- 6 - Understanding the benefits of e-Procurement Andy Gueritz, Jan 2001 © 2001 Sixhills Consulting Ltd & Author  Numerous uncoordinated buyers and sellers  A fragmented supply chain with numerous middlemen Examining these two factors, the likelihood of various categories of goods and services becoming available online can be forecast, and an e-Procurement strategy devised. The figure above shows the distribution of goods and services within decision space we outlined above. Categories in the top right quadrant, such as MRO, with simple approval processes and high inefficiency, are the most likely to be offered online earliest. This has been borne out by experience: MRO was one of the first categories to be offered online. In the bottom left quadrant, large capital value items with complex specifications put out to competitive tender, such as satellites and locomotives, are likely to be some of the later categories to move online. Defining a suitable e-Procurement system Before formulating an e-Procurement strategy it is vital to recognise that the nature of the products and services to be procured and their pricing basis will have a significant impact on the way they should be sourced and procured in terms of technology, organisation and processes to maximise the benefits of the proposed system. Category ExamplesFirst moversBuyer approval process complexityLowHighTransaction inefficiencySecond-wave moversLess likely/longer termVertical industry (i.e. direct purchases)Horizontal (i.e. generic commodity, indirect purchases)ComplexSimpleRaw materialsExpress mailRetail utilitiesNatural gasBasic chemicalsPulp and paperOffice suppliesPCsSoftw areMROStandard semiconductorsAssembly componentsLow -end netw orking productsFreightAirplanes/locomotivesMainframesSatellitesTraining servicesFinancial servicesTemporariesAdvertisingHeavy machineryASICsTravel servicesTelecomsGlass Prod'sLight ChemMed. EquipAg. ProductsConsultingFleetTiming of move on-line Category typeCategory ExamplesFirst moversBuyer approval process complexityLowHighTransaction inefficiencySecond-wave moversLess likely/longer termVertical industry (i.e. direct purchases)Horizontal (i.e. generic commodity, indirect purchases)ComplexSimpleRaw materialsExpress mailRetail utilitiesNatural gasBasic chemicalsPulp and paperOffice suppliesPCsSoftw areMROStandard semiconductorsAssembly componentsLow -end netw orking productsFreightAirplanes/locomotivesMainframesSatellitesTraining servicesFinancial servicesTemporariesAdvertisingHeavy machineryASICsTravel servicesTelecomsGlass Prod'sLight ChemMed. EquipAg. ProductsConsultingFleetTiming of move on-line Category type
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