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E-Procurement
CONSTRUCTION SUPPLY CHAIN
MANAGEMENT (MGT60803/QSB 2433)
Objectives Today
• Definition of E-Procurement
• E-Procurement Model
• Benefits and key to successful E-Procurement
• E-Sourcing / E-Contracting
• Challenges in the construction industry
• Tutorial
2
Definition of E-Procurement
• The combined use of information and
communication technology through electronic
means to enhance external and internal
purchasing and supply management
processes.
• These tools and solutions deliver a range of
options that will facilitate improved
purchasing and supply management.
3
Definition of E-Procurement
• However, the use of IT alone does not
necessary amount to the existence of e-
procurement within the organization.
• Many construction companies use computer
with basic word processors, spreadsheets,
account and administrative packages which
require analysis of users.
4
Definition of E-Procurement
• E-procurement should enabled the user to
make “effortlessly analyze and model complex
decisions in real time; automate the contract
life-cycle management including awards,
rejections, amendments and renewals and
collaborate with the supplier; using a central
system enables people to collaborate easily”
(Bailey et al., 2008).
5
E-Procurement as the application
of IT in Procurement Process
6
Information
Technology
Application
Examples:
- word processors
- spreadsheets
- accounting
software
- administration
software
- internet
- network
E-Procurement
E-sourcing
E-requisitioning
E-intelligence
Procurement
Process
Typical Cycle:
- Define
requirement
- Supplier
scouting
- RFI/RFP/RFQ
- Supplier
qualification
- Tendering/bid
ding
- Negotiating
- Selection
- Place order
- Delivery
- payment
Stages of e-Procurement in
Construction
• E-informing
• E-tendering
• E-awarding
• E-catalog
• E-invoicing
• E-contracting
• E-payment
• Source: Tran (2014)
7
Benefits of E-Procurement
• Quality
- Preferred suppliers is used (Contractor)
- Reduced processing errors
• Cost
- Purchasing power is leveraged (benchmark
and comparison)
- Reduced processing cost
8
Benefits of E-Procurement
• Process Efficiency
- Reduced administration
- Reduced errors
- Reduced cycle time
- Reduced inventory
- Staff focus on value added activities
9
Keys to successful E-Procurement
• There must be a strategized system in-place
before the implementation of e-procurement
• The information flow must be an efficient and
effective
• Relationship management and continuous
improvement
10
E-Sourcing / E-Contracting
This is the ability to identify sources of supply
online and to make contact with them over the
world-wide-web (significantly reducing cycle
time)
11
Definition
E-Sourcing / E-Contracting
Benefits:
12
Cost Reduction
Benefits to the
Supplier
Supplier
Consolidation
Access to improve
sources of supply
Enhance efficiency
of RFI/RFP/RFQ
Processes
RFI / RFP / RFQ
• A Request for Information (RFI) is used when you
think you know what you want but need more
information from vendors.
• A Request for Proposal (RFP) is used when you know
you have a problem but don’t know how you want to
solve it.
• A Request for Quote (RFQ) is commonly used when
you know what you want but need information on
how vendors would meet your requirements and/or
how much it will cost.
13
E-Requisition
Self-service purchasing for buyers in large
organizations.
14
Definition
E-Requisition
Benefits:
15
Cost Reduction
Reduce Internal
Lead Time
Reduce Human
Error
Reduce Human
Resources
Paperless System
E-Intelligence
16
Intelligence = combination of a number of
data sources and quality of data to provide
a complete picture of the dynamics of a
business environment
Definition
Discussion
• What are the challenges for a construction
company to implement for e-procurement?
• What are the benefits? Examples.
17
Challenges in the Construction Industry to
implement E-Procurement
• Complex and traditional
• Fragmented industry
• Cost consideration
• Lack of knowledge about the software
• Lack of training
• Requires integration with existing work and suppliers
• Culture of change
• Requires provision for maintenance
• Reluctant to share information
18

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CSCM Chapter 5 e procurement cscm

  • 2. Objectives Today • Definition of E-Procurement • E-Procurement Model • Benefits and key to successful E-Procurement • E-Sourcing / E-Contracting • Challenges in the construction industry • Tutorial 2
  • 3. Definition of E-Procurement • The combined use of information and communication technology through electronic means to enhance external and internal purchasing and supply management processes. • These tools and solutions deliver a range of options that will facilitate improved purchasing and supply management. 3
  • 4. Definition of E-Procurement • However, the use of IT alone does not necessary amount to the existence of e- procurement within the organization. • Many construction companies use computer with basic word processors, spreadsheets, account and administrative packages which require analysis of users. 4
  • 5. Definition of E-Procurement • E-procurement should enabled the user to make “effortlessly analyze and model complex decisions in real time; automate the contract life-cycle management including awards, rejections, amendments and renewals and collaborate with the supplier; using a central system enables people to collaborate easily” (Bailey et al., 2008). 5
  • 6. E-Procurement as the application of IT in Procurement Process 6 Information Technology Application Examples: - word processors - spreadsheets - accounting software - administration software - internet - network E-Procurement E-sourcing E-requisitioning E-intelligence Procurement Process Typical Cycle: - Define requirement - Supplier scouting - RFI/RFP/RFQ - Supplier qualification - Tendering/bid ding - Negotiating - Selection - Place order - Delivery - payment
  • 7. Stages of e-Procurement in Construction • E-informing • E-tendering • E-awarding • E-catalog • E-invoicing • E-contracting • E-payment • Source: Tran (2014) 7
  • 8. Benefits of E-Procurement • Quality - Preferred suppliers is used (Contractor) - Reduced processing errors • Cost - Purchasing power is leveraged (benchmark and comparison) - Reduced processing cost 8
  • 9. Benefits of E-Procurement • Process Efficiency - Reduced administration - Reduced errors - Reduced cycle time - Reduced inventory - Staff focus on value added activities 9
  • 10. Keys to successful E-Procurement • There must be a strategized system in-place before the implementation of e-procurement • The information flow must be an efficient and effective • Relationship management and continuous improvement 10
  • 11. E-Sourcing / E-Contracting This is the ability to identify sources of supply online and to make contact with them over the world-wide-web (significantly reducing cycle time) 11 Definition
  • 12. E-Sourcing / E-Contracting Benefits: 12 Cost Reduction Benefits to the Supplier Supplier Consolidation Access to improve sources of supply Enhance efficiency of RFI/RFP/RFQ Processes
  • 13. RFI / RFP / RFQ • A Request for Information (RFI) is used when you think you know what you want but need more information from vendors. • A Request for Proposal (RFP) is used when you know you have a problem but don’t know how you want to solve it. • A Request for Quote (RFQ) is commonly used when you know what you want but need information on how vendors would meet your requirements and/or how much it will cost. 13
  • 14. E-Requisition Self-service purchasing for buyers in large organizations. 14 Definition
  • 15. E-Requisition Benefits: 15 Cost Reduction Reduce Internal Lead Time Reduce Human Error Reduce Human Resources Paperless System
  • 16. E-Intelligence 16 Intelligence = combination of a number of data sources and quality of data to provide a complete picture of the dynamics of a business environment Definition
  • 17. Discussion • What are the challenges for a construction company to implement for e-procurement? • What are the benefits? Examples. 17
  • 18. Challenges in the Construction Industry to implement E-Procurement • Complex and traditional • Fragmented industry • Cost consideration • Lack of knowledge about the software • Lack of training • Requires integration with existing work and suppliers • Culture of change • Requires provision for maintenance • Reluctant to share information 18