e-Procurement Business Case Development
Team B
ISCOM/361
e-Procurement Business Case Development
A commodity product includes a series of physical substances that have basic use that could be taken from natural sources. The company we chose to write about and that has a commodity product is the Bean Company. It is a company that sells 100% organic, healthy Arabica bean coffee. The customers can purchase whole beans, already ground up beans, or in K-cup form. However, typically the company is popular for the coffee beans more so than the other variety it offers. For instance, this paper involves all activities in e-Procurement that allows a commodity product to be released in an easy way because the company uses tools such as ERP and MRP that includes transactions, forecasting, and among other challenges with these systems to create a better flow in production.
Define the elements of e-Procurement employed with the commodity supplier.
ERP/MRP system
ERP and MRP codes represent systems that a business utilizes to ensure they are coordinating their planning activities according with the production process. ERP (Enterprise Resource Planning) allows the company to cover areas that include accounting and purchase ledgers, human resources including payroll and time sheets, supply chain such as stock control and purchasing, or warehouse data to manage every document. Similarly, MRP (Manufacturing Resource Planning) focusses on sales, job costing, purchasing and production orders. Both are necessary in manufacturing because they facilitate upper management to locate their resources and to control inventory levels of raw material as well as final products or services. Transactions
These agreements are made between two parties, the supplier and the buyer in which they both exchange products or services that will turn into payments. These transactions can get complicated if they are not clear or if the parties have not settle their terms and conditions. Every company is responsible to be accounted for their financial records and tax reports. For instance, some of these transactions include, credits, deposits, and among other forms of payment rules to make sure each party is corresponding to their agreements. Moreover, each company has their internal control of what financial transaction are being made and one department is responsible to authorize purchases, receipts, and payments.
Forecasting
Forecasting is a vital yet demanding job in supply chain that consists of a full-time position, making sure and understanding what is needed ahead of time will help keep the company producing products in a more productive manner. As a supply chain manager, it is your duty to save the corporation costs as needed, and by forecast supplies that are needed you can order in larger quantities with better pricing. Having a software that can analyze history of products will better be able direct you to not over or under order supplies needed.
Ordering
In E-Procurement the ordering process can same the employee’s time and allows them to concentrate on much more critical tasks at hand. When ordering through the system there is a process that it needs to go through that consists of the employee that needs the supplies creates a requisition in the system that gets sent to his direct supervisor for approval, once the supervisor has reviewed the requisition he approves it, then the purchasing team is able to pull this in on a report of approved requisitions and is able to create a purchase order to send electronically transmit to the supplier.
Advance shipping notification
“Advanced Shipping Notice (ASN) is an electronic notification of an upcoming delivery which is sent directly from a supplier or third-party logistics company to a buyer, in advance of the shipment. The content of the ASN typically includes:
· order information
· delivery date and time
· location information
· pallet codes
· product details
· physical characteristics of the delivery, such as the type of packaging, and
· information about the carrier” ("True Commerce", 2018).
One of the goals of any advanced shipping notification is to allow any buyer to prepare for the incoming delivery and expedite the receiving process. This allows the buyer to review the information before hand, designate a storage location based on the load size, and utilize the codes to scan products into inventory.
Financial transactions
We want to use a system that saves us time and makes our transactions more efficiently. We have a lot of support from electronic handling that supports any purchasing and will increase some transaction’s speed. We know that we need to maintain an establish relationship with our supplier’s cycles so that they can speed their process as well. By using financial transactions, we can eliminate unplanned issues, so we can focus our operations in other valuable areas. E-procurement will save us money because it avoids our team to spend more time in double spending or buying unnecessary products. Moreover, using these systems saves us costs regarding paper-based systems including the cost of mail. We need to have a solid business that increases working capital and operating profit at the same time that increases our payment optimization when the business is having negative rates.
Supplier Communication
Explain the benefits of e-Procurement.
e-Procurement has many benefits including lowering costs, visibility of spending, productivity, control, and technology. ("5 E-Procurement Advantages", 2017). E-Procurement eliminates paperwork, in which reduces reworks and errors. This causes less costs for mistakes. This also shows how spending is conducting, where all reports are visible. Selecting what is needed for productivity is easier, which puts more time where it matters. Standards can be easier stated and followed, to where controls can set the standard. Using technology, reduces paperwork, and creates electronic forms, this reduces the carbon footprint.
Identify the challenges of implementing and maintaining an e-Procurement system and recommend mitigation actions.
Some of the challenges that a company faces when implementing e-Procurement is that it is a constant changing system. Some of the users or customers might refuse to use it or would create resistance to the system. It is important that we acknowledge all possible challenges by training our staff internal and external and to constant communicate with our customers to ensure they are aware of the programs we offer. Moreover, adopting change and new technology with a new e-Procurement can cause our customers an inability to integrate to our system, and gives the company conflicts when we send them or receive orders.
Commodity products, or products with physicality are interchangeable with other same products. Determining effective E-Procurement decisions is valuable in the supply chain process. With the use of ERP and MRP systems, procurement processes are made much more efficient and effective. These systems benefit internal transactions such as forecasting, ordering, and advanced shipping notifications. Supplier communications are imperative to ensure the supply chain works flawlessly and can determine the success or failure of a company. Benefits of E-procurement include reduced transaction times, increased standardizations and productivity, simple configurations and scalability, and increased efficiencies. Challenges implementing E-procurement processes include; lack of trust and security problems, difficulty implementing IT systems, and reluctant suppliers.
References:
5 E-procurement advantages (2017). Retrieved from https://www.purchasing-procurement-center.com/e-procurement-advantages.html
Johnson, P.F. & Flynn, A. (2014) Purchasing and supply management (15th ed.). New York, NY: McGraw-Hill.
True Commerce (2018). Retrieved from https://www.truecommerce.com/uk-en/resources/faq-eng/what-is-asn
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ISCOM361Week3EprocurementBusinesscasedevelopment.docx
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