E Procurement System : Information Technology Based System

Through e-Procurement system we can improve redundancies in the business process and operations, gain in productivity by upgrading procurement processes. Cost savings by reducing processing time, rationalization of a large number of BAL suppliers and maintaining relationship with Key Suppliers.

To cite this document: Remko van Hoek, (2001),"E-supply chains - virtually non-existing", Supply Chain Management: An International Journal, Vol. 6 Iss: 1 pp. 21 - 28 Permanent link to this document: http://dx.doi.org/10.1108/13598540110694653 Downloaded on: 23-05-2012 References: This document contains references to 11 other documents Citations: This document has been cited by 16 other documents To copy this document: permissions@emeraldinsight.com This document has been downloaded 4014 times.

It is quite challenging to discuss about procurement management without stating the importance of its strategies. There are four main basic procurement strategies that serve different functions within a procurement management. To begin with, a “Partnership” strategy focuses mainly on constructing mutual commitment in long term relationship with suppliers. While a “Secure Supply” strategy aims to secure short and long term supply while reducing risk from suppliers. In addition, a “Category Management and E-Procurement solutions” serves as a tool to reduce logistic complexity, improve operational efficiency, and attempts to reduce the number of suppliers. Lastly, a “Competive Bidding” strategy emphasizes on obtaining the “Best Deal” for short term transactions with suppliers.(van weele) Each of these four strategies involves a unique purchasing methodology, which implies that the complexity is embedded in an individual strategic implication. Therefore, it requires different tools to accomplish the specific strategical characteristics. A business entity may need to support and execute procurement decisions with other strategic apparatus with analytical methods, including market analysis, uncertainty analysis, price forecasting, supplier relationship and along with others.(Harvard)

E-procurement has had an increasingly important role in business-to-business(B2B) commerce. Web-enabled B2B e-commerce enhances inter-organizational coordination resulting in transaction cost savings and competitive sourcing opportunities for the buyer organization. E-business has radically altered the ways in which firms interact with their suppliers(Phillips 2003). Continued improvements in Internet technology connectivity provide an opportunity to make procurement for goods and services more transparent and efficient. Six forms of e-procurement applications

8. Shorter cycle and lead times – Improved relationships with suppliers and involvement in product and process improvement

In recent years, the importance management of supply chain has been a popular topic for a discussion and debates especially among the researchers, academician and practitioners. Still, the literature on supply chain management (SCM) especially in exploring the supply chain performance measurement is very limited. This limitation is due to the affected (in return) by many aspects of the firm’s environment and operations. The lack of investigation on understanding the supply chain measurement will affect the objectives and motivations of several supply chain concept even though there is a lot of literature on number of conceptual frameworks, discussion on characteristics, hierarchy and structure of performance measurement framework.

While researching on line I came across an article that described the affect that the Internet is having on supply chains today. “E-enabled supply chain management is fast emerging as a core strategy that organizations worldwide are adopting for sustainable business advantage”. (4)

Tata steel from the late 1990’s was developing a way to have e-procurement in its operations. As of now, almost every transaction is conducted via e-procurement.

Procurement also is the selecting from a range of options for acquisitions, and in analyzing and identifying the requirements for the purchasing, negotiating contracts, picking the suppliers, the creating of strategic alliances with suppliers, or the acting as a liaison between the user and suppliers. The current state of procurement practice reflects the dynamic interaction between the opposing forces, leaving the remaining in limbo. The two complementary process is involved in the procurement is vendor selling and customer buying. The best practice in the procurement process is the Exchange-Point Analysis. The exchange points highlight the opportunities for the process integration, which are noted for performance improvement opportunities. The process integration is to convert critical aspects for the supply chain process and procurement from one based on commercial norms about markets and current laws to the one that relies upon goal alignment and trust through the chain of command. The current best practices in industry or government project management include the belief based operations between vendors and customers (Morris & Pinto,

A recent study conducted by the Forrester Research indicates that U.S manufacturers are dependent on the benefits of Information Technology to improve the supply chain, improve the cycle time and receive high efficiency in order to deliver the products to their customers within the time frame. Stevens defines Supply chain management as the “series of interconnected activities that are concerned with the planning, coordinating and controlling materials, parts and finished goods from the supplier to the customer and works as a transporting link between these facilities.” With the development of Information Technology the companies has adapted online communications which helps to increase the interaction between firm and the customer effectively. According to Bakos & Brynjyoolfsson (1993) Information Technology decreases transactional costs between the transaction costs between the buyers and suppliers and creates a more cooperative governance structure which finally results in closer buyer- supplier relations. The research revealed that the effect of information technology on Supply chain management are on 4 aspects which are purchase, logistic, firm, vendor relationship management and customer relationship management.

For a long time, procurement has been looked at as negotiating to get better prices. Many organizations still view procurement as a way to influence spending to get discounts and lower costs from their suppliers. However, sustainability and the supply chain risks that companies face today call for procurement to be different now. Organizations can see real savings by looking at total cost of ownership, which can include a lot of the end-to-end supply chain costs. Disruptions are unavoidable and every decision involved in the procurement process has a risk factor to it. In order for procurement to influence and affect a company it must present a business case that it is a value added function. An organization can add value long term with its ability of purchasing within procurement.

Nowadays, more and more people are using online auction services. With the advancement of technology online auction is one of the in-demand transaction modern people use. In the report an analysis and evaluation of two of the most known e-auction, EBay and Grays Online and their supply chain and logistics processes. We will see how the use of e-business technology affect the supply chain management and what recommendations we may come-up to their strategies and process. The role that supply chain management in an organization can have a direct influence on a firm performance, particularly in the area of cost reduction. An advances in information technology, specifically the Internet, have made it possible to change the

Through e-Procurement system we can improve redundancies in the business process and operations, gain in productivity by upgrading procurement processes. Cost savings by reducing processing time, rationalization of a large number of BAL suppliers and maintaining relationship with Key Suppliers. Investing in an e-procurement system BAL would seek short term improvement tool that would

E-procurement help to provides various benefits, but still the implementation is in development stage. Since not every business model or e-procurement system are equally stable for supporting different business processes, so companies are approaching

The purchasing process involves the use of purchasing systems which provide ways for firms and companies to purchase and acquire goods and services at the best prices and at optimum terms. Purchasing Information Systems are used in decision making at different levels as tools for planning, analyzing, monitoring and controlling the business operations. These systems can be use for various functions like invoice management, ordering of orders automatically, management of supplier contracts among other uses. Enterprise Resource Planning (ERP) systems are business software systems that are