E-Procurement in Supply Management and Strategy

How does the use of e-procurement change the nature of the skills and knowledge required of supply management personnel?

Quesada et al. (2010) indicate that ‘supply chain management (SCM) should efficiently integrate the supply-side participants of a firm’s value chain’ (516). The important goal of effective SCM is to ensure products and services are available to the targeted consumers in a timely manner. The quantities, optimal costs, and targeted locations should also be monitored throughout the supply chain process. Recent research studies have shown conclusively that modern technologies can increase the effectiveness and profitability of every supply chain process (Simchi-Levi, Kaminsky & Simchi-Levi 2008). Supply management personnel should possess specific competencies, knowledge, and skills to ensure there is a smooth transition of goods from the manufacturer to the consumer. The process entails every practice aimed at acquiring different raw materials and resources.

Supply chain personnel must possess numerous skills and competencies to promote organizational performance. The wave of e-procurement has continued to transform the nature of these skills. To begin with, supply chain management personnel should possess adequate leadership and workplace skills. Such skills include ‘conflict management, collaboration, responsibility, problem-solving, communication, planning, and organizing’ (Naslund & Williamson 2010, p. 16).

Modern technologies and ideas such as e-procurement have the potential to transform these competencies. E-procurement is therefore defined as ‘the use of software technologies to promote ordering, requisitioning, receiving, and invoicing of services or goods over the internet’ (Tassabehji & Moorhouse 2008, p. 61). That being the case, supply chain personnel can use this technology to improve the level of coordination, communication, planning, and invoicing. Such strategies will make it easier for the managers to create and approve various purchasing requisitions. Orders will also be placed within the shortest time possible thus minimizing the efforts used to plan different activities.

This new technology has been observed to revolutionize various roles of supply chain managers (Quesada et al. 2010). For instance, the use of e-procurement is a subset of enterprise resource planning (ERP). Such ERP systems make it easier for supply chain management to monitor business performance, control inventory, place orders, and approve purchases (Naslund & Williamson 2010). Sourcing has always been a critical role undertaken by such supply chain personnel (Vaidya et al. 2004). The continued use of improved technologies has led to a new practice known as e-sourcing. The concept of e-procurement makes it easier for the manager to identify new resources and supplies. As well, e-sourcing ensures the management selects the right supplies from different categories and suppliers.

E-tendering has also become common whereby supply chain personnel acquire useful information and share it with different stakeholders. Consequently, the decision-making process is supported thus improving the company’s business performance. The technology ensures that the personnel have access to different e-catalogs (School of Management, 2014). The approved catalog list outlines various products and their respective prices. The personnel will make appropriate decisions that can be used throughout the purchasing and planning process.

Konecka (2010) also indicates that ‘the benefits of e-procurement towards supporting the diverse roles of supply chain management are determined by the nature of the business’ (p. 25). This explains why there are numerous aspects of e-purchasing and e-tendering. Organizations should, therefore, devise the most desirable e-procurement options. Supply chain managers are also capable of supporting various technical practices and business operations (Vaidya et al. 2004).

This means that they should ‘possess various competencies such as warehouse management, risk management, distribution, and use of six sigma tools’ (Konecka 2010, p. 27). E-procurement presents numerous benefits thus transforming the nature of these knowledge areas and skills. For instance, the targeted managers can use various e-resources and software applications to manage their warehouses. They will be prepared to receive every ordered product or supply. They will also use the tool to monitor, control, and manage the transportation process for the ordered products (Konecka 2010).

E-procurement has been observed to support every risk management process. This is true because the supply chain manager prevents risks before they emerge. This goal is achieved by identifying the most genuine suppliers and business partners. Supply chain management needs to understand the needs of the targeted customers. The concept of customer relationship management benefits significantly from the continued use of modern technologies (Quesada et al. 2010). The management will be aware of the unique needs, complaints, and expectations of the targeted consumers. The procurement process will, therefore, be informed by this information.

This discussion shows conclusively that e-procurement is a powerful approach that can change the nature of the skills and knowledge possessed by supply management personnel. The actors will find it easier to complete their tasks, get new supplies, manage the supply chain process, and deliver value to the final consumers (Tatsiopoulos 2004). The practice will eventually improve the profitability and performance of every organization.

How does the use of an e-procurement system increase the strategic contribution to an organization?

Successful organizations use different strategies to maximize value for their customers (Vaidya et al. 2004). Some of these strategies include business models, planning, decision-making, logistical operations, and corporate images. Eakin (2003) indicates clearly that e-procurement is a powerful business tactic that increases a firm’s strategic performance. Organizations will always purchase and acquire new supplies from different business partners. As well, consumers will also engage in similar practices to acquire the targeted commodities from the respective business organization. That being the case, business organizations should embrace the power of efficient e-procurement processes.

