EProcurement and Supply Chain Technologies - Literature review Example

eProcurement and Supply Chain Technologies EXAM Name Professor Institution Course Date 1. How does a SCM system help improve manufacturing and product delivery to customers? The most outstanding companies across the globe are establishing a great new basis of competitive edge. This is the supply chain management which comprises of all of the integrated approach which bring products to the market and ensure customers are satisfied. The change in the business platform now compels to fast improve their supply chain management both manually and with technology, inform of eprocurement in order to enhance manufacturing and customer delivery (Kouvelis & Chambers &Wang 2006, p.451). This shows how Supply chain management is significant and efficient in an organization. Supply chain management is all concerned with having the correct product, at the precise cost, in an appropriate location, at the suitable time and in the right form. Kouvelis & Chambers &Wang (2006, p.456) claim that three elements of a supply chain include a producer, the producer's suppliers and the customers. SCM optimizes and oversees the processes of obtaining the raw materials from suppliers, translating those raw materials into finished products, and delivering to customers. Mentzer, et al (2004, p.5), defines Supply chain Management (SCM) as the strategic and systematic management of the business tactics and functions within these business functions in a certain organization and across businesses in the supply chain. This is with an intention of enhancing the long-term success of the individual firms and the supply chain in general. To improve the capacity of manufacturing to a considerable level, a business enhancement manager will require formulating a powerful strategy that depends on practical supply chains that have better products with numerous shared capacities, components and facilities (David 2010). For this reason, the major part of SCM is called the strategic segment. Various firms that have enhanced their supply chain management have stayed alive to compete with other big names to get market advantages. Names that mostly appear when ideal supply chain management is mentioned are Toyota Company, Dell Corporation, and Wal-Mart among others (Hines 2004). Every firm mentioned here requires a strategy where it can control its resources and fulfill customer demand in reference to products and services. The plan entails the formulation of metrics which examine the effectiveness of the supply chain. A retain chain like Wal-Mart has been capable of cutting on the costs and improve product value to clients (Halldorsson, Kotzab, Mikkola, Skjoett-Larsen 2007, p.293). Supply chain management process sits between vertically and completely integrated business organizations. In such a company, the whole raw material and finished products flow comes from a single company. For improved production all departments must work together to create a flow of both ideas and ideas. Effective manufacturing is possible only with the management of between employees and chain supply. In the auto sector, supply chains are broad and consist of elements of manufacturing based on numerous forecasting methods (Hines 2004). The funds invested are much and fixed. The major trend in the auto industry is the rise in the alternative numbers on car models and standardization of elements in their supply chain. Hines (2004) claims that this implies that models can be changed to the tastes of clients and new car models are always produced so as to satisfy the changing market need. The supply chain strategies and processes of Toyota are significant in its everyday operations. By adhering and sticking to Toyota Production System (TPS) and Just-In-Time manufacturing, the company comes on top as the world largest auto maker (Kouvelis, Chambers &Wang 2006, p. 450). According to Kouvelis & Chambers &Wang (2006, p.467), Toyota is regarded as the first auto to introduce a clear requirement for flexibility in their whole supply chain system. The ‘lean philosophy’ undertaken by Toyota is not just constrained in its manufacturing mechanism, it also explains a philosophy which includes a set of tools and methods into business practices to maximize human resources, time, assets, and production while enhancing the products and services quality level to their clients. Today, numerous automobile companies understand the power of ‘lean thinking’ according to increase in their supply chain management flexibility (David 2010). The supply chain created by Toyota Company was one of the leading in supply chains of low cost nature. The whole chain was carried in order to reduce the costs of production (David 2010). However, there was no negotiation on customer quality, delivery time and satisfaction. It sustained “rational levels of service”. The reason of the Supply Chain Management was to put the “Right Product” at the suitable store in the correct quantities providing to the appropriate customer at the right price and right time (Kouvelis & Chambers &Wang 2006, p.455). Toyota is rooted in constant growth by implementing lean manufacturing process and is an initiated in Toyota Production System (TPS). This system is developed on “Pull approach” and customer remains at the prime emphasis in the whole production plant. It executes lean production plant that has attributes such as Cellular layouts and can be created within a short time. It holds pull scheduling focusing on decreased wastes (Kouvelis & Chambers &Wang 2006, p.453). Hines (2004) offers a number of major issues pertinent to Toyota Company’s supply chain management, like the