E Procurement

E-Procurement Tools Training Module Developed By: Benjamin Maughan Operations 361

Purpose Define E-Procurement Explain its role as an E-Business Tool Identify E-Procurement in Your Organization Create E-Procurement Flow Chart Summarize Learning Points Identify Next Step Overview

Exercises Process Flow Diagram Process Flow E-Procurement Analysis Streamlined Process Flow using E-Procurement Cost Analysis Overview

E-Procurement Using internet or intranet based information systems software to coordinate the buying, shipping, inventory management, supplier selection, and approval process of vital business acquisitions within the organizations core competency. Define E-Procurement

E-Procurement Purchasing Process - Preliminary Actions Need/Specification Identification Supplier Selection Terms Negotiation Regulations Define E-Procurement

E-Procurement Purchasing Process - Buying Process Purchase Order Delivery Process Purchase Order Receipt Process Order Fill Timing Order Accuracy Order Receipt Order Inspection Order Payment Process Define E-Procurement

E-Procurement Purchasing Process - Concluding Actions Order Record Storage & Organization Order Reviews Benchmarking Comparative Analysis Define E-Procurement

E-Procurement Purchasing Process Needs Identification Specifications Supplier Selection Supplier Evaluation Purchase Order Prep Define E-Procurement Follow-up Receipt/Inspection Payment Records Management

E-Procurement Software Tool Encompasses: Preliminary Actions Coordinates inventory management systems with purchasing systems. Coordinates new business ventures with purchasing systems. Creates List of Needed Items (Inputs) Archives that List E-Procurement’s Role

E-Procurement Encompasses: Preliminary Actions Maintains Record of Suppliers Maintains Record of Supplier Profiles Maintains Record of Supplier Capabilities Maintains Record of Negotiated Prices Maintains Record of Negotiated Terms Maintains Record of Contracted Limitations E-Procurement’s Role

E-Procurement Encompasses: Buying Actions Sends Purchase Order Delivery directly to Supplier Maintains Real-time Order Status Records Order Delivery timing Records Order Accuracy Records Order Inspection Data Submits Payment Request Coordinates Payment Approval Process E-Procurement’s Role

E-Procurement Encompasses: Concluding Actions: Sends Electronic Receipts to suppliers, archives, managers Maintains on-demand records for order reviews Allows reports and analyses for benchmarking Facilitates comparative and costs analyses E-Procurement’s Role

E-Procurement Benefits Streamlines procurement process Increases communication Increases procurement speed Eliminates non-value added personnel Reduces DEAD time E-Procurement’s Role

E-Procurement Benefits Provides records Produces reports Facilitates improvements E-Procurement’s Role

E-Procurement Detriments Limits flexibility for extensive notations Poor performance for exception items E-Procurement’s Role

E-Procurement In your organization: Understanding Process Flow Beginning Points End Points Inputs/Outputs Gray Boxes Black Holes Miracles Transformation Activities E-Procurement in Your Organization

E-Procurement In your organization: Mapping Symbols Start Point/Finish Point Symbol Process Activity/Step Symbol Decision Point Symbol Input/Output Symbol E-Procurement in Your Organization

E-Procurement In your organization: More Mapping Symbols Document Created Symbol Delay Symbol Inspection Symbol Move Activity Symbol E-Procurement in Your Organization

E-Procurement Identify Buying Steps as Flow Symbols Engineer requests four computers using ERP. (A procurement software program) What symbol is this request? E-Procurement in Your Organization

E-Procurement Identifying Buying Steps as Flow Symbols Manager approves request for four computers. What two symbols would result for this action? E-Procurement in Your Organization

E-Procurement Identifying Buying Steps as Flow Symbols With manager approval Procurement sends purchase order to Computer Provider Inc. What symbol would result from this action? E-Procurement in Your Organization

E-Procurement Identifying Buying Steps as Flow Symbols Purchase Order sits in suppliers bottleneck instead of going straight to suppliers pack and ship department. What symbol would result from this action? E-Procurement in Your Organization

