The development of information technologies has made it possible to improve communication within and outside organizations in a significant way. An important objective of companies is to achieve the integration and collaboration of their suppliers as part of a strategy to obtain a good position in the industry, processes with shorter cycle times, reduction of operation and administration costs, elimination of excess inventory., use of space maintaining inventory levels of less than five days, delivery of raw materials just in time, control of material in transit, avoiding stoppages of production lines due to lack of materials, etc. For this, technologies have emerged that allow the electronic procurement of materials using the internet (e-procurement),which is part of an e-business business strategy.
Introduction
Globalization, a highly competitive environment, and technological development demand processes with shorter and leaner cycle times, better use of resources, and agile and reliable information management so that companies that supply products and services can compete and become leaders in the segment of the industry in which they are developed.
The new configuration of the economy and industry demands companies that are innovative not only in products and services, but also in internal processes; and it is perhaps in the process area where there are more opportunities to apply new technologies to achieve competitive advantages that allow us to succeed in organizations.
Information technologies are a fundamental part of the new business administration, systems that allow the planning, organization, communication and integration of the company's internal data and processes (Enterprise Resource Planning), systems for the management of the supply chain (Supply Chain Management), and Customer Relationship Management. Information technologies have made it possible to face the new challenges caused by the development of the industry and the evolution of industrial processes and relations.
E-procurement technology is one of several applications that have emerged to complement previous information technologies and to strengthen the new e-business scheme using the advantages of Internet infrastructure..
Methodology
To carry out this article I used various sources of information; among them the databases Emerald fulltext and ProQuest Direct in digital library, books in EGADE library, articles from Internet magazines, in addition to the knowledge product of my work experience in the implementation and administration of this technology.
E-procurement
E-procurement is the automation of internal and external processes related to the request, purchase, supply, payment and control of products using the Internet as the main medium in customer-supplier communication. It is a technology related to the administration of the supply chain (Supply Chain Management), and among its main characteristics I can mention the use of information on requirements, inventories, material in transit, among others, displayed through an Internet page. The information flow is carried out in real time, and allows the data to be known instantly when any change in the variables occurs.
Another advantage is access from any point where there is Internet service regardless of geographical distances, or being outside the company's facilities. It also has restricted access to personnel who have previously been authorized by client and supplier to exchange information; This is very important to maintain the protection of strategic business information and complies with the parameters established in business-to-business (B2B) relationships.
Figure 1 Console for inventory management in e-procurement (1)
Investment benefits
The electronic procurement of raw material is considered by the directors of world-class companies as one of those that provides a Return on Investment (ROI) higher than other information technology projects and generates a significant reduction in costs in a short period of time after its implementation. Crouch (2003) points out that the reduction in costs is a consequence of the following factors:
- Decrease in inventory levels.Requisition of raw material based on real customer needs.Elimination of excesses.Compliance with production plans.Reduction of expenses originated by transportation of material area.
This is achieved by improving the communication between supplier and customer using the internet to show in a graphic, easy to understand and real-time inventory status for each of the part numbers, the projection of requirements, the minimum levels and inventory maximums established by the client, among other variables that allow reducing costs based on better inventory management.
Necessary technological infrastructure
It is very important for both companies (client-supplier) to have information technologies that allow the implementation and proper functioning of an e-procurement tool. Both need access to the Internet and link electronic data interchange systems (EDI, XML, ASCII) with the Internet to display internal data in a graphic way through an online page.
For small vendors, there is even no need to invest in expensive EDI or XML technology as some e-procurement applications allow the provision of data directly over the Internet.
For large organizations that have ERP, SCM and CRM systems, Crouch (2003) highlights that e-procurement improves internal and external communication in the organization, providing the following advantages:
- Allows supplier monitoring in real time. Provides key supplier performance information. Managing multiple processes for material orders including kanban, push system, etc. Inventory management (excesses, setting minimum and maximum inventory levels) Allows Material transportation (logistics) management by displaying the real-time status of the material in transit Detect potential problems in the supply of material in advance.
It is important to mention that the client or the company that shows its requirements and inventories, is the one that needs a greater investment in technological resources to achieve the deployment of the information, as well as the one that must make the decision of the application of e-procurement that adapts to your business. Crouch (2003) indicates that providers only monitor customer status and manipulate variables such as:
- Quantities of material in transit. Tracking guides to facilitate the logistics of the material. Date of shipment. Promise of upcoming dates and quantities of shipment. In practice, large companies supplying products for the industry have more than one system that allows them allows to know the client's requirements and inventories.
The technological aspect is not the only factor that companies must evaluate before implementing an e-procurement tool. The human factor is part of the success in the implementation, so those responsible for this application must have the knowledge and skills to make decisions based on the information shared by both businesses. Furthermore, according to Crouch (2003), the implementation strategies must establish collaboration and coordination processes to achieve the integration of both companies through an e-procurement technology.
Integration
Integration is the consequence of good communication between supplier and customer. It is important that suppliers know the needs of each of their clients and make the necessary adjustments within their organization to meet their expectations. Some important variables that the client must show to its suppliers are:
- Projection of future requirements for each part number. Actual and updated inventories of each of the products. Quantity of material received to facilitate billing processes Establishment of minimum and maximum quantity of raw material in the plant (physical inventory levels and storage capacity) Consider the transit time of the material for order generation. Personal information of the material administrator to verify urgent information and facilitate the human communication process. Automatic information processing when using the material in production.
In turn, the buyer requires the supplier to report on:
- Quantity of material shipped. Date of shipment of the material. Means of transport selected for shipment (land, sea or air). Guides to track the material with the logistics department. Promise in quantity and date of future shipments. Capacity problems in the supply in advance. Alerts of defective material (quantity and guide).
E-procurement is a technology that facilitates integration by quickly and reliably communicating the information necessary to anticipate problems, establish corrective and alternative actions that allow the proper functioning of both organizations. Integration requires the exchange of information and mutual support to achieve common goals.
Buyers evaluate the performance of suppliers to make the decision to continue or not with the business relationship. Good integration enables long-lasting business relationships, which in turn make it possible to develop planning strategies and product development.
| Variables for measuring the performance of an e-procurement tool | Percentage reduction using e-procure ment |
| Inventories. | 60% |
| Raw material flights. | 70% |
| Administrative costs. | 80% |
| Time-out. | 80% |
Figure 2 Results of the e-procurement application (2)
conclusion
E-procurement applications allow the integration of the company with its suppliers, facilitate the administration of an important segment of the supply chain and collaborate in the automation of material procurement processes and the processes of internal and external information exchange through the use of information technologies. The economic benefits are presented shortly after its implementation, adapting to a culture of just-in-time production and use of space for productive purposes rather than storage.
Within the new and successful e-business environment, e-procurement is perfectly adapted to market trends and the technological infrastructure developed on the Internet to enable business-to-business communication (B2B). Another of its characteristics is that it complies with the information security requirements and facilitates access by the parties involved without the need to implement expensive or specialized technological equipment. Only Internet access is required, which is also an advantage of this technology in terms of implementation and operation costs.
Virtual organizations are a new way of configuring the industry, since the worldwide trend is to specialize in your product or service and take advantage of those in which other companies have invested time, technology, research, experience and knowledge to allocate resources own in the development of innovative products for absolute customer satisfaction. E-procurement tools are adapted to this type of virtual organizations.
The integration of companies is also part of the new trends in the industry and key to the success of information technologies, since they facilitate and make this objective more agile. E-procurement is an excellent alternative to facilitate the integration and collaboration of a company with its suppliers.
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