Electronic Procurement the Advent of Essay

Excerpt from Essay :

The two parties can exchange information, including specific data and necessary reports, in a quick and efficient manner. With the aid of this procurement method, information is exchanged more efficiently than with the use of traditional communication channels, and the overall organizational processes are better supported (Best Price Computers, 2010).

f) Electronic data interchange

The electronic interchange of data was the first process of electronic communication, dating back at least two decades, and being itself older than electronic commerce. Electronic data interchange refers to the communications underwent by two or more economic agents in the scope of completing their business operations.

The electronic interchange of data is generally occurring between two economic agents, in which case it is called B2B communications (business to business). The interchange of data is commonly characterized by the exchange of information within the virtual community of data which would traditionally be found in five categories of business documents: "invoices, purchase orders, requests for quotations, bills of lading and receiving reports" (Schneider, 2010).

g) Online marketplaces

Last, the online marketplaces represent virtual communities which bring together buyers and sellers. Within these virtual communities, parties involved in business and trade operations can exchange information, and collect data on the services needed / provided as well as other important features.

An important component of the online marketplaces is represented by the presence and usage of software. In other words, the online marketplaces use software applications to ensure that the participating parties are able to adequately exchange and use information. This situation often raises additional complexities as the marketplace would have to purchase the software applications, incurring as such additional costs. These costs associated with the electronic procurement method would be reflected in the service delivery to the users, meaning for instance that the participants in the online marketplace could be required to pay a membership fee (e-Commerce, 2011).

The final two methods of electronic procurement are simplistic presentations of the wider process in the meaning that the reality presents the individual with various combinations between electronic data interchange and online marketplaces. Countless methods of electronic procurement are created through the combination of the two, each characterized by its own features as needed by the company resources, needs and other such criteria. Some other decisive factors used in the selection of a procurement method could include the needs of the company, the features of its market supply and chain, the sources of its supply, the costs and prices, the risks involved or the schedules (Plummer).

Aside from the combination of electronic data interchange and online marketplaces, the real life context of economic agents also reveals a combination of electronic procurement methods with traditional procurement methods. For instance, in the process of negotiation with purveyors and information, the company could use both the internet, as well as the fax machine (Havaldar, 2010).

All in all, electronic procurement is a more and more common presence within the business community and it has metamorphosed from a sporadic process into a full and complex business strategy. Electronic procurement methods are supporting economic agents in developing and focusing on the core operations by increasing the efficiency of procurement operations and decisions (inventory management, logistics, purveyor communications and so on). But it has to be noted that each economic agent has to make use of the electronic procurement methods which generate the most benefits in the particular context of the respective institution.


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