E-Procurement Example - Customer Request Five Servers What are some of the possible process components? Be Creative! E-Procurement in Your Organization

E-Procurement Example - Customer Requests Five Servers Input: Salesperson fills out specification form 10W Delay: 10W sits in ‘new order’ pile Activity: 10W is faxed to assembly. Activity: Assembly manually collects the inventory items. Document: Assembly creates order form 10A for ‘out of stock’ items. Activity: Assembly delivers 10A to supervisor for approval E-Procurement in Your Organization

E-Procurement Example - Customer Requests Five Servers Delay: 10A sits in supervisor ‘to do’ pile. Activity: Supervisor approves request. Activity: Supervisor gives 10A to secretary Activity: Secretary gives 10A to assembly Activity: Assembly faxes 10A to approved supplier Activity: Supplier has E-Procurement Software and ships items in 4 hours. E-Procurement in Your Organization

E-Procurement Example - Customer Requests Five Servers Inspection: Assembly inspects shipment Activity: Assembly puts items in the five servers Inspection: Quality Assurance inspects servers Document: Quality Assurance creates 10C - Inspection Activity: Assembly moves servers to shipping Activity: Shipping sends servers to Customer Document: Shipping records shipment items and date Even simple requests require many components E-Procurement in Your Organization

E-Procurement Creating a List of Flow Chart Components in your Procurement Process Remember to include: Approvals Documents created and archived Delays Inspections Any other item that is part of the process This can be extensive - Take 15 minutes. E-Procurement in Your Organization

E-Procurement Procurement Process Streamlining Non-Value Added Actions Inspections Records Benchmarking Delays Dead Time Wait Time Ship Time E-Procurement Flow Chart

E-Procurement Procurement Process Streamlining Unnecessary approvals Direct Supervisors Accounting Process impediments Unnecessary steps Secretary Handling Shifting products around Factory E-Procurement Flow Chart

E-Procurement Procurement Process Streamlining Identify unnecessary steps: Input: Salesperson fills out specification form 10W Delay: 10W sits in ‘new order’ pile Activity: 10W is faxed to assembly. Activity: Assembly manually collects the inventory items. Document: Assembly creates order form 10A for ‘out of stock’ items. Activity: Assembly delivers 10A to supervisor for approval E-Procurement Flow Chart

E-Procurement Procurement Process Streamlining Identify unnecessary steps: Delay: 10A sits in supervisor ‘to do’ pile. Activity: Supervisor approves request. Activity: Supervisor gives 10A to secretary Activity: Secretary gives 10A to assembly Activity: Assembly faxes 10A to approved supplier Activity: Supplier has E-Procurement Software and ships items in 4 hours. E-Procurement Flow Chart

E-Procurement Procurement Process Streamlining Identify unnecessary steps: Inspection: Assembly inspects shipment Activity: Assembly puts items in the five servers Inspection: Quality Assurance inspects servers Document: Quality Assurance creates 10C - Inspection Activity: Assembly moves servers to shipping Activity: Shipping sends servers to Customer Document: Shipping records shipment items and date E-Procurement Flow Chart

E-Procurement Identify your procurement process unnecessary steps: Be Creative! Try to take out ALL steps that a computer can do. E-Procurement Flow Chart

E-Procurement Steps 1 - 6 with E-Procurement Input: Salesperson assists customer to customize servers using an online POS Delay: Fax delay time eliminated Activity: Online POS system sends the order specifications directly to assembly. Activity: Identifying ‘out of stock’ eliminated Document: Order form for ‘out of stock’ items eliminated Activity: Supervisor approval for ‘out of stock’ order form eliminated E-Procurement Flow Chart

E-Procurement Steps 7 - 12 with E-Procurement Delay: Supervisor approval time delay eliminated Activity: Supervisor approval is not required because of JIT inventory based on sales data. Activity: Transfer time to secretary eliminated Activity: Transfer time to assembly eliminated Activity: Order to Approved Supplier will come directly from the E-Procurement system integrated with the POS system. Emails sent to all pertinent parties. Activity: The supplier with E-Procurement will continue to have their items shipped in 4 hours. E-Procurement Flow Chart