leveling out of manufacturing schedules by creating inventory including extra manufacturing processes and appearing at face value looking to some extent counter insightful. Hines (2004) claims that Toyota Production System (TPS), offers that this mechanism is critical to the plants of the organization and their supply chain management is effective with the reason that "it distances suppliers to Toyota including perhaps the dealers, the distribution channel, the suppliers and eventually the consumers". This statement truly justifies the reality that Toyota as a company, and in the arena of supply chain management, is eventually charged with any of the faulty or poor technologies that were integrated in their motor vehicles and product system. In order to create a successful and an efficient supply chain management system, there has to be five basic elements that are taken into consideration and acted upon. The planning for production is crucial and measures the success of an effective SCM system (Mentzer et al 2001, p.16). In this step, strategies are created including metrics to determine the performance of that system. David (2010) argues that, a manager needs a strategy for allocating all the resources that are used for manufacturing towards satisfying customer demands. A big portion of planning is creating a number of metrics to check the supply chain to make it cost less, resourceful and delivers value and higher quality to customers. Organizations are growingly establishing that they have to depend on efficient supply chains to compete in the international market and developed economy (David 2010). To keep competition, firms have sought fresh solutions to significant Supply Chain Management matters like modal assessment, supply chain management, route planning, planning and distribution network plan. Companies have to undergo corporate challenges which influence Supply Chain Management like re-engineering, outsourcing and globalization. According to David (2010), new management concept says that the paradigm of business relationships extends far much than traditional business boundaries and look to organize whole business processes all through a value chain of several firms. The manufacturing process creates and delivers products to the outlets with regard to past forecasts. Supply Chain management ensures that manufacturing processes are flexible so as to react to market changes and ought to facilitate mass customization (Halldorsson et al 2007, p. 285). Supply chain making ensure that orders are processed under a just-in-time (JIT) basis. Supply chain speeds up the manufacturing flow processes leading to short cycle times, implying enhanced efficiency and responsiveness in fulfilling customer’s demand. This process controls events associated with planning, scheduling and manufacturing operations supporting, like storage at work-in-process, transportation, handling and time stages of elements, inventory at manufacturing plants and flexibility in the management of the site and final assembly or packaging (Halldorsson et al 2007, p.291). The optimal supply chain is required by employing appropriate and specific technologies. Operations of supply chain itself can be improved by applying appropriate push and pull management ideas. The basic concept of “Push” implies “Manufacturing to Stock” in which the manufacturing is not done in regard to the genuine demand (Hines 2004). To maximize supply chain management, the top management might require to do manufacturing process halfway between push and pull concept, or by applying a regulated combination of both categories. Mentzer, et al (2001, p.18) in their study, examine the application of JIT in terms of promoting the flow of raw materials in line with supply chain, hence enhancing the customer services. They claim that it is very significant to maintain a customer focus on what a company produces and it requires to be done in a very efficient manner. As used by Toyota Company, he believes that the company first requires describing the customer demands which are then integrated into the value system which is based solely on the manufacturing and JIT systems they ought to apply (Mentzer, et al 2001, p.20). They also believe that observing at subsystems is not suitable and the entire system has to be observed in general. All the actions should be done in relation what the customer states and thus the approach for the JIT and supply chain ought to also be created. David (2010) contends that the JIT paradigm is realized only by means of high degree of management and smooth flow of product. They consider that so as to attain efficient JIT retailing, management and employees in production require working with a high degree of cooperation while maintaining high levels of interaction amongst the two. This would allow the producer to satisfy customer needs and deliver Just-in-time. This is as as a result would enhance customer fulfillment and the supply chains system would be considered more. Supply Chain Management exists all over and they are embraced by several network leaders or industry champions (David 2010). 