Page 295 - DMGT546_INTERNATIONAL_TRADE_PROCEDURE_AND_DOCUMENTATION

International Trade Procedures and Documentation

Notes 14.1.1 E-Procurement Systems

E-procurement systems, applications designed to allow businesses use the Internet in order to
acquire the necessary goods and services, are not all created equal. The term itself is quite broad
and actually includes several varieties of applications. Part of a successful implementation
involves choosing the appropriate application.
In general, there are three main categories of e-procurement systems. One type focuses on
improving the transactions and the decision-making capabilities of the company. Businesses
may deal with hundreds of transactions weekly, but these applications simplify the process and
help foster stronger relationships between buyers and suppliers.
The second category of e-procurement systems involves managing assets. Systems in this category
provide inventory management, maintenance scheduling, in-house product availability, as well
as other similar services. These applications are useful for businesses that need to keep a close
idea on the quality of their direct materials in stock. Finally, the last category includes systems
designed to optimize a company’s production operations. Many of these applications deal with
the entire production cycle, including the procurement of materials when the inventory runs
low, the management of supplier contracts, and the production scheduling.
Because of the differences between the systems, it is important for companies to choose the one
that is most appropriate for their industry. However, the decision isn’t as difficult as one might
at first think. Businesses involved with manufacturing, such as automobile makers, would be
more likely to use systems from the third category. Those types of applications would allow
them to maintain a specific amount of direct materials in their inventory but they also need to
have a system which helps them plan and forecast their production.

On the other hand, companies that deal with repair and/or maintenance, such as automotive
repair shops, would be more likely to use e-procurement systems from the second category.
Since they need to keep track not only of their inventory of car parts, but also of helping them set
repair schedules.
Regardless of the type of e-procurement system a company chooses, the company can expect to
receive similar benefits including saving money on purchases, improving the timeliness of the
purchasing process, and eliminating waste. In addition to these benefits, companies can also
improve the efficiency of their supply chain.
Supply chains essentially include every business, manufacturer, and distributer that supplies
the goods and services necessary to create a product, so any improvement in the speed of those
transactions is obviously beneficial. Additionally, using e-procurement to enhance supply chain
relationships can make it easier for accounting departments to track and keep a record of payments
and invoices.
E-procurement systems don’t automatically boost supply chain efficiency, however. The company
must select a system that has the capabilities necessary to achieve those benefits first. For
example, the system must include applications to assist with contract management, including
storing pricing information, maintaining sales terms and helping negotiations. By having all of
this information in one place, the purchasing process is expediated. Another offering that must
be included in the application is the ability to easily compare suppliers so that the best one can
be chosen to meet that company’s particular needs. After all, choosing the right supplier depends
on more than just price; it also involves product availability, customer service, industry reputation
and quality.

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