E-Procurement Steps 13 - 19 with E-Procurement Inspection: E-Procurement will log inspection results. Activity: Assembly will not change. Inspection: Q&A will not change. Document: An extended E-procurement tool can produce the inspection approval records. Activity: Assembly to Shipping move will not change Activity: Shipping to Customer will not change Document: An extended E-procurement tool can record shipment items and dates. E-Procurement Flow Chart

E-Procurement Create/Renovate your current procurement process with E-Procurement Remember A computer program can do all repetitive, limited thinking tasks. E-Procurement Flow Chart

E-Procurement Cost Analysis Cost Savings Excess personnel eliminated Inventory costs eliminated Supervisor’s approval time requirements decreased Customer dissatisfaction decreased. Competitive advantage E-Procurement Flow Chart

E-Procurement Cost Analysis Costs Custom E-Procurement tools can be expensive ‘Off-the-shelf’ E-Procurement tools are cheap, but not very robust E-Procurement Flow Chart

E-Procurement Cost Analysis Example E-Procurement rough estimate costs Customized 35 supplier profiles, 3500 product E-Procurement tool with 125 available reports and expansion capabilities: $150,000 Requires 10 dedicated servers: $50,000 Integration costs: $25,000 Training costs: $25,000 Maintenance costs: $10,000 Total Cost: $260,000 E-Procurement Flow Chart

E-Procurement Cost Analysis Example E-Procurement rough estimate savings Eliminates 3 assembly jobs: $120,000 Eliminates related payroll expenses: $120,000 Eliminates inventory costs: $60,000 Eliminates order error costs: $10,000 Reduction wait time increases sales by: $100,000 Total E-Procurement Savings: $410,000 E-Procurement Flow Chart

E-Procurement Cost Reduction = Savings - Costs Cost Reduction = $410,000 - $260,000 Cost Reduction = $150,000 E-Procurement Flow Chart

E-Procurement Using your new E-Procurement Process: Identify your: Eliminated personnel Comparable RPE Order error costs Increase in sales Your company should be willing to pay up to this amount for the E-Procurement Tool E-Procurement Flow Chart

E-Procurement Learning Points E-Procurement Tools are internet/intranet based Coordinate buying, inventory, supplier selection, and approval process of a company Learning Points

E-Procurement Learning Points Diagnosing the need for E-Procurement Tools Step 1: Identify current procurement process Step 2: Identify unnecessary components Step 3: Recreate procurement process with an E-Procurement tool in mind. Step 4: Create a cost analysis of savings Step 5: Buy or Develop an E-Procurement Tool Learning Points

E-Procurement Next Step: Get E-Procurement Software Some Suggestions Choose a company that has experience Choose a company with exceptional customer service Choose a company that wants your company to succeed Identify your needs first then listen to their suggestions Ensure that your team lead understands basic software coding principles Ensure that your team lead understands process flow diagrams Ensure that this effort is in parallel to your companies core competency Next Step

E-Procurement Questions?? Contact: Benjamin Maughan [email_address] Next Step

Readings E-Procurement: From Strategy to Implementation. Dale Neef - Business & Economics. 2001 E-Government: Towards Electronic Democracy. Michael Bohlen, Johann Gamper, Wolfgang Polasek. March 2005 Successful Global Account Management: Key Strategies and Tools for Managing Global Customers. Nick Speare, Kevin Wilson - Business & Economics - 2001 Cyber Commerce Reframing: The End of Business Process Reengineering? Uwe G Seebacher - Computers - 2002. E-Business 2.0: Roadmap for Success. Ravi Kalakota, Marcia Robinson - Business & Economics - 2000. Introduction to E-Supply Chain Management. David Frederick Ross - Business & Economics - 2002. E-Business: Key Issues, Applications and Technologies. Brian Stanford-Smith, Paul T. Kidd - Computers - 2000. Next Step

E Procurement

More Related Content

What's hot

Viewers also liked

Similar to E Procurement

More from ahmad bassiouny

Recently uploaded

E Procurement

Editor's Notes