In recent years, the significance of E-Procurement strategies has been emphasized frequently in the field of e-commerce. Since there are many dimensions in the implementation of E-Procurement strategies, a multi variety of E-Procurement strategies have been developed and embodied. E-Procurement is more than just a system for making purchases online. E-Procurement system can connect companies and their business process directly with suppliers while managing all interactions between them.
Which enable clients to quote, requisition, order, and track and receive through single online channel. Finding an appropriate and well managed is a crucial step in creating E-Procurement strategies. To solve this problem, this study investigates various approaches towards achieving best E-Procurement strategies for a given category. Significance of E-Procurement It’s evident that E-Procurement sites are the most successful.
How you approach your target audience may differ depending on whether one uses a business-to-business (B2B) or business-to-consumer (B2C) e-commerce model, but the major goal is to meets your customers’ needs and generate profit at the same time. Applying E-Procurement, benefits Supplier, Merchant and Customers. The companies can save on purchasing costs through online e-procurement system by tracking purchase, suppliers, better negotiation.
To be successful, the e-seller must select best E-Procurement strategies for Managing all the challenges for B2B Procurement which includes approved suppliers on-line, Increasing efficient of purchase management ,better Forecasting , best deal reports ,accessibility, flexibility, control ,cost ,time , Less maverick buying and for some global operations (Chaffey, 2007). Strategies for e-procurement E-procurement is the automation of the procurement processes so that the sourcing vendor selection, procurement processes, shipment status tracking and payment can be made in an online environment.
The main aim of the e-procurement application is to reduce the cycle time for performing such applications hence increasing the opportunities that will attract more suppliers and greater bargaining power to the buyers and this helps a company or an organization to realize greater profits within the organization. Most of the organizations and companies nowadays are looking for ways in which they are going to cut cost as the living standards and economic status keeps on changing and this leaves most of the companies with no option than to look for various ways to cut costs in every possible way.
This can only be achieved by what is known as procurement and different companies have different definitions making it the strategic arm for cost reduction. Procurement is a very broad term and companies have to adapt e-procurement for all types of purchasing and in most cases the best place to apply electronic procurement is where a very close business relationship must be established and ongoing mutual aid is needed with suppliers and this is especially when developing new products or technologies.
In today’s dynamic business companies are differentiating sourcing and logistics, value chain has been be the only solution due to the e-procurement applications which helps organizations and companies to realize lots of benefits through its usage and makes the company discover a cost reduction of up to 5-10% of the total procurement spent in an organization.
Before any company or organization thinks of using the e-procurement they have to bear in mind if the implementation will help the organization to generate more income and the benefits it will deliver to their organization and if it will deliver the same benefits to the industry. This profits of the e-procurement can only be realized when a well plan procurement strategy is put in place and this strategy that may seem to be different from other companies is what will help your organization to realize the huge profits which will be an advantage to your company.
According to research done on different sectors it indicates that almost 55% of the procurement expenditure is on services with the major services procured is management, business and administration services, and advertisement, marketing and sales services, technology services and others and yet most organizations do not have a corporate wide policy for procuring such services. Another option that can be helpful for an organization is to choose only certain aspects of the e-procurement process to automate.
For example some of the organization and businesses do their negotiations outside the e-procurement system and use the internet to do all their purchasing and order tracking and this will help an organization a great deal to realize huge profits depending on their needs. Many of the organizations and businesses simply use e-procurement for connectivity purposes and this option is only suitable to companies or businesses that are not interested in making a major switch and are happy with their procurement system they have.
E-procurement systems help every company a great deal in terms of delivery as they get impressive returns on their investments To effectively implement the e-procurement 1. Start with non-critical items. An initial e-procurement system should slim the amount of paperwork needed for purchasing and reduce order complexity by standardizing the exchange process between supplier and buyer. Use your intranet to bring all internal stake-holders on board with your new procurement process and to establish internal customer behavior.
Streamline, map, test, troubleshoot and improve the process before expanding it to external suppliers. Work with a favored supplier to test the system. 2. Leverage your system once it’s running. Exploit your full purchasing power by using reversed auctions. Invite new suppliers to participate once the system has proven itself. 3. Combine buyers within your organization to increase your purchasing power and gain better pricing. 4. Use a portfolio approach to expand your system. It is not possible to have uniform relationships with all suppliers nor are all purchasing requirements the same.
