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

What is COVID-19 ?

COVID-19 is a disease caused due to the infection of novel coronavirus. The first case of COVID-19 disease was founded at Wuhan, China in December 2019. It also named as severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). COVID-19 is the most widely spread disease ever in the world. In most cases it infects the respiratory system that causes fever, dry cough, and shortness of breath. Previous : What is the difference between coronavirus and COVID-19 ?

EDI and Business

Organisation that Uses EDI 1) Wal-Mart : An EDI link between Wal-Mart and one of its suppliers, Seminole Manufacturing Co. cut the delivery time of Seminole slacks by 50%. This resulted in a 31% sales increase of these slacks in the first 9 months after the link was established. 2) General Motors : General Motors have integrated EDI Electronic funds transfer at 30% of its assembly plants. Shipping receipts are sent electronically from the GM plant to an Electronic Data System (EDS is subsidiary of GM) computer center where they are matched against electronic invoices and purchase orders. Suppliers group the shipping receipts, and one payment is made. This single payment may represent dozens of different shipments to different plants. These payments are also performed electronically via Electronic Funds Transfers. 3) J C Penney : Sales of Stafford suits jumped 59% after JC Penney linked up with their supplier Lanier Clothes. EDI allowed Penney to quickl...

EDI Maturity Model

The development of EDI within an organisation or a trade sector goes through a number of stages. Saxena and Wagenaar suggest a three stage EDI maturity model as a part of a three-way analysis of EDI development in organisations, trade sectors and nations. Figure 2.20 shows the concept of EDI maturity with a six-stage maturity model, and links it to the opportunities for competitive advantage. The stages of EDI development as represented in the model are: Stage 1:Discovery : The first stage in EDI development is the discovery stage. Discovery can be by an organisation choosing to adopt EDI to gain competitive advantage or to solve an administrative problem. Stage 2: Introductory : This stage requires investment hardware and software but, atleast significant, will be the time commitment in establishing the parameters of the electronic trading relationship. This stage, on its own, does not result in any cost saving or efficiency gain. there are direct costs in computer ...

fivwords

Search This Blog