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    Supply Management and E-Procurement Creating Value Added in The Supply Chain

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    Sehrish Mumtaz
    This document discusses how e-procurement can create value in the supply chain. It outlines the traditional purchasing process and how e-procurement improves each stage by enabling real-time information exchange. Benefits include reduced costs through lower purchase costs and transaction costs, as well as improved assets through faster inventory turns and cycle times. These impacts can increase a firm's Economic Value Added, a measure of value creation that considers profits minus capital costs. However, managers must still have a strong process in place, as technology alone cannot fix flaws. Industrial marketers should understand how to help clients realize e-procurement's value-adding benefits through competitive strategies.

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    Supply Management and E-Procurement Creating Value Added in The Supply Chain

    Uploaded by

    Sehrish Mumtaz
    18 views10 pages
    This document discusses how e-procurement can create value in the supply chain. It outlines the traditional purchasing process and how e-procurement improves each stage by enabling real-time information exchange. Benefits include reduced costs through lower purchase costs and transaction costs, as well as improved assets through faster inventory turns and cycle times. These impacts can increase a firm's Economic Value Added, a measure of value creation that considers profits minus capital costs. However, managers must still have a strong process in place, as technology alone cannot fix flaws. Industrial marketers should understand how to help clients realize e-procurement's value-adding benefits through competitive strategies.

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    This document discusses how e-procurement can create value in the supply chain. It outlines the traditional purchasing process and how e-procurement improves each stage by enabling real-time information exchange. Benefits include reduced costs through lower purchase costs and transaction costs, as well as improved assets through faster inventory turns and cycle times. These impacts can increase a firm's Economic Value Added, a measure of value creation that considers profits minus capital costs. However, managers must still have a strong process in place, as technology alone cannot fix flaws. Industrial marketers should understand how to help clients realize e-procurement's value-adding benefits through competitive strategies.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    18 views10 pages

    Supply Management and E-Procurement Creating Value Added in The Supply Chain

    Uploaded by

    Sehrish Mumtaz
    This document discusses how e-procurement can create value in the supply chain. It outlines the traditional purchasing process and how e-procurement improves each stage by enabling real-time information exchange. Benefits include reduced costs through lower purchase costs and transaction costs, as well as improved assets through faster inventory turns and cycle times. These impacts can increase a firm's Economic Value Added, a measure of value creation that considers profits minus capital costs. However, managers must still have a strong process in place, as technology alone cannot fix flaws. Industrial marketers should understand how to help clients realize e-procurement's value-adding benefits through competitive strategies.

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    SUPPLY MANAGEMENT AND E-

    PROCUREMENT CREATING VALUE ADDED


    IN THE SUPPLY CHAIN

    BY: WILLIAM D.PRESUTTI JR .

    Presented to: Sir Ali Agha

    Presented by: Sehrish Mumtaz, Minahil Qureshi, Raffae & Zeeshan Imtiaz
    Introduction
     Corporate management’s major concern over the past decade.

     Sharpened top management’s focus on the value added potential of


    supply chain.

     70% of a firm’s sales revenues on average are spent on supply chain


    related activities

     Firms with most competitive supply chain are and will continue to
    be the big winners in contemporary business.

     All the links in supply chain must be strong and integrated.

     Strategic supply management has the potential for significant value


    creation of the firm.
    The purchasing Process

    Define Contract Supplier


    Select Supplier
    Requirements Agreement Evaluation

    •Specification •Pre-qualification •Negotiate •Assessing Supplier


    Development Performance
    •RFP •Formalize
    •EPI/ESI Contract •Supplier Ratings
    •Select Supplier
    •Cross – •Establish
    functional Teams Ordering,
    Routines/
    Transaction
    Processing

    The focus here is on the role of e-procurement in the purchasing


    process and its contribution to value creation
    E-procurement
     Pervades each major component of the purchasing process.

     Real time exchange of information is crucial.

     The use of Internet helps the buying firm in all stages of the supplier
    selection process.

     Using Internet Technology in this step is called e-sourcing.

     The process requires extensive and accurate performance data.


    E-procurement: a caveat
     Has the potential for:
     Improving the effectiveness.
     Improving the efficiency
     A caveat is in order.

     The technology is an enabler. It cannot fix a flawed process.

     It is a powerful enabler that can generate a tremendous value for the


    firm in terms of higher revenue, reduced costs and better utilization of
    assets.
    Benefits of E-procurement

     Reduced labor costs

     Mater cost reduction

     Impact on a firm’s asset base.


    Economic Value Added (EVA)
     Comprehensive measure of value creation.

     Indicates how well a firm has performed in


    relation to the amount of capital employed.

    EVA = operating profit after taxes – cost of


    capital

    Economic Value
    Added

    Costs (-) Lower Assets (-) Inventory


    Revenue + New Purchase Costs Turns
    Products Speed to
    Market, etc Lower Transaction Cycle Time
    Costs Reduction, etc.
    Enter E-procurement
     Impact on Costs
     Cost is dramatic

     Impact on Assets:

     Impact on Revenue
     Reduction in time to market cycles by 10 –
    15%
     Revenue boosting product launch
    Limitations of EVA
     Can be manipulated by managers to make a
    situation appear more favorable.

     Managers can manipulate the asset base.


    Limitations of Industrial Marketing
     Industrial marketers need to understand value creating benefits.

     Industrial marketers who succeed in helping the supply manger deliver


    on the buying firm’s competitive strategy through it’s e-procurement
    initiatives will become coveted members of the buying firm’s supplier
    base.

     Industrial marketers need to understand that the reverse auction


    approach to e-procurement has been evolving to the point where the
    objective is to award business on a low cost, not low price, basis.

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