Since the Information and Communication Technologies (ICT's) offer more and more opportunities, the implementation of an electronic procurement is now perceived as an essential solution for companies to gain competitive advantage in the global world of commerce and technology.
With the ICT's, the procurement function can offer wider opportunities to the companies by prioritising and achieving their strategic objectives which involve costs, quality, delivery, flexibility and innovation.
E-procurement is a tool for making purchases, including sourcing, ordering, commissioning, receipting and making payments, through a range of Information & Communication Technologies -especially by Internet- that can be used to automate the internal and external related processes.
It applies only to B2B and implements a system where companies manage directly all interactions between their business processes and their suppliers.
[...] It facilitates the applications of various forms of EP and general e-commerce. A site falls into the e-category of an e-market place when it is open to multiple buyers and sellers and provides one or more commerce related functions, such as reverse auctions, vendor catalogues, fixed price ordering, trading exchange functionality and RFx capability. Van Weele, in 1988, illustrated these forms of EP in the purchasing process. However, Harink JHA in 2001 made a small extension to this model by adding three other phases called the 'completion process' in the operational procurement process. [...]
[...] They have to focus at the strategic importance of the purchased component and have to consider the number of suppliers that can provide the component or service. Two other factors, according to C. Billington (2003), have to be taken into account. According to him, the third factor should be the complexity of the interfaces between the component and the rest of the final product and the complexity of the supply chain itself. Boeing is a good example of the necessity to maintain a constant communication and sharing of data with suppliers as it is the only way to bring million of components at the right time. [...]
[...] In fact, the evolution of the e-procurement function shows a shift from a focus on cost savings to the broader management of supply availability and risk while maintaining competitive cost structures. Investment in these technologies has steadily increased the past few years and a last phase of development has been the integration of electronic markets (e-markets) in the supply chain. The e-markets offer a support for outsourcing the operational procurement functions by offering tools for auctions and request for quotations and they are supposed to revolutionise business in the 21st century The main forms of e-procurement Based on our previous definition of EP, e-procurement can encompass different forms (Perrings and Ansusategi, 2001) as follows: ERP or Electronic Ressource Planning It is the process of creating and approving purchasing requisitions for direct goods and services by using a web-based software system. [...]
[...] The e-procurement systems in the late 1990s have allowed the reorganization of all the supply chain by an increased standardization on a technical level. In the earliest days of the web, General Electric began buying components through its Trading Process Network (TPN). On TPN, the cost of processing a traditional paper purchase was divided by 10. Following that success, most large organizations have transferred their procurement of indirect materials to the web. Exchanges for direct materials increased later in 1999, with the success of some on-line auctioneers (e.g. Freemarkets.com). [...]
[...] E-procurement solutions have maximised the costs savings by eliminating inefficiencies and finding smarter ways of doing business. In addition, the use of the IT has also brought other benefits to the operational processes procurement. The companies, which are investing in eprocurement to gain ultimate control to the entire purchasing process, can expect the benefits as follows: Process efficiencies -High decrease in the costs of goods and service -More efficient search of products and alternative choices -Fastening the decision-making process by keeping relevant information organized and time-stamped. [...]
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