Purchasing transactional procurement

E-procurement is the automation of an organization s procurement processes using web-based applications. It enables widely dispersed buyers and suppliers to interact, and execute purchase transactions. Each step in the procurement process is captured electronically, and all transaction data is routed automatically, reducing the time and cost of procurement. Properly deployed, e-procurement can deliver tremendous value to enterprises in different ways. A procurement platform is shown in Eig. 4.11. 

Transactional Processing Order and Shipment Processing Order Management Order-to-Cash Procure-to-Pay Purchase Order Management... 

There is no formal Procurement area in place or only a Purchase department with a pure transactional focus. 

Supplier Supplier provides exactly to the contract agreement Agreements are short-term transactions Offer improvement suggestions Provide no special expertise electronic purchasing Commit to cost improvements E-Procurement Non-traditional pricing Value added through expertise Metrics-based agreement... 

Following an investment that is expected to reach one billion euros, the company has already raised the percentage of online transactions by 50%. A company portal has been set up, called click procure, for securing standard goods and material and providing all of the functions necessary for handling purchases on an electronic basis. Suppliers store their catalogs on the site, issue quotes, receive orders, send invoices, and obtain data on demand. Some 3,000 Siemens buyers and another 30,000 employees have access to this platform. In a similar move, more than 20,000 employ-... 

Total cost of ownership rather than price is used here because in most transactions there will be costs other than the purchase price involved. For example, inventory carrying costs, maintenance costs, running costs, disposal costs and so on, In business-to-business markets particularly, as buyers become increasingly sophisticated, the total costs of ownership can be a critical element in the purchase decision. Life-cycle costs , as they are referred to in the military and defence industries, have long been a critical issue in procurement decisions in those markets. Figure 2.1 shows the iceberg effect of total costs of ownership where the immediate purchase price is the only aspect of cost that is visible, whereas below the surface of the water are all the costs that will arise as a result of the purchase decisions. 

More efficient procurement transactions can significantly reduce the overall cost of purchasing. This is most importaut for it s for which a large number of low-value transactions occur. 

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