other e procurement methods

desktop purchasing

refers to purchasing by employees without the approval of supervisors and without the involvement of a procurement department. This usually is done by using a pur- chasing card (P-card)

. Desktop purchasing reduces the administrative cost and the cycle time involved in purchasing urgently needed or frequently purchased items of small dollar value. This approach is especially effective for MRO purchases.

The desktop purchasing approach can be implemented by collaborating with external pri- vate exchanges.

group purchasing

orders from several buyers are aggregated so that better prices due to larger quantities purchased can be negotiated.

this model is similar to the one we used for b2c

internal aggregation and external (third-party) aggregation.

internal aggregation

Large companies, such as GE, spend many mil- lions of dollars on MROs every year. These com- panies aggregate the orders from their subsidiaries and various departments (sometimes there are hundreds of them) for quantity discounts. They can cut administrative and item costs by 90%.

external aggregation for group purchasing

e-tendering from a seller’s point of view; the closing case demonstrates e-tendering from a buyer’s perspective.

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group reverse auctions

increase bargaining power and ge price discounts
companies can buy in a group. group can use reverse auction to get an even better deal than quatity discount

B2B reverse auctions can be done in a private exchange or at an aggregator’s site for a group of buying companies. Such group reverse auctions are popular in South Korea and usually involve large conglomerates. For example, the LG Group operates the LG MRO Auction for its member companies, and Samsung Group operates the Samsung iMarketKorea (imarketkorea.com), which provides procurement services and MRO goods. Samsung’s iMarketKorea’s revenue comes primarily from B2B transactions (see Online File W4.2.) This practice is popular in the healthcare industry in the United Kingdom, the United States, and other countries where hospi- tals are banding together to buy their supplies at a quantity discounted low prices.

how companies can use edistributors as sales channels

usually when buy small quantities

buy from e-distributor

buy at B2B exchange using one of the several available methods

in the process, some may automate some actions in the process such as generation of a purchasing order . which is a major provider of e procurement softwae and services.

acquisition via electronic bartering

bartering : exchange of goods and services without the use of money

companies usually ask an intermediary for help due to little success

how to select the appropriate e procurement solution?

ariba.inc provides an innovative score sheet that companies use to evaluate vendors based on the described success factors. The success factors are grouped by cost reduction, increased agility, managing complete commerce, and fulfilling tactical requirements.

when organisations make such decisions it is infuenced y factors such as :
who is buying ? what are you buying?h how much informatiokn do you need to make the decision?

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SECTION 4.6 REVIEW QUESTIONS

  1. Describe a buyer-operated procurement mar- ketplace and list its benefits.
  1. Describe the benefits of desktop purchasing.
  1. Discuss the relationship of desktop purchas-

ing with group purchasing.

  1. Explain the logic of group purchasing and

how it is organized.

  1. How does B2B bartering work?
  1. What are the major considerations for select-

ing an e-procurement vendor and solution?

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