Whether eprocurement can achieve competitive advantage

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Whether eprocurement can achieve competitive advantage

Mahbubur Rahim Innovation and Knowledge Management: Existing e-business literature provides a rich description of the benefit experiences of many organizations which have implemented these systems. Little guidance is however available for the senior management of organizations which are contemplating possible adoption of an e-procurement system to help them predict the likely benefits they can possibly gain from the introduction of these systems.

Whether eprocurement can achieve competitive advantage

We argue that it is not pragmatic to assume that organizations intending to introduce the same e-procurement solution would always experience a somewhat similar set of benefits. This is because the attainment of benefits can be largely influenced by the specific type of business relationship that an organization seeks to establish with its suppliers using an e- procurement system, which in turn, affects how the system is implemented.

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In this paper, we report on the development of a model which identifies four types of buyer-supplier relationships that can possibly be sought by organizations while deciding to introduce an e-procurement system. We further suggest that these relationships are associated with different types of benefits which organizations can expect to experience from the implementation of e-procurement systems.

Whether eprocurement can achieve competitive advantage

Finally, some implications for management are highlighted and the current status of our on- going research project involving a preliminary empirical evaluation of the model is reported. These systems are of significance to businesses and public agencies alike because they can address many of the inefficiencies associated with the traditional labour prone procurement process.

There are considerable evidence reported in the e-business literature that provide empirical support to the claims made by the information technology IT vendors about the potential benefits that e-procurement systems can bring to organizations.

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However, organizations are known to have experienced varying degree of benefits. For example, one group of authors e. However, satisfactory explanations are still lacking about why different organizations may experience different benefits from the implementation of these systems.

We argue that senior management of those organizations which are contemplating to introduce e-procurement systems require clear guidelines that can help them predict what benefits are realistically attainable given their circumstances and what needs to be done to guide their e-procurement implementation processes for experiencing those predicted benefits.

Innovation and Knowledge Management: A Global Competitive Advantage To address this gap in the literature, in this paper we report on the development of a conceptual model to explain why a variation in the attainment of e-procurement systems benefits could be observed. Using these concepts, the model identifies four types of business relationships that organizations may seek to establish with their suppliers while deciding to introduce an e-procurement system.

The model further predicts the likely benefits that organizations may expect to experience from the e-procurement implementation initiatives. These predictions are expressed in terms of hypotheses which link each e-procurement benefit with a particular type of business relationship.

Our proposed model has several implications for management which are also discussed near the end of this paper. We have arranged the remaining sections of this paper in the following manner.

What do you think?

First, a brief but insightful synthesis of the relevant background literature is provided. Next, our proposed model is presented. After that, a set of hypotheses are derived from the model. Then, several implications are discussed and conclusions are made by reporting the current status of our on-going research project which involves a preliminary empirical evaluation of the model.

Background literature As our objective is to present the development of a model to help organizations predict the likely benefits they can achieve from the implementation of their e-procurement systems using business relationship as an appropriate theoretical lens, we now report a synthesis of e-procurement systems benefits as well as a summary of the findings on business relationships in context to e-procurement systems.

IT vendors have developed a wide range of web-enabled solutions to support organizational procurement process.

E-procurement: How does it enhance strategic performance? | Wojciech D Piotrowicz - srmvision.com

These systems which are commonly known as e-procurement systems automate and streamline the key activities involved in a procurement process. E-procurement systems generally use the Internet as a communicating mediumweb protocols to exchange procurement related data between a buying organization and its suppliers, e-catalogues for products, and a powerful search engine to browse the catalogue.

The benefits of e-procurement systems among organizations are widely recognized Ronchi et al. According to Wen and Weithese benefits can be ideally classified into two broad categories: Operational benefits are generally concerned with efficiency improvement, transaction cost reduction and increased control among others, whereas strategic benefits focus more on buyer- supplier relationships, image building, and competitive position enhancement.

This eProcurement function takes advantage of multiple auction styles (English, Dutch or Japanese models) over an online platform where buyers can compete for the best deal on relevant goods and. 21st century procurement moving from expense to advantage. ultra-competitive virtual marketplace where buyers and sellers with the ultimate goal of providing you with a means to calculate yourself the potential benefits you can achieve. Buyer Supplier. Operations Research and analytics offer new ways to achieve these goals, but how can companies determine when and how it will help them achieve their goals and gain a competitive advantage? A company basically has two ways to improve its overall performance.

A summary of how a typical e- procurement system, upon its successful implementation, can provide benefits to organizations is given in Table 1 and is explained below. Key benefits arising from the implementation of e-procurement systems Benefits Literature sources Improving efficiency Gunasekaran and Ngai ; Smith Cost savings Turban et al.

ERP systems, financial systems Gunasekaran and Ngai, Electronic forms rather than physical papers travel between persons via electronic means instead of changing hands physically and receives approval quicker Turban et al.

Decision rules can also be built into an e-procurement system which further reduces the number of approvals necessary Wen and Wei, Automation of procurement process via e-procurement systems coupled with use of e-catalogs which saves product search time speeds up the overall efficiency of the entire purchasing process Smith, Purchase order generation cost can also be significantly reduced Subramaniam and Shaw, The mission statement for the procurement function at Mars started, “To achieve competitive advantage.”.

And when the Mars family came to visit, Is your Supplier Selection Process a Source of Competitive Disadvantage? eProcurement / Procurement Supply Chain Management Sourcing Commodities. Procurement is often a misunderstood and disregarded (unfortunately!) function of an organization.

However, procurement optimization can produce a host of benefits and add tremendous value to your organization as a whole. DRIVE COMPETITIVE ADVANTAGE THROUGH INNOVATIVE SOURCING AND STRATEGIC MANAGEMENT.

Consumer power is at an all-time high, and consumer packaged goods (CPG) organizations need to meet customers’ desire for new delivery models, specialized products that appeal to their changing tastes, while maintaining the integrity of their supply chains.

According to their research results, firms may achieve competitive advantage from long-term relationships rather than merely short-term. Strategic performance measurement The operations management literature has advocated the need for research to address infrastructural issues such as performance measurement (Marucheck et al.

). Obtaining a Competitive Advantage Through Cost Leadership and Differentiation - This assignment will cover how a business can gain a competitive advantage over similar businesses in the same market using sources such as cost advantage and differentiation.

Innovation and Knowledge Management: A Global Competitive Advantage To address this gap in the literature, in this paper we report on the development of a conceptual model to explain why a variation in the attainment of e-procurement systems benefits could be observed.

E-procurement: How does it enhance strategic performance? | Wojciech D Piotrowicz - srmvision.com