In today's competitive business world, companies are continuously seeking IT solutions to increase the efficiency of their business processes and reduce their operating costs to improve their margins. Businesses are under constant pressure to improve their bottom line, regardless of the peak line growth. No other choice than adopting new e-procurement solutions, improving time to market, reducing operating costs, avoiding costly mistakes beyond the race and avoiding the risk of extinction
To improve purchasing efficiency and maximize potential savings it is necessary for the entire supply chain to be very effective. Suppliers and trading partners, such as shipping agents, clearing agents and forwarders, and financial agents, should be equally effective to ensure the right materials at the right time at the right price at the right price. This is only possible through cooperation solutions between customers, suppliers and trading partners. It is important that the e-procurement solution should focus on the co-operative supply chain practice in order to achieve full savings.
Procurement activities based on direct and indirect materials are of different types. Direct materials are products that are bought for production and indirect materials (MRO products) can be purchased to support production activities. The features and specifications of e-procurement solutions relate to direct and indirect materials, depending on the procurement process of various vertical industries. Due to these diverse requirements of e-procurement, different e-procurement providers focus on different vertical industries or horizontal processes based on their domain knowledge and expertise
E-procurement solutions come in different flavors and colors to meet industry requirements
Vertical and horizontal exchanges
Public Exchange between Various Vertical Markets
Private Sponsored Private Exchange
The above technologies can offer effective e-procurement solutions in their efficiency. Vertical exchange links focus on concentrating commodities, products or materials on a single transaction. They typically exist in industries where buyers and sellers are fragmented and ineffective. Horizontal discussions focus on utilizing the expertise of individual business processes across a number of industries. Service industries are also capable of horizontal discussions. The most active horizontal stock exchanges are currently in competition with e-procurement.
Vertical and horizontal exchanges have different market mechanisms. They are as follows:
Auctions for a seller, many buyers
Reverse Auctions One Buyer, Many Sellers
Buying Buyers / Sellers Interaction
However, none of these marketplace solutions meet fully the requirements of e-procurement for direct materials. After the concerns of the companies, the direct purchase of material should be addressed:.
1. Unique and unique purchasing and approval processes are direct materials that have been developed with years of experience
2. Protection of intellectual property and confidentiality for design, drawings, purchase and contract prices, and details of suppliers
3. Cooperate with procurement tasks such as RFQs, purchase orders, deliveries and payments between buyers, suppliers and trading partners
4. Accepting Best Procurement Practices
Why should focus on direct materials?
Research has shown that direct materials represent the maximum savings potential of manufacturing options. The following table shows the average savings potential of a direct and indirect material at a typical manufacturing organization
Businesses can deliver a lot of savings by implementing e-procurement solutions
Direct cost savings are as follows:
a. Lower communication costs – Fax and telephone costs
b. Low Purchasing Operational Costs – Reducing cycle time and increasing the efficiency of RFQ / PO
c. Lower Tracking Costs – Automatic reminders and RFQ / PO status tracking
d. Lower Inventory Costs – Lower Supply Chain
e. Lower Product Costs – Improve the Effectiveness of Supplier and Trading Partner
Indirect Cost Savings:
a. Improved purchasing efficiency – A higher level of cooperation and non-paper transactions
b. Avoid Cost Flaws – Checks and Balances in the E-Procurement Application
c. Purchasing e-Procurement of Direct Submissions:
Manufacturing companies can automate direct purchasing of materials with their existing suppliers and trading partners, such as shipping agents, clearing agencies and financial agents, to improve operational efficiency and increase margins. The direct materials that are included in the material inventory account for between 70% and 80% of the company's purchases. Most of B2B exchanges and purchasing solutions deal only with MRO purchases, which account for only 20% -30% of purchases. In order to significantly improve the production lines, it is essential to improve the efficiency of purchasing direct materials.
For direct materials, companies already have licensed dealers and have business relationships over the years. In addition, the prices of the direct materials are already in line with the wire and by improving the operational efficiency only further price reductions are possible. Replacing direct material suppliers is a costly process in the long run, as it requires extensive training / qualification and often requires complex reliability and product testing. Companies are reluctant to interrupt long-term relationships with existing suppliers and threaten new, unknown suppliers, unless absolutely necessary. E-procurement solutions need to automate the procurement of direct materials with existing suppliers and trading partners as they need to replace existing business / procurement processes with suppliers and trading partners, reducing operating costs and improving time to market  e- a procurement solution for direct materials should be based on the Collaborative Private Market Place model. The acquisition of direct materials is a very complex process of cooperation that includes a number of organizational units (such as R & D, Purchasing, Quality, Materials, Accounts, Finance, Legal, Manufacturing etc.) within the Buyer Organization, Suppliers and Trading Partners, Clearing agents, banks and financial agents. Appropriate information should be available to the right people at the right time to make the right decision in the procurement process. This individual procurement process was developed by the company over the years of experience The designs and drawings exchanged during design / RFQ / PO processes are highly protected and the intellectual property of the company. Public Market Place offers a limited opportunity to provide personalized business processes and not meet the security requirements. On the other hand, Private Market Places can easily limit customizability due to its limited private membership and security is less problematic as it is sponsored and managed by the customer organization
Summing up the following key benefits Cooperating Private Market Place Solutions for Direct Procurement:
first Describe the maximum savings potential of direct substances
2. Enables customers, suppliers, and business partners to collaborate on the corporate intranet / virtual private network (VPN)
3. Protecting the Intellectual Property and Secrecy of Design and Drawings according to the nature of a private market
4. Enables custom procure and approval processes to be customized to match dynamic business needs
5. Helps improve the efficiency of suppliers and trading partners through a better tracking and sales system
Source by sbobet