e - procurement
DESCRIPTION
e - PROCUREMENT. BPT3133 – PROCUREMENT IN INDUSTRIAL MANAGEMENT. Chapter Outline. What is e-procurement? Drivers of e-procurement The benefits of e-procurement The current state of e-procurement initiatives The barriers of adoption Measuring the benefits of e-procurement - PowerPoint PPT PresentationTRANSCRIPT
e - PROCUREMENTBPT3133 – PROCUREMENT IN INDUSTRIAL MANAGEMENT
Chapter Outline• What is e-procurement?• Drivers of e-procurement• The benefits of e-procurement• The current state of e-procurement
initiatives• The barriers of adoption• Measuring the benefits of e-procurement• E-Business applications
Learning Objective• Understand the concept of e-procurement• Identify the benefits and potential barriers
to the successful adoption of e-procurement
• Explain the applications of e-procurement
What is e-Procurement?“the term used to describe the use of electronic methods in every stage of the buying process from identification of requirement through to payment
and potentially to contract management”
OR
“using the internet to operate the transactional aspects of requisitioning, authorizing, ordering,
receipting and payment processes for the required services or products”
• Key processes in most e-procurement models:a. E-sourcing – for contractual processes
tools include e-tendering, e-RFQs (request for quotations) and e-auctions
b. E-procurement – for transactional processestools includes marketplaces using
techniques such as e-cataloguesc. E-payment
tools include virtual or embedded PC (procurement cards), e-invoicing and self-billing
What is e-Procurement?
e - Procurement
Drivers of e-Procurement
• Internal and external strategic integration• Globalization and communication• Data information management• New business processes• Replacement of legacy systems• Strategic cost management
Benefits of e-Procurement1. Reducing purchasing cycle time2. Enhancing budgetary control3. Eliminating administrative errors4. Increasing buyer’s productivity5. Lowering prices through product
standardization and consolidation of purchasing power
6. Better information management
Benefits of e-Procurement
Current State of e-Procurement
Successful of e-procurement initiatives generally occur in two areas:1. Procurement of office equipment and supplies using stand-
alone desktop requisitioning tools• focus has been on simple, indirect materials
sometimes called MRO goods (maintenance, repair and operations)
• often failed to integrate with the supply chain and do not enable supply to be matched precisely to demand
2. Strategic sourcing using e-requests for quotation and for proposal (often jointly known as e-RFX) as well as online auction tools
• to lower the input cost of goods and services and the procurement process costs
• goods and services can be uniquely defined and categorized
Barriers of Adoption1. Potential high cost of integrating e-procurement
tools with enterprise resource planning (ERP) systems
2. Difficulty of building a solid business case for another e-procurement project
3. Current spend by some of the commodities groups is unknown
Barriers of Adoption
Measuring the Benefits• Principal metrics that will demonstrate a return of
investment in e-procurement are:a. Hard (direct measurable) benefits:
price savingsprocess cost reduction reduction in cycle times (days / weeks)consequent reductions in inventory holdings (value /
stock turnover ratios)b. Soft (indirectly measurable) benefits:
increase individual time freed up through more efficient processes
enabling staff to spend more time on value-added aspects such as supplier development or contract management
Measuring the Benefits
E-Business Applications• Integrate suppliers and distributors• Share information• Link ERP systems to sales personnel in the field• Outsource manufacturing and logistics systems• Facilitate supplier, on-site engineering and
maintenance activities.
E-Business Applications
ERP Systems
Enterprise Systems
Summary• Implementing e-procurement requires systematic
planning coupled with process and behavioral changes
• Organizations must address the current flawed designs of their existing procurement process and only then build these applications around their re-engineered networks.