E-Procurement in Global Supply Chain Management

Topics: Supply chain management, Procurement, Logistics Pages: 8 (2814 words) Published: February 20, 2012
E-procurement in global supply chain management
From 1990s, due to the economic globalization and the increased competitive pressures, lots of firms increase their focus on integrated supply chain management to gain a competitive advantage. Effective supply chain can facilitate a firm to be more competitive not only by reducing the purchasing costs but also improving the competitive dimensions of quality, dependability, flexibility, and innovation. Nowadays with globalization, global supply chain management is becoming a very important issue for most of businesses. The main reasons of this trend are procurement cost reduction, purchasing risks control, and revenues increasing. For instance, companies may set up overseas factories to benefit from tariff and trade concessions, lower labor cost, capital subsidies, and reduced logistics costs in foreign markets. Moreover, easy access to abroad markets and close proximity to customers result better organizational learning. On the other hand, improved reliability can be obtained as a consequence of closer relationship with supplier. There are some issues that should be considered in managing a global supply chain. First of all, the company should decide about its general outsourcing plan. For whatever reason, businesses may prefer to keep some aspects of supply chain nearer to home. The second issue that must be incorporated into a global supply chain management strategy is supplier selection. It can be very difficult to comparing bids from a range of global suppliers. Companies usually jump on the lowest price instead of taking time to consider all of the other elements. On the other hand, selecting the right suppliers is influenced by a variety of factors, and this there will be additional complexity in supplier selection due to the multi-criteria nature of this decision. Additionally, companies must make decisions about the number of suppliers to use. Fewer suppliers may result reduced inventory costs, volume consolidation and quantity discounts, reduced logistical costs, coordinated replenishment, improved buyer-supplier product design relationship, and thus better customer service and market penetration. However, small number of suppliers could lead to potential problems if one vendor is unable to deliver as expected, especially in global sourcing strategy. Finally, companies who prefer to ship their manufacturing overseas may face some additional concerns. Questions about the number of plants as well as their locations can pose complex logistical problems. Technology will be a very important role in managing the extended global supply chain, because technology can reduce costs and improve efficiency in supply chain. In fact, technology offers both sides of the global supply chain. For example, through technology companies get better insights into customer needs and behavior and may be able to cut the cost of acquiring customers. On the other hand, customers will get more information about supplier by technology, so they can realize clearly which are good suppliers and then they would continue to have business with them. Using technology can increase effectiveness in both sides. If both sides have good interactions to create value, they could ensure that they have the right information and context. As companies learn to use technology tools, they will develop managerial innovations, smarter and faster ways for individuals and teams to create value through interactions. Therefore, using IT strategy in global SCM to create e-business is a trend in the business world.

There are several different or new things about e-business, such as create more competitive advantages, attract new customers with value-add service, enhance companies’ existing customer relationships, achieve cost savings through IT system to integrate supply chain management, realign business processes to maximize efficiency and extend core IT systems...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Supply Chain Management of Dell Essay
  • Essay on Supply Chain Management
  • Supply Chain Management Essay
  • E Supply Chain Management Essay
  • Supply chain Management Essay
  • Essay on supply chain management of Walmart
  • Essay on Supply Chain Management at Nestle

Become a StudyMode Member

Sign Up - It's Free