Liisa Korkiakoski
Nov 11, 2011
Posted in category: 2011 Member Articles

orations Web-based Procurement

With most organizations spending at least one third of their overall budget on purchasing goods and services, procurement holds significant, but often overlooked, business value. Internet technologies and services have raised hopes of changing the picture of costly, time-consuming, and inefficient procurement processes by enabling major improvements in terms of the lowest administrative overhead, better service quality, more timely delivery and allocation of products and increased flexibility (Gebauer and Segev).  But are these possibilities being used in the companies? Is procurement taken seriously in the companies’ strategic planning?

Purchasing operated as a stand-alone function and its activities were traditionally confined to receiving buying requests from internal users and translating these into purchase orders or other contractual relationships with suppliers. In most cases purchasing was a reactive, paperwork intensive clerical function, which focused on transaction processing. In a relatively stable environment, purchasing decision-making was fairly simple and mainly addressed short-term operational issues. But even in the stable environment, inefficiencies existed both in purchasing processes and in leveraging buying power with suppliers (Gebauer and Segev).

In the last fifteen years purchasing has undergone a change from an operational function to a more strategic one. In the new strategic model, purchasing’s role is to manage the process, rather than only process its transactions (Gebauer and Segev). MRP (Manufacturing Resource Planning) and ERP (Enterprise Resource Planning) systems have been used in automating especially the direct procurement processes. Web-based procurement systems have entered a new era where the combination of different business models is the key issue why e-procurement must be seen beyond the corporation’s internal borders. New technologies should be used in both direct and indirect procurement.

Recent research made by Technology Business Research Center Lappeenranta emphasizes the procurements role in maintaining Finland’s national competitiveness in the global markets. Procurement’s aim is to influence positively into company’s profit and create long-term competitivity in the market.

However the research shows that although the procurement’s strategic role has been noticed still many actions should be taken to truly achieve the benefits offered by corporate procurement. These include for example the use of Web-based Procurement systems.

References:

Assessing Internet-based Procurement to Support the Virtual Enterprise and The market for Internet based Procurement systems, Part 1: The Context of Procurement Transformation, Judith Gebauer, Arie Segev, Fisher Center for Management and Information Technology, Haas School of Business, University of California, Berkeley, Berkeley, CA 94720-1930, USA Segev and Gebauer

Hankintatoimen osaaminen kilpailukyvyn lähteenä globaaleissa arvoverkostoissa, Hallikas, Koivisto-Pitkänen, Kulha, Lintukangas, Puustinen, Technology Business Research Center Lappeenranta
Lappeenranta University of Technology, 2011

Corporate Procurement,  Master’s Thesis, Liisa Korkiakoski, Computer Science, University of Kuopio, Department of Computer Science and Applied mathematics, March 2001

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