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Group One

How IT has changed Procurement and Supply Chain Management

Access to information for purchasers and suppliers on the

internet. It results into fast communication, on line transaction processing, has lowered barriers to entry and opened new supply markets for suppliers It has changed business processing operations functions to automated production, materials handling, recording and tracking stock movements. This has changed production and distribution processess ICT has raised supplying chain capacity and productivity by allowing faster, more accurate and consistent work than human beings can achieve alone. Improving communication and visibility of information through websites and email. This supports co-ordination, decision making and enables suppliers production plans to be more aligned to customer demand and usage rates

It is changing the way supply chains are

organized and managed.eg use of ICT to facilitate offsite and mobile working and virtual team working. Location is irrelevant Technology offers opportunities for cost reduction. Streamlined processes and lower pricing through savings in transaction an interaction costs e.g. e-auctioning through a wider supply base Time management frees up professional procurement time for strategic and creative aspects. It enhances management information and

Supporting development of SCM relationships. This is

done by providing real time information for transaction processes, delivery tracking and other value adding services. You have up-to-date information for transaction processes, creating Knowledge communities e.g. linked in Technology reduces risk o fraud. Falsified records, intentional miscalculations, safety. This is achieved through fewer cash transactions, less human interventions, controlled access to data systems

e-Procurement & e- Sourcing

Definition of e-procurement Its a combined use of ICT through electronic means to enhance external and internal purchasing and supply management process E-sourcing. Its used for processing and tools involved in using the internet to make decision and form strategies regarding how and where services or products are obtained. Activities under e-sourcing

Knowledge of need Specifications requests from quotations negotiations and evaluation contract

Activities under e-procurement
Select and requisition Authorize Order Receive Payment

E-procurement tools
Identifying and defining needs through

checking real time inventory and issue requisitions, Create e-specifications Sourcing the market through e-sourcing tools Purchase to pay and contracts management

E-sourcing tools

Its an online catalogue providing specification and price information Supplier portals. These are sites where multiple buyers and sellers share information about requirements and offerings E-auctions. They are conducted on line using buyers or sellers web sites or third party auction sites E-tendering. Using e-RFQs and specifications posted on line or email potential suppliers. Bids can also be received and evaluated electronically against pre-set criteria.

Shorthand for purchase to pay processes is a process of ordering, invoicing, expediting and

payment using electronic means

Risks and costs of using IT

Increases fraud

High capital investment

High initial cost in training users Costs in initial errors Potential confusing of running the system Reliability issues especially at early stages of

development e.g. network breakdown, power failure etc. Compatibility issues. If the system may not work with the other suppliers security