Adoption of E-Procurement by Anechoic Technology - Case Study Example

Adoption of e-procurement by Anechoic Technology Student Name Tutor Course Institution Date Adoption of e-procurement by Anechoic Technology Executive summary The emergence of e-business in the past decade resulted to the development of novel opportunities connected to procurement such as e-procurement, and outsourcing. The introduction of internet as platform for business systems has been a medium for key transformations in the status and operation of procurement within an organization. Information technologies have transformed the manner in which firms operate. The greater part of organizational spending comprises of purchase. So as to lessen the total expenses spent on process of purchasing, internet technologies are utilized and it has become common to implement e-procurement by both enterprises and governments. Even though the improvement opportunities seem plentiful, both public and private sector firms are still vigilant when it comes to the implementation of information technologies. This is because application of information technology in the procurement projects and initiatives do not deliver the anticipated gains. The utilization of information and communication technologies has considerably transformed business models, services and people’s anticipations of the efficiency and quality of service delivery and information sharing. The development in communication and information technology ,particularly the internet assist the use of alliances utilized by manufacturers to become more and more efficient via the integration of the organization’s information technology infrastructure. E-procurement is a key information scheme that assists in the transformation of the activities of supply chain. E-procurement is the utilization of the internet based communication and information technologiesto undertake individual or all phases of the procurement procedure entailing search, negotiation, outsourcing, receipt, ordering as well post procurement review. While there exists several types of e-procurement that focus on a single or numerous phases of the process of procurement such as e- marketplace and e-tendering, e-procurement may be looked at more largely as the end to end remedy that incorporates and streamlines numerous procedures throughout the firm. Anechoic Technology have recognized that time and cost saving can be attained through having a connection with key suppliers technology. The internet can enable the organization to centralize its logistics and procurement systems that in the past conducted in each country it operated. E-procurement has turned out to be one of the highly effective applications of e-commerce, having been executed by several organizations seeking improved business processes. E-procurement is beneficial in improved efficiency, cost saving and effective data entry. Since e-procurement entails products purchasing automation via the utilization of the internet, it results to considerable reduction in time and cost. It is a highly inclusive phenomenon which entails making strategic plans and it might be utilized to reorganize the whole procurement process. An appropriately implement system of e-procurement can directly connect Anechoic Technology and its business processes with suppliers whilst managing every interaction. Project plan and e-procurement module for Anechoic Technology’s EBS There are several requirements connected to the adoption of e-procurement module for the company’s EBS system that the chief procurement officer is supposed to put into consideration. There are several actions that the chief procurement officer is needs to include in the project plan to ensure the capability of the organization to deliver effective strategic procurement. They entail objectives, technology, information, skills and staffing. These requirements may make adoption of e-procurement module for the Anechoic Technology company EBS system to face numerous challenges like compatibility, adoption, integration and regular utilization by workers as well as lack of capability by small suppliers. Davila et al (2012) note that for the success of every e-procurement, there exists numerous factors that a firm must critically put consideration. They entail user acknowledgement of the novel information scheme, information quality, timely supplier involvement, staff training, support from top management, conformity with best practices, consistent measurement of major benefits, re-designing of the business process being affected as well as actual choice of the e-procurement solution(Davila et al, 2012). According to Cullen and Webster (2010) use acknowledgement of the novel information scheme has a profound and vital effect on the general success and usage of the adoption of the system. The acceptance by user is usually the pivotal aspect establishing the failure or success of a new information system. User acknowledgement and utilization of a new information system delineates the ineffectiveness or effectiveness of the scheme. Another factor the chief procurement must consider when implementing the e-procurement module for the company’s EBS system, is information quality. Piotrowicz and Irani (2009) notes that the quality of information is seen to capture electronic commerce content issue. Within the context of the success of e-procurement, web content must be complete, relevant, personalized, secure and simple to understand if the organization anticipates suppliers or buyers to instigate transaction through the internet and use the site regularly. Training of employees in the procurement practices as well as the utilization of e-procurement devices is vital to the effectiveness of a e-procurement initiative. Davila et al (2012) argue that an organization’s success is required to attain the essential skills that will enhance them to efficiently and effectively operate whilst utilizing the novel e-procurement scheme. If employees are not sufficiently, they might not be capable to own the new e-procurement scheme and this might lead to failure of the system. The success and effectiveness of an e-procurement initiative is dependent on the buyers and users utilization of the novel system and process. The solution is supposed to make the end users to see e-procurement as a favorable scheme through which to procure services