Monday, October 7, 2013
Optimizing supply chain using E-procurement
This blog is with respect to one of the latest techniques that I have come across for effectively managing supply chain for a company. The blog written is based on one of the articles that I have come across this week
‘Electronic procurement (E-procurement) is defined as business-to-business or business-consumer or business-to-government purchase and sale of supplies, work, and services through the purchasing practice that utilizes electronic commerce to identify potential sources of supply, to purchase goods and services, to transfer payment, and to interact with suppliers was adopted for this research because it is comprehensive.’ Analysts and supply chain managers agree that the intensely competitive nature of today’s business environment makes the effective use of e-procurement an operational necessity for companies. Some of the noted benefits include increased collaboration, between buyers and suppliers, reduced personnel requirements, improved coordination, reduced transaction costs, shorter procurement cycles, lower inventory levels, and greater transparency, resulting in lower variability.
For research-intensive companies, there are strategic and operational benefits associated employing e-procurement services. E-procurement can help develop purchasing practices that lead to greater discounts and better service from their suppliers. This in turn results in accelerated flow of important information and reducing the administrative tie for ordering. E-procurement also improves relationships with their suppliers (buyer-seller relationships) and reduced errors rates in orders because orders are less likely to be delayed or the wrong goods delivered due to low transaction errors.
Certain operational benefits are also involved in using e-procurement. It improves control over finances making it easier to match orders, eliminate paperwork resulting in greater savings. It can also reduce inventory levels and the costs associated with inventory, shorten delivery times by saving time associated with waiting for documents in the mail and eliminate time zone constraints since e-procurement is 24*7.
Lot of companies and even governments has made use of this e-procurement system to good use. For example, the Philippines government through its procurement services adopted the e-procurement system to improve the efficiency and increase transparency in government procurement.
Over the past few years, supply chains have been rattled by natural calamities, product contamination in regulated industries, political unrest, the continued threat of terrorism, and social instability in certain countries as a result of economic uncertainty and a loss of jobs. Also as a structure supply chains are changing and strategies adopted must be flexible in advent of increased risk, weakness and uncertainty.
Executives and supply chain managers are looking to optimize their efficiency and deliver increased value from limiting funding. With that in mind, how else could the supply chain managers make use of this e-procurement to optimize their supply chain and reduce variability?