Sort purchasing needs into groups that can use a similar process and a similar template Difficulty in E-Procurement There exist several differences between Merchants from different parts of the globe due to differing cultures, values, Policy and terms. In addition, Involved in managing more complex B2B relationships requiring expensive technology and capabilities. Integrating between purchasing process and information of Inventory, logistics and other systems require much more customization. Business Objectives towards E-Procurement Strategy
The main aim of the business to reduce the cost, Improve contact compliance. Enhanced market data. Improve in provisions of service and cost. Strengthen the competition, balancing the trade during agile business process, Improve the Internal customer relationship management. Best Spend Management during recession. One-stop-shopping, getting more partners, reduced dependency and lower inventory. Reduced paper cost, Better finding products. Distributes the purchasing power to authorized user, standardizes buying methods. To make effective use of human resources (Kaplan, & Norton, 2004).
Business/Purchaser considerations Towards E-Procurement Strategy In order to achieve E-Procurement across all channels, it is important that the business develops at least minimal strategy outlining its goals and how to achieve them. Understanding current purchasing policies. Investigate the type of spending by classifying the buying goods in terms of direct and indirect. Identify the source of goods and services which are belong to either contract or spot purchase. To be success, it depends in large part on the number and types of merchants that join.
Considering the extra cost which may be included in switching supplier. Maintaining supplier business relationship (Dobni, 2003). Identify high supply risk and low profit of business process. Financial standing, settlement and Logistics needs of Purchaser, Quality of Purchaser staff. Supplier/Technology Consideration towards E-Procurement What are the functions are included. Is key suppliers are ready to use e-commerce. Who and how best maintain the catalogue content. Is it feasible interface with leading supplier hubs and is it scalable to meet the supplier needs (Verma, 2007).
Developing the Best Strategy for E-Procurement The initial E-procurement strategy can be derived from the following steps. Identify the objectives of business and possible conditions. Then involves in situation and context analysis and followed by SWOT analysis of business, Technology and process . Finally derive the best strategy by taking the Key considerations from Merchant, supplier and Technology perspective. As well as consider budget and performance perspective without deviating from the Business Goals and Objectives (Kaplan, & Norton, 2004).
Guidelines for choosing best E-Procurement strategy E-procurement is basically divided into 4 categories as Buyer centric, Supplier centric, E-marketplaces, and Collaborative. The following bullet points are generic and applicable to all categories • Addressing basic type of goods and service covered by e-procurement. Direct and Indirect goods. Indirect materials are generally included commodity and standard Item and often cut industry line and low risk. • Direct Materials are not easy to automate and consume large resources and need degree of collaboration with suppliers
• Focusing on defined Target groups E-procurements process is geared towards the supplier and consumer satisfaction and needs. • Equal Fostering competition Both supplier and consumer should be economically benefit • Enable supply management to focus on value added function of contract management and Strategic sourcing Controls Procurement expense and makes great deal of sense to help keep costs under control • Encouraging the re-use of existing solutions • Intensify the collection of feedbacks and success stories from direct and indirect contact
• Create Effective Collaboration which provide best Cross functional and supplier collaboration • Spend Management Initiatives reduce of Maverick buying and tightened spend management • Provide Price adjusting strategy based on the situations and deals • Manages a Global system of supply chain methods to support beyond corporative Limit by introducing modern and structured e-procurement process. The process is transparent and easy to use. • Selecting the appropriate e-procurement techniques for the give products needs
• Depends on company size and financial status select either wait and see or passive approach • Increase corporate leverage with the reports available • Choosing effective Platform o Easy to use by both vendor and buyer o Flexible enough to accommodate direct and indirect purchasing needs o Functionality rich enough to perform wide rand of purchasing, searching, sourcing, bidding, tracking, auditing, • Choosing Right vendor o Considering quality of service providers includes B2B strong knowledge and market place Interaction (Gronroos, & Ojasolo, 2004). Conclusion
There is need of choosing best e-procurement strategy to be successful in B2B relationship. For this to be effectively achieved, it should be in a way that is acceptable by both Purchaser and supplier to meet their needs. As such, the B2B relation success is determined by ability of choosing best strategy of e-procurement. References Dobni, D. (2003)”. A framework for understanding service sector Productivity”, the Journal of Services Marketing. Gronroos, C. & Ojasolo, K. (2004). “Service productivity: towards a conceptualization of transformations of inputs into economic results in services”.
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