3.0 E-procurement and its benefits and disadvantages to both buyers and suppliers. Currently, the development of e-procurement is turning out to be more consecutively and has gone a notch higher to a global scale. In 2007, Chris Miller of Shell Chemical in the Case Study from Chaffey was quoted stating that ‘Eprocurement is not concerned with messing suppliers. It’s concerned with reducing costs for both suppliers and buyers and institutionalized in competencies. Additionally it supports small suppliers and buyers just like the bigger ones. He went ahead to sate that Eprocurement system is not a big boys’ club. In a nutshell, he meant that just like a new idea, procurement has benefits and at the same time has disadvantages to both suppliers and buyers. Brack (2000) define e-procurement as the “business-to-business buying process which employs electronic commerce to establish prospective supply sources, to acquire products or services, to transmit payment, and to interrelate with suppliers’ (p.66). On top of that, electronic procurement comprises of Enterprise Resource Planning (ERP), e-Maintenance Repair Operate (MRO), e-tendering, e-sourcing, e-exchanges, e-informing and e-auctioning (Croom, S 2000, p.10). It should also be noted that e-procurement technologies are categorized into 2 types, direct procurement and indirect procurement (Davila, Gupta & Palmer 2003, P.12). Besides, procurement process entails a series of complex activities that enables a company to reach a final procurement decision via potential supplier assessment and technical specification (Barua, Konana, Whinston 2001, p.41). Thus, several companies in different sectors implement the e-procurement strategy and concentrate on restructuring the whole order-to-delivery mechanism as opposed to a particular task so as to enhance the effectiveness supply chain management role including decreasing the cost of operation of the company. Websites such as buyerzone and dhgate have built a single platform that connects buyers and suppliers for different industries, in an implication to bring the real-time factor in the supply chain system of the company (Barua, Konana, Whinston 2001, p.38). For smaller companies, this enables accessibility to multiple provisions with the capability to form a direct link with a supplier of their preference, while making sure that the cost provided is competitive enough. Baily (2008, p.394) argues that for retailers, the application of this platform enables them to boost their marketplace presence and modify particular products or services to be in conformity with the demand of the smaller companies that are on the search for their provisions. E-procurement has fast turned into a vital issue. Implemention of eprocurement system is not about screwing buyers and supplier, Public sector companies apply e-procurement for engaging in contracts to obtain benefits like cost savings and increased efficiency in government purchase and enhanced transparency in purchase services. E-procurement concept in a public sector has undergone rapid development in the recent years (Lysons & Farrington 2006, p.103). This initiative has been adopted in the US, the UK, European Union, Singapore, Malaysia and Australia. E-procurement plans are frequently part of the state’s bigger e-Government attempts to enhance its services to citizens and organizations moving to a digital economy. For instance, Singapore is known for its GeBIZ that was adopted as one of the programs in line with e-Government master plan (Brack 2000, p.69). Some of the companies that implement include General Motors, Ford Motors Company, Daimler Chrysler and Tate and Lyle Company, Wal-Mart and Dell Company among others even though it is the big names that appear when implementation of eprocurement is mentioned, small companies also have a chance to do better with this strategy. E-procurement at General Motors General Motors is automobile manufacturer based in the US and holds numerous attributes which make it an ideal fit for e-procurement system and a great case of how online purchase is reshaping the US manufacturing sector (Brunelli & Milligan 2000, p.139). This is one innovative tool that General motors employs to enhance its SCM practices and eliminate the problems which has risen over the past in Auto industry. First, General Motors is the major segment of a larger supply chain. The supply chain scope and the function of General Motors in it are depicted in its yearly $63 billion procurement expenditures (Barua, Konana, Whinston & Yin 2001, p.42). Secondly, General Motors’ capability to push the implementation of e-procurement by each link of supply chain increases the volume of sales by means of its e-procurement idea to $300-500 billion annually (Brunelli & Milligan 2000, p.139). This has been tipped to generate extra cost savings with regard to buying within the entire supply chain. General Motors began implementing its eprocurement in 1999 in collaboration with its technology partners, Commerce One and i2 Technologies. In 2000, GM Company announced their agreement to work with Daimler Chrysler and Ford Motor Company in developing a eprocurement network (Brunelli & Milligan 2000, p.139). This alliance in eprocurement plans resulted in benefits that is normally stated by suppliers and buyers in the economies of scale and the capability to handle a single system having a common protocol as opposed to multiple purchasing networks in the same sector. GM, its partners and supplier are now enjoying the benefits of eprocurement. It’s a short period between its launch in February 2000 and March 2000, general motors purchased over $5 million of MRO supplies from five suppliers’ catalogs who had already registered in that network (Barua, Konana, Whinston & Yin 2001, p.37). This procurement has improved planning process between General Motors, suppliers and buyers over the years. The program has also improved expectations in terms of supply chain optimization, rapid flow of information and enhanced information sharing all through the supply chain of both suppliers and General motors and its B2B partners. Employing the eprocurement systems at General Motors help in fast tracking orders or orders placement with suppliers. This process ensures more control, production