Essay on "Methods of Electronic Procurement"

Essay 5 pages (1417 words) Sources: 10

[EXCERPT] . . . .

Electronic Procurement

The advent of technology has reshaped the business community. Economic agents now integrate technologic developments to more efficiently complete their business operations. They for instance use technologic developments to improve the production and assembly processes, to manage the inventory and even to make new purchases.

One specific technologic development which is gaining more and more momentum within the business community of today is represented by the electronic procurement. This process refers to the completion of procurement decisions with the use of the internet. In other words, the economic agents identify the resource necessities, select the items they wish to purchase, but do not go down to a different location to actually complete the purchase, but place the order and make the payment online. Additionally, they decide on logistics and other procurement related issues in a more efficient manner. This process saves both time as well as money.

"Electronic Procurement (also known as e-procurement) is a way of using the Internet to make it easier, faster, and less expensive for businesses to purchase the goods and services they require. While e-procurement is a general term that covers a wide assortment of techniques, such as reverse auctions, its overall goal is to streamline the purchasing process so businesses can focus more management time on earning revenue and serving customers" (EPIQ, 2010).

Electronic procurement has not been traditionally treated as a managerial topic, or at least it was not paid as much attention as other fields, such as marketing or financing. Throughout the past recent years however, the field of electronic business has developed and has become more popular. Today then, electronic procurement is not only accepted as a sporadic process engaged in every now and then, but it is perceived as an organizational strategy. In other words, the importance of business procurement is given by the fact that it saves the company time and money, allowing it to better focus on its core operations. With the aid of electronic procurement then, firms can better develop and serve their customers (Chaffey, 2006).

In terms of the actual means in which electronic procurement is completed, these are numerous and may differ from one institution to another, based on the resource availabilities, the levels of technological skills possessed and other such criteria. The more common methods of electronic procurement include the following:

Web-based ERP

e-MRO

e-sourcing e-informing

Electronic data interchange and Online marketplaces.

a) Web-based ERP

The ERP acronym stands for enterprise resource planning and it represents a set of software applications which allow the economic agent to keep a better track of the inventory (Wallace and Kremzar, 2001). The software applications can make suggestions regarding the purchase of commodities based on the comparison on the needs, consumption and internal availability of a respective commodity. The ERP systems can also support and improve the relationship with the suppliers (Best Price Computers).

b) e-MRO

e-MRO is a specific application of the enterprise resource planning system, which, among other things, can also identify and notify when the equipments of the economic agents are damaged or otherwise challenged and they as such need repairs and maintenance. When these problems are identified, an e-MRO message is sent and the issues are communicated so that they can be easily resolved. The emphasis and advantage of this procurement method refers to the efficiency of resolving equipment problems and the minimizations of the production delays.

c) e-sourcing

Electronic sourcing refers to the process of identifying and negotiating with prospective suppliers via the World Wide Web. The economic agent conducts research of potential suppliers and assesses them. The suppliers then send in their offers and bids for the projects and commodities discussed with the economic agent. Based on pre-established criteria, the economic agent would decide in favor of one or more suppliers.

e-sourcing is virtually a process of reverse auctioning, in which the prospective suppliers forward their offers, alongside with the detailed description of the services / products to be provided and the commitments assumed. The main advantage of electronic sourcing is that it saves the company time and it also broadens the area of purveyors, by allowing it to access new suppliers which would be unreachable through traditional channels (Best Price Computers, 2010).

d) e-informing

The… READ MORE

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