E-Business and Operations

management

Ramesh Chalise
Lecturer,LGIC
 Essential of E-Business

 Difference between purchase and procurement;

 Market solutions - sell-side, buy-side, and market

place;

 Integration of product catalogue;

 Procurement service providing.

Ramesh Chalise , LGIC

 Operations Management

 Managing the conversion of various kinds

of inputs into outputs referred to as
operations management
 Operations Management is the set of
activities that creates value in the form of
goods and services by transforming inputs
into outputs. – Jay Heizer
 Internet technologies upon opt. Mgmt.
can
 improve the flexibility of product or service
provision
 increase the capacity for production or service
provision; and/or
 reduce costs per unit produced or provided.

Ramesh Chalise , LGIC

What Is The Difference Between
Procurement And Purchasing
 Purchase and Procurement:
Introduction

Elements involved
 Buyer
 Seller
 Organization

Process/function:
 Supply Chain Management
People Often use the term
Procurement and Purchase
Interchangeably but even though
they sound similar their exist the
differences between them.
Purchase Vs Procurement

 Purchasing generally refers simply to buying goods or services.

On the other hand Procurement involves the process of selecting
vendors, establishing payment terms, strategic Review, selection,
the negotiation of contracts and actual purchasing of goods

 Purchasing happens to be a part of the procurement process.

 Purchasing is going to rely on the judgment of what procurement

has done
 Purchasing is the simple acquisition of goods and services but
procurement involves much more than the simple acquisition
of goods and services as negotiation as well as logistics is also
encompassed in this term

 While purchase can be regarded as more of an administrative

function in a company but procurement has come to the level
of strategic function as a challenge upon successful
completion of the entire process called procurement.
 E procurement
 Simply, E-procurement is the management of all procurement
activities via electronic means.

 e-procurement seek efficiency in accessing information on suppliers,

availability, price, quality and delivery times as well as cost savings by
collaborating with partners to pool their buying power and secure best
value deals.

 E-procurement specialise in providing up to date and real-time

information on all aspects of the supply of materials to businesses.

 E-procurement companies make money by charging a percentage of

each transaction, licensing consulting services and software, and
assessing network use fees (Trkman and McCormack, 2010)
 The process of e-procurement covers every stage of purchasing,
from the initial identification of a requirement, through the
tendering process, to the payment and potentially the contract
management
Contd...
 Independently owned intermediary that
connects hundreds of online suppliers offering
millions of maintenance and repair parts to
business firms who pay fees to join the market.
 Also referred as many to many markets
 For Instance; Ariba provides an excellent
example
 E-procurement companies expand on the business model of
simpler e-distributors by including the online catalogs of
hundreds of suppliers and offering value chain management
services to both buyers and sellers.

 Value chain management (VCM) includes those
services provided by e-procurement companies
include automation of a firm’s entire procurement
process on the buyer side and automation of the selling
business processes on the seller side
 For purchasers, e-procurement companies automate
purchase orders, requisitions, business rules enforcement,
invoicing, and payment.

 For suppliers, e-procurement companies provide catalogue

creation and content management, order management,
fulfilment, invoicing, shipment, and settlement.
 Benefits of e-procurement
 a greater simplification, standardization, and
transparency of procurement procedures
 a reduction in duplication of procurement
functions and offices
 greater transparency and accountability of
decision-making; and the
 potential benefits of scale from consolidation of
procurement processes

 Barriers to development of e-procurement

 a lack of awareness of and capability to
implement e-procurement technologies within
the firm;

 a lack of suppliers within a particular

marketplace; and

 a resistance to change from traditional

purchasing methods.
E-marketplace
 Electronic marketplaces (e-marketplaces) are electronic exchanges
where firms can register as buyers or sellers and undertake
business activities using the internet.

 E-distributor, E-procurement, independent exchange, industry

consortium are the types of net marketplace.

 Industry consortium are industry-owned vertical market that

enables buyers to purchase direct inputs (both goods and services)
from a limited set of invited participants.
E-Market place
 An online marketplace (or online e-commerce marketplace or
virtual market) is a type of e-commerce site where product and
inventory information is provided by multiple third parties,
whereas transactions are processed by the marketplace operator

 Short Note (Market Place)

 They allow buyer and seller to easily find and promote product.
 They fascilate e-commerce, online ordering, e-payment
 Conduct of transaction.
Buyer Side Model
 Buy side e-commerce refers to transactions where buyer
invite bids via tendering place on the own site.

 One of the important element in the buy side e- commerce

system is that the corporation (buyer ) does not have
to physically go out for searching suppliers.

 All transaction between the supplier and corporation are

handled electronically.
 In the buy-side market model, the buyer must run and
maintain the appropriate software together with
extracts from the product catalog.