scheduling and delivery scheduling more than the traditional system. The eprocurement software is offering in-built features and analytical tools to automate or check the general performance of the suppliers. This is in regard to the product or service quality, reliability, price comparison and agreement the policy of procurement set between the company and the supplier (Croom 2000). Since General motors are one of the leading automobile companies in the US it is recommended that it maintains an upstream supply policy to create long term connections with the B2B partners and suppliers. It can also be observed that, GM Company has built a strong supplier-manufacturer rapport and this form of relationship improves sustainability and the effectiveness in the market of both parties i.e. manufacturers and suppliers (Brunelli & Milligan 2000, p.139). The rapport is carried out on the basis of the collaboration amongst business partners. At General Motors there are three elements flowing through their supply chain. In the supply chain, the products or services flow on one direction, the payments on the other direction whilst the information flow is in both directions (Brunelli & Milligan 2000, p.139). All these are coordinated by eprocurement. According to Brunelli & Milligan (2000, p.139), E-procurement has played a potential and a pivotal role in the company’s effort to formulate a competitive advantage in terms of cost which lasts for several years, thus creating a sustainable competitive edge. Therefore, so as to realize sustainable competitive edge and convenience between a company, suppliers and buyers, the firm must concern its implementation of business strategy in the concept of e-procurement. However, if a company fails to employ an effective strategy, it will lead to loss of business efficiency and competitiveness that will weaken the long-term success of the company (Barua, Konana, Whinston & Yin 200, p.42). This show that eprocurement also bears some disadvantages in business. Disadvantages of eprocurement One of the biggest obstacles to faster implementation of eprocurement is the gap between the anticipations of the two faces of a transaction; that is buyers and suppliers and concerning the manner in which B2B markets should influence them (Croom 2000). Implementation of Eprocurement for suppliers can be a major impediment especially if they are dealing with more than one market. The implementation is also associated with high level of training cost and higher risks comprising of highly sensitive data among others (Brack 2000, p.69). As the technology changes take place, organization changes their system to conform to the current changes and as such suppliers will be compelled to also update their system to be in line with the company they supply to. This may prove to be costly for the suppliers. At General Motors, the eprocurement system might not be safe and effective as several system analysts believe. Brunelli & Milligan (2000, p.139) think that General Motors must carefully handle the challenges of distributing authority between itself and suppliers to make sure the effective and fast implementation of electronic purchase. Disadvantages of eprocurement are largely on the part of the suppliers. Brack (2000, p.69) believes that buyers get many benefits compared to suppliers like in short order cycles, a broad implementation of "just-in-time" systems and an increased supplier participation in the product development. Some suppliers are normally used to handling clients on face-to-face basis could find online dealings uncomfortable, because suppliers do not essentially understand the people they are transacting with online (Brack 2000, p.70). Another drawback of eprocurement systems is fast growing several standards. Both suppliers and buyers are doubtful of which eprocurement provider will stay alive or turn obsolete. According to Davila, Gupta & Palmer (2003, p.12) several standards also contribute to the uncertainty concerning which company to employ and might raise costs for a seller as it try to meet multiple standards. Compared to large suppliers, smaller suppliers may not have the capacity to adopt eprocurement due to the high cost of implementation and maintenance (Davila, Gupta & Palmer 2003, p.15). On the side of buyers, buyers may not be familiar with using the adopted system or could find it time consuming to use such systems. With this, the company is persuaded to adopt simple systems. On the other hand, such systems are prone to insecurity like hacking and data manipulation. In conclusion, findings show times have changed and big companies have made it because of good supply chain management. The competition has even taken supply chain management to another level. Companies are adopting technology in eprocurement now because it determines the level of competition in terms of purchase, production and product delivery. However the same finding reveals that not every firm can be successful with the implementation of eprocurement. Though it is fundamental to know what and how the eprocurement had been used to purchase, repercussions for the company and its effectiveness have remained a concern. As far as there are numerous advantages ranging from time saving, effectiveness and cost saving, e-procurement also bears it challenges include the higher cost of adoption, inefficiency and security risks to the company suppliers and buyers. To make it more effective and favorable for company, supplier and buyer, companies must implement chain supply management and eprocurement that is simple to use, but more security for all the stakeholders involved. 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