Experts argue that changes in supply and demand are common in the marketplace. Traditional procurement tactics usually cause delays and eventually fail to address the needs of different stakeholders. E-procurement, on the other hand, responds to ‘the short-term changes experienced in the market’ (Eakin 2003, p. 17). The tool makes it easier for organizations to adjust their procurement techniques and maximize their gains. As well, organizations have to sustain several strategic relationships. This approach is necessary because companies do business with middlemen, suppliers, stakeholders, and even consumers (Quesada et al. 2010). E-procurement leverages these relationships thus making sure every ordering process maximizes the benefits for the existing stakeholders.

Pomazalova (2014) believes that e-procurement is a meaningful system that results in supplier-buyer involvement. The insights obtained by the organization from these stakeholders can be used to promote new innovative ideas. The information will ensure different players are engaged throughout every product development process (PDP). The final product will eventually add value to the targeted firm and increase its strategic contribution (Talluri, Chung & Narasimhan 2006). The product will also support the needs of more consumers.

Technologists argue that modern procurement software can increase the level of cooperation. The e-procurement system simplifies the actions and operations undertaken by different units throughout the supply chain (Subramaniam & Shaw 2002). This move will ensure the firm focuses on the major functions that can streamline operations and add value to every actor (Eakin 2003). The practice improves the level of coordination thus increasing returns.

Corporations that select the most desirable e-procurement systems will be able to enhance alignment. This is the case because the system should be by the strategic typology of the targeted organization (Quesada et al. 2010). The systems will ‘deliver high levels of strategic IT performance and capability’ (Pomazalova 2014, p. 75). As a result, the e-procurement system will improve every strategic activity thus delivering tangible results.

Experts have also explained why companies should consider the importance of implementing powerful e-business models (Dittman 2013). Such models can support the implemented e-procurement design thus presenting new synergy (Tavi 2008). The e-procurement will be integrated as an aspect of the firm’s e-business plan. The new strategy will be used to predict future business goals, outline the most desirable business practices, and identify specific gaps that might affect the level of performance. The organizational leaders will then make informed decisions to support the targeted business goals.

The e-procurement strategy will also be supported by a powerful technology that brings together more participants. Different divisions and units will communicate effectively, address the existing challenges, and focus on the targeted outcomes. The e-procurement approach will streamline communication and change the concept of management. Tavi (2008) argues that ‘e-procurement technology brings more people together despite their hierarchies and ranks’ (p. 27). New processes emerge thus promoting innovation and commitment. Resistance to change decreases significantly since every person is informed about the major performances and goals targeted by the company. The new links ‘between business goals and operational elements result in a new strategic contribution that guarantees positive results’ (Tatsiopoulos 2004, p. 632). Entrepreneurs should, therefore, embrace the power of e-procurement because it has the potential to increase the strategic contributions of their firms.

List of References

Dittman, P 2013, ‘Five Core Competencies Every Supply Chain Manager Should Master’, Inbound Logistics, vol. 1, no. 1, pp. 1-12.

Eakin, D 2003, ‘e-Procurement Benefits’, Canada Magazine on Public Sector Purchasing, vol. 1, no. 1, pp. 15-18.

Konecka, S 2010, ‘Lean and Agile Supply Chain Management Concepts in the Aspect of Risk Management’, Electronic Scientific Journal of Logistics, vol. 6, no. 3, pp. 23-31.

Naslund, D & Williamson, S 2010, ‘What is Management in Supply Chain Management: A Critical Review of Definitions, Frameworks and Terminology’, Journal of Management Policy and Practice, vol. 11, no. 4, pp. 11-28.

Pomazalova, N 2014, Public Sector Transformation Processes and Internet Public Procurement: Decision Support Systems, IGI Global, Hershey.

Quesada, G, Gonzalez, M, Mueller, J & Mueller, R 2010, ‘Impact of e-procurement on procurement practices and performance’, Benchmarking: An International Journal, vol. 17, no. 4, pp. 516-538.

School of Management 2014, E-Procurement for Contemporary Organizations, Laureate Education, New York.

Simchi-Levi, D, Kaminsky, P & Simchi-Levi, E 2008, Designing and Managing the Supply Chain, McGraw Hill, New York.

Subramaniam, C & Shaw, J 2002, ‘A study of the value and impact of B2B e-commerce: the case of web-based procurement’, International Journal of Electronic Commerce, vol. 6, no. 4, pp. 19-40.

Talluri, S, Chung, W & Narasimhan, R 2006, ‘An optimization model for phased supplier integration into e-procurement systems’, IIE Transactions, vol. 38, no. 5, pp. 389-999.

Tassabehji, R & Moorhouse, A 2008, ‘The changing role of procurement: developing professional effectiveness’, Journal of Purchasing & Supply Management, vol. 14, no. 1, pp. 55-68.

Tatsiopoulos, P 2004, ‘Special issue editorial: purchasing and e-procurement’, Production Planning & Control, vol. 15, no. 7, pp. 631-633.

Tavi, J 2008, ‘Learning from global world-class e-Procurement practices’, Strategic Finance, vol. 89, no. 10, pp. 25-29.

Vaidya, K, Riquelme, H, Gao, J & Soar, J 2004, ‘Implementing e-Procurement Initiatives: Impact of Organisational Learning across the Public Sector’, CINet, vol. 1, no. 1, pp. 397-409.