 Moreover, procurement process rules like observance of

contract conditions, authority when ordering, or procedures
for approval can be realized for the individual customer, but
with corresponding expenditure.

 The procurement process remains largely supplier

independent and the process data obtained can be collected
and analyzed.
Seller Side Model
 In the sell-side market model, the buyer goes to supplier
website to purchase.

 Organization sell their product or services to other

organization.
 Sell side e-commerce refers to transactions involved with selling
products to an organisations customer.

 A sell side e commerce system is a one to many( suppliers to

buyers) .

 The best of sell side e commerce applications such as dell and

cisco permit customization by the configuration which the buyer
wish to purchase.

 Sell side e commerce systems are most suitable for corporations

that are producing or marketing products to a large number of
small and large corporations.

 The sell side system also provides better demand forecasting as it

directly coupled to actual sales data.
 eProcurement based on the sell-side approach requires the
supplier to provide the entire business logic for the
procurement process, including the product catalog in an
information system (purchasing software, eShop).
Overview of e-procurement Solutions
What is E-Catalogue ?
E-Catalogue
 Helps you to search information on a particular subject. For
eg products and services offered by a company are showed.

 Digital catalogues can store great quantities of items,

which can be organized and classified into different
categories for users to search in a more rapid and effective
way.
 There are different types of catalogues that address
various buyer needs like
 a. Product catalogues: Contain data on tangible items such as
office products, medical supplies, rolls of steel, etc.

 b. Service catalogues: Offer professional service “intangibles”

such as office maintenance services, temporary personnel
services, etc.

 c. Commodity-specific catalogues: Offer specific product

families or groups such as chemicals, paper, or other raw
materials.
 Advantages of e-catalogue
 Low costs:
Unlike conventional catalogues, these e-catalogues allow you to
save money, since you will not need to spend on paper and
printing. For this reason, they are perfect for small and medium-
sized companies, which will have, with them, the possibility of
getting into the world market.

 Market expansion
The possibilities that the Internet provides, people around the
world will be able to gain access to your online catalogues any
time. With these catalogues, different companies gain new
customers, providing a faster and more comfortable service to
consumers. By using these catalogues, users will be able to
search for products and services, place orders, make payments
by credit cards or payment portals, and clear up their doubts. In
this way, sales increase considerably.
 Contd.....
 Interaction
Unlike printed catalogues, digital catalogues allow a direct relationship between the company
and its clients. With an e-catalogue, a company can inform about its products and services to
its clients, who will contact the company’s representatives to clear up their doubts, to make
comments or suggestions. Because of this, company will be permanently updated about the
fluctuating necessities of their target.

 Information for customers

With these catalogues, each company will be able to provide information on the products and
services it offers and links to other websites for customer to get complementary information
on the subjects the company’s website leads with.

 Regular update
E-catalogues content is stored on a server to which navigators from all over the world have
access. They can be updated from the server in a regular, fast and easy way. What is more,
the changes made are immediately available for customers to see. In this way, catalogues show
the latest about new products, prices, points of sale, new technology incorporations, etc.
Integration
 Different catalogs can be brought together if they have a
uniform metastructure. This facilitates hierarchical searches
through product hierarchies and enables different providers.

 One metastructure that is suitable for a horizontal

marketplace and covers both products and services is the
Standard Product and Service Code (SPSC)
Eprocurement Service Provider
 An eProcurement service provider specializes in the
procurement processes of companies and mediates different
supplier relationships.
Task of Procurement service provider
 Strategic sourcing
 Benchmarking
 Implementing Best Practices
 Supplier rationalization
 Supplier Evaluation and Negotiation
 In the request and ordering services, the requirements
of the procurement as well as the approval rules for each
procurement company are established and recorded. The
ordering itself is supported by software, as both settlement
and payment arrangements are recorded.
 The catalog service and content management enable
suppliers, products, and services to be searched for. At the
same time, a multisupplier catalog must be put together and
maintained. Some eProcurement service providers offer the
possibility of configuring complex goods and product groups.

 System administration involves recording and

maintaining user profiles and supplier profiles.
 E-collaboration
 E collaboration is operationally defined as the
collaboration using the electronic technologies
among different individuals to accomplish a
common task

 Wide range of activities: from information sharing

and integration to decision, process, and resource
sharing.
 Drivers of outsourcing & offshoring
 Outsourcing(hiring an outside vendor( third party) to provide the
services you cannot perform with in-house personnel)
 Network & software reasons
 Business process re-engineering
 Cost pressure
 Regulatory change
 Improvements in educational provision in emerging markets( Consumer
Psychology)
 Labour force mobility ( Production based)
 Offshoring is the relocation of a business process from one country
to another.
 Globalization
 Political Tides ( Tax and benefits)
 Cost Economics
 Talent Management
 Any
Questions?????