2024 Global Procurement Management

Chapter 7
E-procurement

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 Objectives of this Chapter

What is e-procurement?
The benefits of e- procurement
Measuring the benefits of e-procurement
Industry 4.0
Analytics

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 What is e-procurement?
Definition: e-Procurement refers to the use of
electronic methods throughout the procurement
process, from identifying requirements to payment
and contract management.
Key Processes:
e-Sourcing: Involves contractual processes such as e-
tendering, e-RFQs, and e-auctions.
e-Procurement: Focuses on transactional processes using
tools like marketplaces with e-catalogues.
e-Payment: Includes virtual or embedded PCs, e-invoicing,
and self-billing for streamlined financial transactions.

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 What is e-procurement?
CIPS Definition:
e-Procurement: Using the Internet for requisitioning,
ordering, receipting, and payment processes.
e-Sourcing: Using the Internet for strategic decision-
making in sourcing services or products.

Goals:
Devolve buying to local users.
Ensure compliance with procurement procedures.
Provide visibility and collaboration among partners.

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 What is e-procurement?

The Benefits of E-Procurement

Reducing purchasing cycle time.
Enhancing budgetary control.
Eliminating administrative errors.
Increasing buyers' productivity.
Lowering prices through product standardization and
consolidation of purchasing power.
Improving information management.

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 e-Procurement

Kraljic’s
procurement
positioning:
application of
e-procurement?

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 Measuring the Benefits of e-Procurement

e-Procurement refers to the use of digital

technologies to streamline and optimize the
procurement process, leading to various benefits for
organizations.
Key Points:
Price Savings
Process Cost Reduction
Cycle Time Reduction
Inventory Holding Reduction

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 Measuring the Benefits of e-Procurement

Benefits Overview:
Improved Quality of Management Information
Enhanced Compliance with Regulations
Transactional Benefits like Automated Purchase-to-Pay
Processes
Lower Prices through Competitive Bidding

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 Measuring the Benefits of e-Procurement

Drivers of e-Procurement Benefits

Several factors drive the benefits of e-procurement
implementation within organizations, leading to enhanced
efficiency and cost-effectiveness.

Main Drivers:
Improved Process Efficiency
Enhanced Compliance
Reduced Costs
Inventory Management

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 Industry 4.0
Integration of e-procurement, ICT, and automation technologies
Technologies include IoT, cloud computing, AI, smart contracts,
and cognitive computing
Digitalisation for optimizing operations in a digital business
environment
Advancements in digital tech reshaping supply chains and
enhancing procurement value
Focus on data collection, analytics, early warnings, and
predictive capabilities
Digital supply chain for streamlined end-to-end management
Benefits: faster cycles, improved budget control, reduced errors,
increased productivity, cost savings through standardization and
leveraging buying power

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 Industry 4.0

Digital
technologies

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 Industry 4.0
The Internet of Things (IoT)
IoT is a system of interconnected computing devices and
digital machines with unique identifiers.
Devices transfer data over a network without human-to-
human interaction.
IoT includes sensors and data communication technology in
physical objects.
Applications: RFID tags, wireless sensor networks, GPS for
tracking and monitoring.
Benefits for procurement: Improved stock monitoring,
automatic reordering, asset tracking.
Enhancements: Better supplier relationships, forecasting,
connected logistics.
IoT enables real-time insights for quality control, product
forecasting, and on-time deliveries.
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 Industry 4.0
Blockchain
Blockchain is a shared ledger with multiple copies stored online across
computers.
New entries create blocks of information shared with all stakeholders.
Constant cross-checking ensures data integrity and immutability.
Benefits: Increased traceability, visibility, compliance, reduced paperwork,
risk, and fraud.
Enables time-saving validation processes and focus on service delivery.
Transparency in the supply chain and reduced reconciliation efforts.
Requires digital processes for optimal utilization.
Applications: Record-keeping, certification, supply chain management, and
data security.

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 Industry 4.0

Blockchain
flows in
a supply
chain

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 Industry 4.0
Smart Contracts
Smart contracts are self-executing software programs on Blockchain.
They automate functions based on predefined conditions.
Combines natural language with machine-readable clauses.
Executed automatically when contract terms are met.
Stored on a distributed network like Blockchain for transparency.
No single party can unilaterally control or amend the contract.
Increase transparency, reduce fraud, and improve supply chain
sustainability.
Enable real-time tracking of goods, stock levels, and audit trails.
Enhance trust, efficiency, and automation in contractual agreements.

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 Industry 4.0

Bots:
Bots are software programs designed to perform human tasks.
They automate processes like verifying invoices, placing purchase orders,
and resolving queries.
Robotic Process Automation (RPA) refers to end-to-end automation using
bots.

Benefits of bots in procurement:

Improved reliability by removing human fallibility.
Reduced cost-to-serve by automating tasks.
Reduction in cognitive bias for more objective decision-making.
Decrease in cycle time with 24/7 real-time operation.
Resource allocation to strategic activities for added procurement value.

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 Industry 4.0
Big Data:
Big Data involves managing, structuring, and utilizing large volumes of data.
Enables processing large data sets quickly and accurately.
Requires specific technologies and analytical methods for handling vast
amounts of data.

Characteristics of Big Data:

Volume
Velocity
Variety
Veracity
Value
Variability

Big Data technologies enable organizations to gain insights,

make informed decisions, and drive innovation.
Enhances decision-making, improves operational efficiency, and
supports
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MANAGEMENT SOLUTIONS
 Industry 4.0

Artificial Intelligence (AI)

Artificial Intelligence (AI) refers to machine intelligence
replicating human cognitive functions.
AI can learn, solve problems, and adapt based on data.

Three levels of AI:

Assisted intelligence: Automation of basic tasks like
assembly lines.
Augmented intelligence: Collaboration between AI and
humans for more accurate decisions.
Autonomous intelligence: AI operates independently, e.g.,
driverless cars.

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 Industry 4.0

AI capabilities:
Gather and analyze complex data.
Identify evolving patterns and predict disruptive events.
Enable faster resolutions and decision-making.

AI enhances efficiency, accuracy, and innovation in

various industries.
Organizations leverage AI for data-driven insights,
process automation, and strategic decision-making.

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 Analytics

Analytics involves the use of data analysis and

intelligence tools to gain insights and make informed
decisions.
Predictive Analytics: Utilizes historical data and
statistical algorithms to forecast future trends and
outcomes.
Helps in proactive decision-making and risk mitigation.
Enables organizations to anticipate changes and plan
accordingly.

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 Analytics

Control: Centralizing financial, customer-demand,

and real-time supplier data for comprehensive
analysis.
Incorporates external factors like weather events and natural
occurrences for better decision-making.
Essential for enhancing operational efficiency and strategic
planning.

Analytics empowers organizations to optimize

processes, identify opportunities, and drive
continuous improvement.
By leveraging predictive analytics and control
mechanisms, businesses can enhance performance
and adapt to dynamic environments effectively.
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