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services, temporary personnel services, etc.
Commodity-specific catalogs:
Offer specific product families or groups such as
chemicals, paper, or other raw materials
E-procurement Processes
In addition to creating an electronic catalog,
existing procurement processes need to be
“electrified” end-to-end to support the entire
e-procurement process. This includes requisition and
order management, real-time tracking and receiving,
online order fulfillment, automatic billing,
invoicing and payment, as well as workflow
management, commerce transactions, and reporting and
analysis tools.
Note that an effective e-procurement platform must support
both the buyer’s and the supplier’s business processes. It should also offer
functionality that can easily be customized and configured to meet specific
e-procurement requirements. In general, a successful e-procurement solution will
be founded on an open, component-based model that offers easy configurability
and scalability.
User Maintenance
Closely related to the two preceding process management components, user
maintenance includes defining the individuals authorized to use the
e-procurement system, how these users will be enrolled, and how to provide them
access to the trading community. This component serves as the foundation for
managing the complex buyer-supplier relationships that will occur within the
marketplace.
E-procurement user maintenance must address two primary
tasks:
Establish user profiles, access rules, catalog filters, and
workflow
Allow for unique pricing and contractual relationships between a buyer and
supplier
The following steps are vital to successful user management:
Creating the buyer organization:
Identifying and defining the individual buyers, how they will form buying
groups, and how they will access the e-procurement process
Creating the supplier organization:
Identifying sellers, maintaining company profiles, and creating shipping options
and other high-level parameters for supplier activities
E-procurement organization: Aggregating the
entire marketplace, including buyer and supplier, to include such things as
hours of operation, billing rates, etc.
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Additionally, user maintenance requires establishing
authorization levels and associated procedures to precisely govern buyer and supplier capabilities.
Three
authorization levels that must be addressed are:
Access to the electronic catalog: Defines who may access catalogs and how to do so
Creating and editing requisitions: Defines who can create requisitions, who can edit requisitions, and who can edit accounting codes
Managing orders: Defines who has access to POs and who has authorization to override shipping or billing information
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Establishing Buyer/Seller Relationships
This component has two phases: managing supplier
relationships and managing pricing.
Buyers and sellers may be linked based on their previous
buying relationship or based on the buyer’s unique needs.
Buyers may make purchases based on negotiated contracts or
choose the specific commodities they need from customized
catalogs. Price lists too may be customized for a buyer or
buying group. For example, prices may be established by
adding filters that dynamically calculate a price as a
markup or discount of the list price. Or groups of buyers
may be categorized into classes with filters applied for
each group.
Billing Management
E-procurement revenues are generally based on transaction fees. A billing
management system will calculate usage charges and generate and distribute
statements or invoices to buyer-seller members of the e-procurement network.
Suppliers may also use the billing system to calculate ordering charges or to
distribute operating costs for specific orders. These functions must directly
interface with back office invoicing systems to automatically generate bills.
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Price Establishment
Effective pricing enables buyers to negotiate the best possible deals and
sellers to liquidate excess inventory. Two major pricing options are used:
Dynamic Pricing and Fixed Pricing.
Dynamic pricing: Allows
buyers and sellers in an Internet market to trade goods and services at prices
determined by market forces instead of by a predetermined price list or catalog.
An example of dynamic pricing includes business services such as auctions,
reverse auctions, and exchanges.
Fixed pricing: Based on a predetermined price list
or catalog prices negotiated between a buyer and seller
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Data Transmission
Transmitting data over the Internet involves two facets: messaging agents and
security. Data and messaging tools enable the Internet-based exchange of
transactional data between different buyers and
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suppliers in the e-procurement marketplace.
To do this, transactions are sent via the Internet as “messages” and then integrated into a supplier’s
or buyer’s back-office system, enabling financial postings that coincide with the receipt, payment, and
invoicing processes. Data messaging tools are also used to cancel transactions and log failures when
messages can’t be delivered within a predefined time period or following a specified number of attempts. The
most important aspect of the messaging tool is that it enables real-time communication between buyers
and sellers.
Coincidentally, security is an important aspect of any
Internet transaction. Protecting a buyer’s confidential financial information
and ensuring
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that only designated buyers have access
to supplier product information is
critical to ensuring confidence in any
e-procurement system.
System Management
Maintaining an e-procurement system
involves configuring and monitoring
performance usage, average response
time, transaction sources, and traffic
patterns. To maximize the benefits and
strategic opportunities e-procurement
systems offer, this information should
be used to analyze growth patterns,
session times, and ultimately to
fine-tune the system’s performance to
fit specific market communities or
technical environments.
Once an e-procurement system is up and
running, it’s important to monitor
traffic and system security on a
day-to-day basis.
Inadequately designed transaction
engines can result in poor marketplace
performance, lack of scalability,
breakdowns in security, and, ultimately,
frustrated users.
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