and goods (Davila et al, 2012). E-procurement success is also dependent on the communication to users. Therefore, Anechoic Technology should be capable of communicating this information to users. Deformed transmission of information might result to failure of the new information system. The development of e-procurement scheme within an open atmosphere permits it to connect to other schemes for interoperability and also makes the upgrading of the scheme simpler (Davila, et al, 2012). Adoption of Make or buy strategy According to Balakrishnan and Chun (2012) the make or buy strategy is the activity of making the strategic selection of manufacturing a product internally or in-house or purchasing the product externally from an exterior supplier. The act or purchasing a product from an external supplier is also known as outsourcing. Making of outsourcing decision normally occurs when an organization has manufactured a product or a portion of the product or a considerable modification of the product is having problem with present suppliers or is having a diminishing capability or transforming demand. Utilization of in-house capacities to produce a product is usually advantageous when a product is vital to the performance of an organization, time sensitive and prone to regular design transformations. Tight regulation over logistics and production is fundamental if the manufacturer should be sure that the items will at all times be available where and when it is required and that it is of superior quality (Balakrishnan, & Chun, 2012). Alternatively, organizations opt to purchase an item or a series of manufacturing procedures for developing the item, in this situation through outsourcing. Gardiner and Blackstone (2010) this is because they see the production process or the item as a non strategic to the organizations’ business process. Organizations hope to achieve a wide range of benefits through outsourcing such as eradication of the burden and costs of manufacturing a product, flexibility to diminish or increase output in reaction to alterations in demand, and accessibility to alternative and novel process technologies. Anechoic Technology should decide to outsource the product other than produce it because the stock levels are driven straight out of the procurement database and on demand. In addition, it is less costly to buy the product than make because it is only required on demand and the company might not have adequate production capability to manufacture it in-house. Other factors that might influence the decision of the organization to outsource other can manufacture the product internally entail absence of in-house proficiency, small quantities requirements, desire for numerous sourcing. In addition, the product might not be vital to the strategy of the organization (Wisner et al, 2013). Use Kraljic Procurement Model to analyze supplier base The kraljic portfolio procurement model is a matrix that the Anechoic Technology can use to analyse its supplier base as well make an analysis of the procuring portfolio of the organization Dubois and Pedersen (2012) note that this matrix assists an organization get an insight into working schemes of the procurement department and the way it spends its time on numerous products. Additionally, the kraljic procurement method makes it clear on which products an organization can subcontract and thus don’t have to be reordered as well as which products involve a certain risk (Dubois & Pedersen, 2012). The Kraljic procurement model distinguishes four forms of product groups and they include strategic items, bottleneck items, leverage items and non-critical items. Strategies items are products that are procured form a single supplier. There might be a power balance the supplier and the organization, but when the supplier stops to deliver, procurement is stagnated. Generally, raw materials fit into this group and they to a large degree determine the worth of the cost of the end product (Chen et al, 2012). Chen et al (2012) note that leverage items are products that can simply be procured from diverse suppliers and they to a large degree determine the value of cost price of finished products. A slight alteration in price or an alteration in quality strongly influences the cost price. In regard to the power balance amid the supplier and the organization, the organization is the overriding factor. Through conclusion of excellent framework concords along with establishment of targeted pricing, the association amid the supplier and the company goes on being in harmony (Chen et al, 2012). Bottleneck items are items which don’t represent a huge value but are a susceptible factor in the whole supply chain. They are items that are fundamental for the process of production but they are hard to get. There is power imbalance amid the supplier and the organization, whereby the supplier is the overriding factor. Through generating the buffer stock of the scarce bottleneck products and though finding optional suppliers, an organization can destabilize this position. Non-critical items are products that cause the slightest problems in regard to procurement performance. They represent a minimal value and they might be procured in diverse varieties from diverse suppliers. There is power balance amid the supplier and the organization. Through enhancing product standardization, a lot of money and time may be saved (Chen et al, 2012). Utilizing the Kraljic procurement model, Anechoic Technology may be able to professionalize and promote its e-procurement performance which might generate significant cost savings. So as to avert avoidable risks, it is significant for Anechoic Technology to spread the products across these four quadrants and make sure that a supplier do not have an upper hand or the power over the organization (Dubois & Pedersen, 2012). Improvement of Supplier Relationship Management through e-procurement According to Easton et al (2014) supplier relationship management is an inclusive approach of managing an organization’s interrelations with the firms that supply the services and goods it utilizes. The objective of supplier relationship management is to streamline along with making highly effective the procedures amid an organization and its suppliers. Supplier relationship management entails both software and business practices and is a portion information flow