E-Procurement Methods

Companies use different methods to procure goods and services depending on what and where they buy, the quantities needed, how much money is involved, and more. The major procurement methods include the following:

1) Conduct bidding or tendering (a reverse auction) in a system in which suppliers compete against each other. This method is used for large-ticket items or large quantities.

2) Buy directly from manufacturers, wholesalers, or retailers from their catalogues and possibly by negotiation. Frequently, a contract implements such a purchase.

3) Buy from the catalogue of an intermediary (e-distributor) that aggregates sellers' catalogues.

4) Buy from an internal buyer's catalogue, in which company-approved vendors' catalogues, including agreed upon prices, are aggregated. This approach is used for the implementation of desktop purchasing, which allows the requisitioners to order directly from vendors, bypassing the procurement department.

5) Buy at private or public auction sites in which the organisation participates as one of the buyers.

6) Join a group-purchasing system that aggregates participants' demand, creating a large volume. Then the group may negotiate prices or initiate a tendering process.

7) Buy at an exchange or industrial mall.

8) Collaborate with suppliers to share information about sales and inventory, so as to reduce inventory and stock-outs and enhance just-in-time delivery.

Previous	Next

Comments

E-Procurement Cycle

Figure 2.6 illustrates the different steps associated with the overall procurement cycle, from the order placement to the accounts payable, in steps through a web based e-commerce network. It includes customers' inventory and supplier information and is readily accessible at any time and from everywhere. E-procurement allows two-way communication of real-time financial and purchasing information. Management at both the buying and selling end can see what is happening at any given moment and identify trends and problems. A shorter purchasing cycle enables companies to maintain lower inventory levels and respond more quickly to stock-outs. Previous Next

Business Strategy - Strategic Planning Cycle

E-business competitive strategy is normally formed and implemented according to a planning cycle which is called strategic planning cycle . There are four stages in this planning cycle as shown in figure 1.19: Industry and Competitive Analysis It aims to identifying those factors on which the success of an electronic commerce project or business would depend. One way of doing that is to carry out SWOT analysis and study your business as well as the business of competitors. Analysis of online competitor businesses is relatively easy since they are just a few clicks away on the web. Strategy Formulation Based upen study of internal and external business environment and in light of a company's strengths and weaknesses, a competitive business strategy is formed. It may be a strategy of cost leadership, product differentiation or focus. One can also identify ways how information technology can be used to implement/enforce such strategy. The inputs to the strategy formulation process ar...

Disadvantages of EDI

1), Operating Procedures : Since EDI is a structured way of working, companies usually change operating procedures. 2) Production and Purchasing Decisions : Responsibilities may have to be changed during the introduction of EDI system. Unless this system and the links with other systems are managed well, it is not possible for the data processing department to become involved in production and purchasing decisions. 3) Transparent : Less transparent than paper-based systems. 4) Flexibility : Certain EDI systems are highly flexible, others are very simple to implement. 5) High Costs : Applications are costing to develop and operate; especially new entrants find this more difficult to have EDI. Many small companies are facing resources problems in getting starter with the initial implementation of EDI system. It is beyond the resources these companies to invest tens or hundreds of thousands of dollars in setting and implementation costs, as well as weeks of personne...

fivwords

Search This Blog