Procurement is defined as the process of establishing terms and conditions for
acquiring goods and services from external sources. Procurement cost is a Key
Performance Indicator (KPI) that is vital to supply chain management. This provides a clear way to measure the performance of the entire procurement process, and since it is a KPI based on cost metrics, it directly impacts the bottom line.

Procurement savings serve the purpose of driving down the cost of goods (including the handling and delivery of those items) as well as improving terms in the supplier relationship. Reducing procurement costs can be a simple and instant way to increase profit margins without sacrificing the quality of products offered to consumers. There are a variety of techniques businesses can implement to drive down these purchasing expenses, but first, it is vital to understand the different types and components of procurement costs and identify why these expenses occur. Hence, if e-procurement is seen primarily as a price-cutting instrument, there is a risk that buyers reduce operational cost (transaction cost and purchasing. With this regard,

1) Examine the major influence of electronic purchasing on reducing logistics cost.