Page 134 - Introduction to Electronic Commerce and Social Commerce

114 4 Business-to-Business E-Commerce

The general e-procurement process (with the exception of The seven main types of e-procurement are as follows: (1)
tendering) is shown in Online File W4.2. For a free e-book e-sourcing, (2) e-tendering, (3) e-reverse auctioning, (4)
on e-procurement, see Bausa Peris et al. (2013). e-informing, (5) Web-based ERP (enterprise resource plan-
ning), (6) e-market sites, and (7) E-MRO (maintenance,
Example: Volvo’s E-Procurement repair, and operating).
Volvo is a premium Swedish car manufacturer (now owned
by a Chinese company). The company operates in dozens of
countries worldwide. The company has more than 30 pur- The Benefits and Limitations of E-Procurement
chasing centers on six continents. In the past, this has resulted
in inconsistent purchasing practices, lack of collaboration E-procurement has the ability of improving supply chain
among the centers, and inefficient and inconsistent procure- management, and providing real-time information on what is
ment processes. To overcome the problems, management going on in the supply chain (known as visibility of the sup-
decided to use a unified e-procurement system. They selected ply chain), starting with the customers’ needs.
Ariba’s Sourcing and Ariba’s Contract Management solu-
tions (Ariba is a B2B SAP company). The system assures The Benefits of E-Procurement
standardization of the purchasing processes, sharing of best
practices activities, and streamlining of the contracting pro- By automating and streamlining the procurement process,
cess and its management. All these systems are digital. The corporate purchasing buyers can focus on more strategic
e-procurement resulted in a greater cohesion among the activities that result in:
sourcing centers, better use of best practices, and reduced
cost of procurement while its effectiveness increases.

Types of E-Procurement • Increasing the productivity of purchasing agents,
providing them with more nonroutine time and
Four major methods of e-procurement are available: (1) Buy reducing job pressures, possibly reducing purchas-
at buyer’s own website, (2) buy at sellers’ store, (3) buy at ing departments’ overhead.
exchanges, and (4) buy at others’ e-market sites. Each method • Lowering purchase per item prices through activi-
includes several activities, as illustrated in Figure 4.6. Some ties such as product standardization, reverse auctions,
of these will be described in Section 4.7.

E-Procurement

Purchase at Purchase at Purchase
Buyer Site Seller Site at an Others
Exchange

Sellers’ Group
Tendering Auction
Catalogs Purchasing

Reverse
Auctions Auction Negotiation

Internal
Aggregation; Negotiation Bartering
Desktop
Purchasing
Aggregators
of Catalogs; Catalogs
E-Distributor

Figure 4.6 E-procurement methods