A shorter purchasing cycle to maintain lower inventory levels and respond more quickly to stock-outs is the core business value through e-procurement. Along with some strategical challenges on implementation, study observed standardization and internationalization of problems as few limitations of the technology integration with e-procurement.
In the late 1990s, big corporations managed their supply chains with a combination of paper, faxes, e-mail, and proprietary electronic data interchange networks. But these systems provided opportunities for errors. Executives responsible for maintaining an unceasing flow of supplies to keep production lines running and distant field operations on schedule were at the mercy of primitive purchasing processes that were beyond their control.
Though they could select from a host of qualified suppliers, they didn't have the most convenient ways to find the perfect supplier with exactly the right product at just the right price. Alternatively, it could take days or weeks to have the requisitions signed by executives who spend most of their time on the road. A critical pre-requisite for success in digital economy is the implementation of an integrated value chain that extends across - and beyond - the enterprise.
The term "extended enterprise" represen...
new concept that a company is made up not just of its employees, its board members, and executives, but also its business partners, its suppliers, and its customers. The notion of extended enterprise includes many different arrangements such as virtual integration, outsourcing, distribution agreements, collaborative marketing, R&D program partnerships, alliances, joint ventures, preferred suppliers, and customer partnership.
Enterprises that have global operations or need to deal with a multitude of suppliers are finding that e-procurement has become the only practical way to bring order to what can otherwise become a haphazard operation.
Need for shift to e-procurement:
Procurement is the purchasing of product components, standard raw materials, customized supplies, and other goods needed to conduct business operation. This process includes:
Selecting the supplier
Submitting formal requests for goods and services to suppliers
Getting approval from the buyer
Processing the purchase order
Fulfilling the order
A number of contemporary changes in business, such as the increased global scope of operations, increased usage of outsourcing, and buyers' increased dependence on suppliers' capabilities, make procurement work a vital undertaking for corporations to master.
If a company doesn't tie systems together, e-procurement becomes an isolated step. Instead of moving automatically throughout the value train, the purchasing information stops in procurement. The company will wind up with data stored in a number of different places at considerable extra cost and with much greater opportunity for errors. In such systems, much of the process will be handled manually with paper documents. The supplier still prepares paper invoices