Electronic Procurement - Essay Example

e Procurement Name Institution Tutor Date Introduction Electronic procurement is sometimes referred to as a process in which supplier exchange their commodities. It is business-to-business, business to customers or business to government involving sale and purchase of goods, works and services through the medium of internet and other types of information exchange services like enterprise resource planning and electronic data interchange. The process of e procurement is done by employing the use of software that has features of complex auctions and supplier management with the new generation e procurement using software referred to as on demand service and software as a service. The components of e procurement value chain consist of e tendering; indent management auctioning, contract management and catalogue management (Bell, 2003). Indent management is a combination of workflow involved in the processing of tenders. It is optional and procurement departments develop personalized indent management procedures. In cases of works management and administrative procurement, technical sanctions and administrative approval are obtained in an electronic format (Butler & Fitzegerald, 1999). The major elements of e procurement comprise of request for information, request for proposal and request for quotations. Discussion The use of e procurement in public sector is to achieve efficiency and saving of costs in the procurement process and attain transparency in all the major procurement processes. There has been an emergence of e procurement internationally and many countries are initiating projects that are implementing e procurement as a major tool in operating government and institutional processes (Baily, 1998). History of e Procurement Before 2000 internet has so many promises that exceeded its actual capabilities in different sectors of life and management of resources and programmes. By 1999 and 2000, many companies attempted to offer solutions to bureaucracy and administrative delays that were entrenched in the K 12 procurement procedures. Because of this more than $500 million was invested in venture capital to get new business models .Generally the vendors in the sector were sceptical of the approach from this model and the amount of investment it called for so as to operate and achieve the business objectives (Chan & Swatman, 1998). Most of the model developers for e procurement fell along the process. Sustainable model has become the software approach that is well structured, designed, financed and licensed similar to any other type of software purchase and trade. To achieve success in the e procurement sector, it is necessary to incorporate the ledger companies and vendors in a mutual understanding and sustainable process. Today’s web based procurement is found in sectors of all kinds because the sectors can purchase almost all the materials they need from the various online suppliers. This procurement approach has appealed to institutions because it is a solution to administrators and institutional staff at all levels. It has brought a unified approach to fragmented procurement processes of institutions .It allows the users and managers of both the vendors and administrators to have an easy to use tool ensuring negotiated contracts are honoured and applied for all the orders of institutions and organizations (Harry, 2011). Difference from Traditional Purchasing Techniques E procurement is largely electronic and employs the use of internet and technology for its operations and running. There are numerous advantages and disadvantages of this type of procurement in relation to the traditional methods of procurement. In the traditional methods a large time was wasted in dissemination and seeking of procurement information. However, the e procurement has minimized dissemination time wastage and the general barriers to access of information into the procurement process. The traditional method was generally slow and laborious full of numerous physical barriers with manual processes. The human interfaces at every stage also lead to reduction in value addition and low transparency at all the points along the way. The scope of compromise was very high in the traditional approach with low amounts of bid security and confidentiality. With the use of people and personnel there were artificial hike bids from the formation of cartels suppressing competition. The most crucial aspect of the traditional procurement process was the possibility of loss of data and records hence failure of the entire process (Davila, Gupta, & Palmer, 2003). E procurement has therefore offered sustainable solution to this process in a way that is efficient and transparent. The procedure offers and covers the entire process of procurement in a way that favours all the parties in the bidding process. The intention of the process is to automate the entire procurement process allowing efficiency and sustainable operations. Advantages and Disadvantages of e procurement The advantages of e procurement are majorly on the automation of the process to ensure the procurement is free and sustainable and the process is complete from corruption and barriers. It increases the supplier access and provides wider supply chains. It reduces the cost of procurement through competitive bidding and reverses auctioning. The process enhances visibility of procurement and effective decision-making. Finally, the process is almost complete elimination of paperwork hence speedy functioning and efficiency. The major disadvantages of e procurement are on the side of suppliers. Suggestions are that buyers reap more benefits in comparison to suppliers because they have a shorter ordering time and wider options. The suppliers face many problems with a high cost of training and there are high chances of data compromise from detractors and competitors who crack supplier accounts. e- Auction, e-Catalogue, e-Marketplace, and e payment e Auction e auctions are negotiated and conducted online through an online platform. Suppliers are able to improve their proposals based on feedbacks from the market. They are considered the most effective ways for negotiations. Includes active negotiations and use by the bidders. This method is advantageous since it is transparent, participants receive real time market information and the procurement method is faster. e Market Place This is a market place in the internet owned by a company or a consortium and it allows individuals to get new suppliers. The networks are convenient and offer negotiations between different parties. Site is referred to as e market place when it offers services and commercial functionalities like catalogues, ordering, auctioning and wanted advertisement (Garson, 2004). e Catalogue This approach is the prevalent means of offering and procuring small orders in an ordering process. It is not an option for government and large agencies in the sector. e Payment This is an available form of payment of bills electronically from certain software or within a software application. It either applies online payment by use of debit cards or credit cards. In some cases there are instances of direct depositing into accounts. Depending on the needs and ongoing processes, the payment method can be integrated on the soft ware application. Credit cards get used in cases where substantive amounts are used. The internet banking is used in most cases for handling the sales. For the integration of the payment, there is a need to integrate the management and operators of involved banks (Singh, 2008). Conclusion E procurement is a solution to the long problems associated with the traditional procurement procedures. With effective implementation, the procedure leads to competitive procurement and sustainable process that is free of corruption and delays. Bibliography Baily, P. (1998). Procurement Principles and Management. Prentice hall Financial Times , 394. Bell, C. (2003). Going, Going…Govt e-Procurement Tool Shrinks Further. Computerworld. Oxford: Oxford Press. Butler, T., & Fitzegerald, B. (1999). Unpacking the Systems Development Process:An Empirical Application of the CSF Concept in a Research Context. The Journal Strategic Information Systems , 351-357. Chan, S., & Swatman, P. (1998). EDI Implementation,A Broader Perspective. New York: Routeledge. Davila, A., Gupta, M., & Palmer, R. (2003). Moving Procurement to the Internet:E Procurement Technology Model. European Manegement Journal , 11-33. Garson, D. (2004). The Promise of Digital Governemnt. Hershey: Idea Group Inc. Harry, G. (2011). E-Procurement,Not your Ordinary Online Shopping Experience-Student Support Services. Berlin: eSchool Mall. Singh, R. (2008). MDP Session on E Procurement. Oxford: Oxford University. Read More