Information Technology Impact on the Purchasing Department

Topics: Procurement, Supply chain management, Electronic Data Interchange Pages: 8 (2215 words) Published: January 3, 2011
CONTENT

1.Introduction…………………………….…………………………………….Page3 2.Information Technology and Purchasing……………………………………Page 3 3.E-purchasing…………………………………………………………..…….Page 4 3.1.E-sourcing……………………………………………………………...….Page 5 3.2.E-procurement…………………………………………………..………….Page6 3.3.Electronic Data Interchange (EDI)………………………………….……..Page 7 4.Examples………………………………………………………………...…..Page 7 4.1. Slow implementation……………………………………………………..Page 7 4.2. Fast Implementations……………………………………………………..Page 8 5. Conclusion………………………………………………………………………...Page 9 Bibliography……………………………………………………………….……….Page 10

The purpose of this paper is to discuss of the various ways in which information technology has changed the purchasing department, in particular how the Internet has impacted on the purchasing department. Will be outlined the most well known information system, their objectives and the e-purchasing. An example from daily business life will be illustrated in the second part of this paper.

1.Introduction
IT is transforming the way that business is conducted. Computers prepare invoices, issue checks, keep track of the movement of stock, and store personnel and payroll records. The personal computers are changing the patterns of office work, and the spread of information technology is affecting the efficiency and competitiveness of business, the structure of the work force, and the overall growth of economic output. Purchasing department has been radically changed by the development of the Information Technology (IT). Simply the communication channels widened enormously, and the information exchange has became significantly faster and broader, simplifying several steps with regards to purchasing, and also enhancing the fast decision making. Also the quality has improved, costs have been reduced, and speed has increased. Many communication channels are available like Internet, email, telephone, mobile communications, fax, video conference calls, GPS, etc. business is now able to operate in 24 hours, seven day a week. 2.Information Technology and Purchasing

The Internet can be used by purchasing department for many specific purchasing actions, like; -information search (accelerate the flow of information and increase processing capabilities. The information collected by the buyer may give a clearer picture on the market what will be useful during the negotiation of prices with supplier) -for transactions (advantages in the form of lower transaction costs can be realized if both supplier and buyer are connected to the same electronic marketplace) -follow up the delivery (online web tracking or other integrated systems) -book in advance the stock from Suppliers database

The Internet allows companies to exchange data and information in secure line. These applications are significant quicker than the traditional way. Griffin (1990) identified the main cost elements of Information Systems. These are: hardware and software investments, their installation and maintenance, environmental cost (recycle pay in advance), running and security cost, networking cost, training the users. Server room needs to be allocated. The integrated systems, like Enterprise Resource System (ERR), Material Requirements Planning (MRP), System Application and Products (SAP) etc. gives many complex integrated solutions for companies. These integrated systems give complete solutions for all departments of the organization. The benefits for Information System are:

-information relevance (more reliable than the human made information) -accurate and up to date information are available
-speed of information delivery
-improved customer service
-gaining competitive advantage and avoiding competitive disadvantage -support for core business function
-improved management function
-improved product quality
-improved communication (internal and external)
-impact on the business through innovation
The threats of IT systems are the accidents, nature disaster,...

Bibliography: Ricky W. Griffin, Management, (3rd Edition) (1990), Houghton Mifflin
Ravi Kalkota, Marci Robinson, (2001) M-Business: The Race to Mobility, McGraw-Hill Companies
Emiliani, ML 2000, ‘Business-To-Business Online Auctions: Key Issues For Purchasing Process Improvement’, Supply Chain Management, vol. 5, no. 4, pp. 176-186. MCB UP Ltd
Oliver Dempsey (2008), Business Organisation and Information Technology, IIPMM
Graham Curtis and David Cobham (6th Edition) (2008), Business Information Systems, FT Prentice Hall
Donald W. Dobler, David N. Burt (1996), 6th Edition, Purchasing and Supply Management – Text and Cases, The McGraw-Hill International Editions
Conor Hannaway, Gabriel Hunt (1999), The Management Skills Book, Gower
Paul Bojic, Andrew greasley, Simon Hickie (4th Edition) (2008), Business information Systems, FT Prentice Hall
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