constituent of the supply chain management. The practices of supplier relationship management create a universal reference frame to enhance efficient communication amid an organization and suppliers who might utilize quite diverse business practices. Supplier relationship management increases the effectiveness of processes connected with acquisition of services and goods, management of inventory and processing materials (Hughes, 2010). The adoption of an e-procurement module for the Anechoic Technology EBS system can help the organization to improve its supplier relationship management. Wagner and Essig (2010) note that e-procurement reduces cost through leveraging volume, enhancing structured supplier relationships and through utilizing system improvement to minimize exterior spend whilst improving supplier performance and quality. E-procurement enables centralized tracking of business transactions can enable the organization to fully report ion items purchased, requisitions, payments made and order processes. Web enabled procurement can assist an organization to improve its accuracy and timelines of its transaction information, permitting it to better manage and plan its production operations and supplier relationship management. E-procurement has the capability of enabling the organization to interchange information with its direct suppliers at numerous levels in its respective organizational hierarchy, from operations to strategy (Wagner & Essig, 2010). The entry of data into the scheme at a single point is a significant gain of e-procurement. In this scheme, there is no need to enter data into numerous schemes since it is entered only once. As a consequence, data interchange with diverse suppliers is enhanced. There is faster transfer of documents, with the electronic documents eradicating the errors of data transmission and entry.Through the use of e-procurement, it is possible for the organization to gauge and monitor orders, along with their details like processing time, current status and the time the order was placed. AS a portion of implementation, procedures are improved and standardized and there is removal of non value added activities (Cullen & Webster, 2010). Conclusion The introduction of internet as platform for business systems has enabled organization to adopt electronic procurement. In order to minimize its total expenses spent on process of purchasing and reduce its supplier base, Anechoic Technology has been required to adopt a e-procurement module. This module has the capability of improving supplier relationship management through timely and accurately exchanging information with its suppliers at diverse levels of the organization. The success of the new e-procurement module for the company’s EBS system will be dependent on its acceptance by the end users who are the employees and suppliers. Therefore, the organization should train the employees on how the new information system functions and offer the suppliers personalized, relevant and complete information on the new system. Recommendations Since the success of a e-procurement module depends on its acceptance by end users, Anechoic Technology must encourage employees and suppliers to utilize the e-procurement system. The organization must also look for means of addressing factors that are vital to the efficiency of e-procurement. This will enable it to promote adoption of the new e-procurement module. The top management team has the responsibility of setting the goals and visions, bringing out communal commitment for transformation on organizational structures and processes. It is also responsible for the formulation of strategies and policies essential to ensure successful adoption of an e-procurement scheme. If the electronic procurement does not receive complete support from the top management of the organization, it is likely to fail. Therefore, it is vital to ensure that the top management team has offered complete support for the implementation of e-procurement. Substantial support and attention must be offered by senior managers to make sure that the purchasing restructuring has been properly comprehended in the organization. It is important for Anechoic Technology to consistently gauge the major benefits because it is crucial to the efficient delivery of the business project. The gauging of key benefits influences behavior and it is essential in making change successful. Establishment of baselines and goals is very crucial because these goals will enhance the firm to gauge how much it has already accomplished in regard to the adoption of e-procurement system. Bibliography Balakrishnan, J, & Chun, C, 2012, “The Theory of Constraints and the Make-or-Buy Decision: An Update and Review." Journal of Supply Chain Management: A Global Review of Purchasing & Supply 41 (1), 40–47. Gardiner, C, & Blackstone, J, , 2010, "The 'Theory of Constraints' and the Make-or-Buy Decision." International Journal of Purchasing & Materials Management 27 (3), 38–43. Wisner, D., Keong L, & Keah-Choon T, 2013, Principles of Supply Chain Management: A Balanced Approach, Cengage Learning, New York. Cullen, J, & Webster, M, 2010, A model of B2B e-commerce, based on connectivity and purpose‟, International Journal of Operations &Production Management, 27, 205-225 Chen, J, . Paulraj, A, & Lado , A, 2012, ‘‘Strategic Purchasing, Supply Management, and Firm Performance,’’Journal of Operations Management, 22 (5), 505-523 Dubois, A, & Pedersen, C, 2012, Why relationships do not fit into purchasing portfolio models—a comparison between the portfolio and industrial network approaches, European Journal of Purchasing & Supply Management, 8(1), 35-42. Wagner, S, & Essig, M, 2010, Electronic procurement applications and their impact on supplier relationship management, International Journal of Services Technology and Management 7(6), 439-462. Davila, A, Gupa, M, & Palmer, R, 2012, Moving procurement systems to the internet: the adoption and use of e-Procurement technology models, European Management Journal, 21(1), 11-23. Hughes, J, 2010,” From vendor to partner: Why and how leading companies collaborate with suppliers for competitive advantage" Global Business and Organizational Excellence 27 (3), 21–37. Easton, S, Hales, M, Schuh, C, 20114, Supplier relationship management: How to maximize vendor value and opportunity, Apress, New York. . Read More