SCM-e-procurement- part2.ppt

The Key to ess
is not about technology alone. Savings are never automatic. Centralized procurement will need to negotiate the required agreements
Streamlining processes
Enabling processes with technology
Simplify payment process
Optimizing the supplier base
Supplier Readiness
requires Supplier capabilities
At a minimum:
1. Electronic catalog content files
2. access
Desired:
3. Inventory availability
4. Order Status
5. Shipping details
6. Order entry integration via XML
Two Categories of Procurement
Procurement of Indirect and Direct goods and services are usually the responsibility of two anizations and have different business objectives and strategies such as long term contracts versus spot buys.
Indirect Office Equipment and supplies, Computer & IT equipment, MRO, Services, Expensed goods and services not consumed in the manufacturing of a product

Direct Raw materials and packaging materials used in the manufacture and assembly of products.
Benefits
Leverages corporate spending power for lower prices
Enables increased use of price agreements and approved suppliers
Reduces total lead time by 50–80%
Improves buyer’s role as negotiator
Reduces transaction processing time and manpower
Acquisition
InventoryCarrying
Transaction
Cost reduction in three major areas
Benefits
Examples of electronic procurement results
TransactionCosts
AdditionalDiscounts
CycleTime
ComplianceAgreements
Costs perTransaction
-90%
-10%
-75%
+30%
Price
Time
Compliance
100%
100%
20Days
60%
90%
10%
5Days
90%
Benefits
Intangibles
BenefitSource
Purchased UnitCost Reduction
Process Efficiency
Benefits = software solution + process change
As a percentage of total purchase cost plus process cost for a catalogued item
Software-relatedBenefits
Increased use of price agreements
Transaction costs reduction
Accounts payable cost reduction
Lead time reduction
Procurement data availability
Systems harmon-ization