Skip to main content

Procurement Management Using Buyer's Internal Market Place

Improvements to procurement have been attempted for decades, usually by using information technologies. The real opportunity for improvement lies in the use of e-procurement, the electronic acquisition of goods and services for organisations. The general e-procurement process (with the exception of tendering) is shown in figure 2.8. 

One effective solution to the procurement problem in large organisations is to aggregate the catalogues of all approved suppliers, combining them into a single internal electronic catalogue. Prices can be negotiated in advance or determined by a tendering, so that the buyers do not have to negotiate each time they place an order.





By aggregating the suppliers' catalogues on the buyer's server, it is also easier to centralise and control all procurement. Such an aggregation of catalogues is called an internal procurement marketplace. 

Benefits of Internal Marketplaces 
1) Corporate buyers can use search engines to look through internal aggregated catalogues to quickly find what they want, check availability and delivery times, and complete electronic requisition forms.
 
2) A company can reduce the number of suppliers it uses. For example, Caltex, a multinational oil company, reduced the number of its suppliers from over 3,000 to 800. Such reduction is possible because the central catalogue enables buyers at multiple corporate locations to buy from remote but fewer sellers. Buying from fewer sellers typically increases the quantities bought from each, lowering the per unit price.
 
Desktop Purchasing 
The implementation of internal purchasing marketplaces is frequently done via desktop purchasing. 

In this variation of e-procurement, suppliers' catalogs are aggregated into an intermal master catalog on the buyer's server, so that the company's purchasing agents can shop more conveniently. Desktop purchasing is most suitable for maintenance, replacement, and operations (MRO) indirect items, such as office supplies. 

In the desktop purchasing model, a company has many suppliers, but the quantities purchased from each are relatively small. This model is most appropriate for government entities and for large companies, such as Defra in the U.K. 

Desktop purchasing automates and supports purchasing operations such as product and supplier selection, requisitions, catalog searches, approval processes, purchase order processing, catalog updates and content management and report generation. 

A schematic overview of such a system is shown in figure 2.9.



Previous Next


Labels:

Comments

Post a Comment

Popular Post

Competitive Advantage - Sustainable Competitive Advantage

Sustainable competitive advantage may be realised by adoption of e-commerce strategies and business models. Rather than simply exchanging procurement transactions as with e-commerce practices, leading enterprises are executing e- commerce to share intellectual capital with their trading partners working as a value chain that provides a competitive advantage for the development and distribution of their products. The idea of giving the customer access to tracking information via the internet was a new one that had considerable appeal to the customer. For example , the use of new system also had considerable advantage to FedEx who no longer had to deal with a vast number of calls checking up on progress of consignment; because the customer could now access the system themselves. But e-commerce development and implementation could not be entirely private- customer had to become involved at some stage. The competitor was quick to catch on to the idea and UPS (United Parsal Services) was so...
Post a Comment
Read more

E-Commerce Implementation

The strategy diagram divides implementation into the technical and the business aspects and these are briefly considered below: Technical Implementation : The approach to technical implementation of an E-Commerce system depends on the business objectives, business requirements and technologies that have been selected. It is noted that many internet E-Commerce systems are cobbled(repaired) together rather than designed and that is often apparent. It is important that the design process considers: Is of use of system by intended end-users : Always an important factor in system design but crucial if the end user are to be members of the public with perhaps limited computer literacy and the option to switch to an alternative website if not satisfied. Functionality that users need : This has to be what the users want rather than what the organisation things they need. Uses of e-commerce are not a captive audience that can be interviewed and evaluated like the uses of a traditional IS develo...
Post a Comment
Read more

Electronic commerce introduction

Electronic Commerce ( e-commerce ) generally refers to all forms of transactions relating to commercial activities, involving both organizations and individuals that are based upon the processing and transmission of digitised data, including text, sound and visual images. E-Commerce has created a new environment in business transactions using internet. It deals with providing information to consumers regarding products of their interest. It provides a platform of advertisement of products, allows negotiations, order for raw materials, settlement of financial transactions etc. Electronic commerce is an integrations of communication services, data management and security mechanisms that allows organizations to exchange information about the sale of goods and services, where, Communication services supports the transfer of information from the buyer to the seller electronically. Data management is the exchange and storing of data in a uniform format to facilitate easy exchange of infor...
Post a Comment
Read more