ch07 e procurement

8/13/2019 Ch07 e Procurement

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Slide 7.1

Dave Chaffey, E-Business and E-Commerce Management,3rdEdition Marketing Insights Ltd 2007

CHAPTER 7E-PROCUREMENT


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Slide 7.2


Learning outcomes

Identify the benefits and risks ofe-procurement

Analyze procurement methods to evaluate cost

savingsAssess different options for integration of

organizations information systems with

e-procurement suppliers.


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Slide 7.5


What is e-procurement?

Procurement refers to all activities involved

with obtaning items from a supplier

The electronic integration and management of

all procurement activities including purchase

request, authorization, ordering, delivery and

payment between a purchaser and a supplier


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Slide 7.6


The 5 rights of E-procurement

Sourcing items:

at the right price

delivered at the right time

are of the right quality

of the right quantity

from the right source.

Baily et al., 1994


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Figure 7.1 Key procurement activities within an organization


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Figure 7.2 Electronic procurement systemSource:Tranmit plc


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Slide 7.9


Types of procurement

Production-related procurement

Relate to manufacturing of products

Non-production related procurement

Supports operation of whole business

How items are bought:

Systematic sourcing

Negotiated contracts with regular suppliers

Spot sourcing

Fulfillment of an immediate need


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Slide 7.10


Drivers of e-procurement

Reduced purchasing cycle and cost

Enhanced budgetary control

Elimination of administrative errors

Increasing buyers productivity

Improving information management

Improving the payment process

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Slide 7.11


Risks and impact of e-

procurement

Organizational risks

Need to redeploy staff: purchasing team of 5

people was reduced to 4

Maverisk/off-contract purchasing: unnecessaryitems are ordered

Technology risks

Integration with existing financial systems Failure to achieve real cost reduction

ROI (return of investment) may be lower than

forecast

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Slide 7.12


Implementing e-procurement

Stock control system

CD/web-based catalogue

E-mail/workflow system

Order-entry on web site

Accounting systems

ERP systems


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Figure 7.4 E-mail notification of requisition approvalSource:Tranmit plc


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Figure 7.5 Document management software for reconciling supplier invoice with

purchase order data

Source:Tranmit plc


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Figure 7.6 The three main e-procurement model alternatives for buyers


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Table 7.6 Assessment of the procurement model alternatives for buyers


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Figure 7.8 An online catalogue of items for purchaseSource:Tranmit plc


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Figure 7.9 Ford supplier portal provided by CovisintSource: Covisint.com


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Figure 7.10 Supplier Route to Government Portal (www.supply2.gov.uk)

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Government marketplace

exchanges


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Table 7.7 Types of B2B marketplaces identified by Kaplan and Sawhney (2000)

with examplesSource: Adapted and reprinted by permission of Harvard Business Review from table on p. 99 from E-hubs: the new B2B marketplaces, by Kaplan, S. and Sawhney, M., in Harvard

Business Review, MayJune 2000. Copyright 2000 by the Harvard Business School Publishing Corporation, all rights reserved

Types of marketplace

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Dave Chaffey E-Business and E-Commerce Management 3rd Edition Marketing Insights Ltd 2007

Questions:

Q1) Describe the different elements of an e

procurement systems

Q2) Outline the main benefits and risk of e-

procurement

Q3) Explain how cost saving may arise from e-

procurement

ch07 e procurement

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