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E-Procurement-in-New-Dimensions - E-Procurement New...

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E-Procurement: New Dimensions in Electronic Commerce and Supply Chain Management By Scott A. Elliff Many e-commerce articles today focus primarily on the “sell” side of the business, highlighting how companies can better use electronic commerce to move product. Topics include how to get more consumer traffic on your Web site, how to integrate your information systems with those of your business customers, how to more effectively market business-to-business services in an Internet environment, and many others. But every business is a purchaser as well as a supplier, with many routinely processing hundreds of buying activities daily. These include purchasing raw materials for manufacturing or finished products for resale, ordering office supplies and airline tickets, and contracting for temporary labor and consulting services. Typically, purchases represent 50 to 90% of a company’s cost structure –– making procurement strategy and execution a critical lever for effective supply chain operations and superior business profitability. Electronic commerce offers exciting new possibilities for businesses to improve their performance on this important “upstream” supply chain activity, both for indirect or support items and, increasingly, for materials that are direct components of the products and services that businesses make and sell. But what is e-procurement? Really, it’s any purchasing-related activity that involves electronic communication, the Internet, or related software to help companies achieve increased value. From point-and-click ordering using Web-based catalogs of individual suppliers, to marketplaces that bring together in one place the products or services offered by multiple suppliers, to live auctions that determine the lowest-price bidder — there is a wide range of new e-procurement methods and tools to help businesses buy goods and services better, faster, and cheaper. As in many areas of e-commerce, the wide variety of alternatives can be confusing. What’s the best strategy for our company to use? What specific benefits are we trying to achieve? What are the best e-procurement solutions and specific tools, Web-based services, and other mechanisms for meeting our particular needs? This article outlines some of the major recent developments in e-procurement and the important strategic and tactical choices that companies need to make in order to answer these questions and to take full advantage of new “buy” side e-commerce developments. Ironically, what’s most appealing to us as consumers using e-commerce to buy books or clothing or other merchandise –– surfing the Internet, accessing a wide range of choices, and making one-at-a-time purchases at posted prices –– is what businesses most want to avoid. Companies want to ensure that their processes are: Reducing the time employees spend purchasing, whether it’s leafing through catalogues or surfing the Web.
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Leveraging their volume with preferred suppliers in order to get better pricing, service, and access to new technology.
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