents with your company’s ERP or internal management system. It provides more security, greater flexibility, and makes communication between trading partners more fluid by applying standardized protocols. As the number of a company’s business partners (customers, suppliers, logistics operators, etc.) increases, the volume of messages exchanged will also increase. In parallel, the benefits of using EDI become more apparent.
In recent years, electronic orders have become the norm in a variety of sectors such as healthcare, public-private relations, and retail. The explanation for this evolution in the healthcare industry is quite logical: it arose from the need to ensure the continuous operation of healthcare infrastructures and the great variety of products being tracked and managed by healthcare centers. EDI is a key tool for streamlining and optimizing the administration, management and operations of those centers.
Benefits of e-ordering
E-ordering benefits both buyers and their suppliers. The most important benefits of the system are speed, security, standardization and traceability.
Benefits to the supplier:
- An e-ordering solution automates the purchase order management process:
- It receives e-orders, which are integrated with the company's ERP and converted to an importable data structure.
- Order data is integrated with the management system and prepared for processing.
- Customers are automatically notified when their order has been received and is being processed.
- E-invoices are automatically generated from the order information.
- Streamlines information processing.
- Reduces errors.
- Improves customer service.
- Shortens the payment cycle since the system automatically issues an invoice once the order has been filled.
- Reduces processing and filing costs.
- Eliminates paper.
Benefits to the customer:
- Automatically generates orders in EDI format from ERP data.
- Sends notification of reception when order has been received and processed by end user.
E-ordering in Europe
Countries like Italy and the United Kingdom have already introduced e-ordering and made it mandatory in their public health sectors. Starting next year, Denmark will make the use of electronic ordering and e-catalogs mandatory.
The implementation of electronic ordering systems as in the above cases requires suppliers to be equipped to issue electronic orders in European format and to send them via the PEPPOL network (Pan-European Public Procurement Online).
In the United Kingdom, the National Health Service (NHS) and all of its suppliers are using EDI as part the UK’s e-Procurement Strategy. Four types of EDI messages will be used in the system: orders, invoices, order confirmations and credit notes. To ensure interoperability, the PEPPOL standard must be used. To use the system, suppliers must secure the services of a PEPPOL-accredited Access Point.
In Italy, as of February, suppliers of the National Health Services (SSN) are only allowed to receive electronic orders through the government’s NSO platform (Nodo Smistamento Ordini). This means all companies supplying the SSN must be able to receive and process orders electronically. In technical terms, this means connecting to the NSO with a direct connection to the platform or through the PEPPOL Network.
One area of interest has been the Italian region of Emilia-Romagna, which was a pioneer in the implementation of paperless e-ordering in its public sector. Since June 2016, health organizations and their suppliers have been required to manage all orders and delivery notes in electronic format using the PEPPOL standard.
In Denmark, the many benefits offered by e-invoicing have encouraged the Danish government to implement e-ordering and e-catalogs into its public procurement process as well. The Danish Business Authority, the Erhvervsstyrelsen, has planned for the use of electronic orders and catalogs to become mandatory starting 1st January 2021. As of that date, public institutions will have to send their electronic orders from electronic catalogs.