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fundamentals:market_places:e_procurement
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E-Procurement

Definition

E-procurement (electronic procurement) is the B2B or B2C or B2G procurement of goods and services through electronic methods, such as Internet as well as other information and networking systems like EDI or ERP. 1)

Typically, E-procurement web sites allow qualified and registered users to look for buyers or sellers of goods and services. Depending on the approach, buyers or sellers may specify prices or invite bids. Transactions can be initiated and completed. Ongoing purchases may qualify customers for volume discounts or special offers. E-procurement software may make it possible to automate some buying and selling. Companies participating expect to be able to control parts inventories more effectively, reduce purchasing agent overhead, and improve manufacturing cycles. E-procurement is expected to be integrated with the trend toward computerized supply chain management.

Main variants of E-Procurement

  1. E-Tendering:2) Unordered List ItemSending requests for information and prices to suppliers demand receiving their responses.
  2. E-Reverse auctioning:3) Buying goods and services from a number of known or unknown suppliers.
  3. E-Informing:4) Gathering and distributing purchasing information from and to other parties.
  4. E-Sourcing:5) Identifying suppliers for a specific category of purchasing requirements.
  5. Web-enabled ERP (Enterprise Resource Planning):6) Creating and approving purchasing requisitions, placing purchase orders and receiving goods and services by using a software system based on Internet technology.
  6. E-MRO (Maintenance, Repair and Operations):7) Similar to Web-enabled ERP except that the goods and services ordered are MRO supplies.

Advantages of adopting E-Procurement (Systems)

  • E-Procurement helps with the decision-making process by keeping relevant information neatly organized and time-stamped. Most are template-driven which makes all transactions standardized and trackable. Keeping track of all bids means leveraging your knowledge to obtain better pricing. Companies can focus on their most lucrative trading partners and contracts. 8)
  • E-Procurement enhances the comparability of suppliers and prices. 9)
  • E-Procurement reduces the energy expended. Especially at purchasing office equipment and other class C commodities.
  • Well-managed E-procurement helps reduce inventory levels. Knowing product numbers, bid prices and contact points can help businesses close a deal while other suppliers are struggling to gather their relevant data.
  • Effective E-Procurement minimizes process costs by fast transaction of the purchasing orders. 10)
  • E-Procurement systems that allow multiple access levels and permissions help managers organize administrative users by roles, groups, or tasks. Procurement managers do not need to be as highly trained or paid because such systems are standardized and easy to learn. 11)

Ordinary adoption strategies

Some firms have discovered that many of their transactions still take place on paper, and they have run into problems ranging from content management to supplier participation in their systems. Most companies who desire to make the switch fall into two camps. The first are the slow step-by-step adopters. They implement one piece of their system at a time and slowly bring trading partners on board. The others follow the total replacement model. They build a totally parallel system, test it, then switch over to it when it works. There is usually some pain involved and some mistakes are discovered, but by and large these are absorbed and the business continues. 12)

Conclusion

<note tip>“Do not bite off more than you can chew.” 13)</note>

Adopting a complex E-procurement system should only be considered if you have the time and resources to implement this. The possible advantages are described in the text above. If not, stick to an incremental approach.14) You can´t expect an immediate return on investment. A short-tem gain may be noticeable, but it may be eaten up by the cost of staff training and equipment purchases. A year or two down the road and a larger ROI should be evident.

1) E-procurement. techtarget.com. Retrieved 2011/09/10.
2) , 4) , 6) , 7) Description e-procurement. 12manage.com. Retrieved 2011/09/11.
3) Reverse auctioning. timesonline.co.uk. Retrieved 2011/09/11.
5) , 8) E-Sourcing. tcw.de. Retrieved 2011/09/08.
9) , 10) , 12) Cf. Neef, Dale: E-Procurement: from strategy to implementation, p. 8 ff, 2001, Prentice Hall PTR, New York
11) E-Business. prozeus.de. Retrieved 2011/09/08.
13) What does it mean to bite off more than you can chew. wisegeek.com. Retrieved 2011/09/12.
14) Cf. Wheatley, Malcom: How to know if E-Procurement is right for you. cio.com. 2003. Retrieved 2011/09/09.
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fundamentals/market_places/e_procurement.txt · Last modified: 2011/09/13 17:18 (external edit)