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Collaborative E-Procurement: Information, Systems Required, Cost-Benefit Analysis and the Key Success Factors
1. Introduction
This report begins with an introduction of collaborative supply chain systems and narrows down to procurement process to further discuss the information and systems required in the collaborative e-procurement. A cost-benefit analysis is done based on a published hypothetical company case study. On top of that, wide research is done before the report is able to identify the key success factors in the collaborative e-procurement.
2. Findings
2.1 Collaborative Supply Chain
Supply chain (SC) collaboration is defined as any kind of joint, coordinated effort between two parties to achieve a common goal (McLauren, 2002). This incorporated intracompany and intercompany collaboration spans all core functions of manufacturing organizations (Rayport and Jaworski, 2002, p. 400). SC encompasses numerous processes and activities along the entire supply chain such as product design, procurement, order fulfilment, manufacturing, marketing, and distribution. To summarize, collaborative supply chain is a strong and close relationship that involves more than one organization, in which every participant in the relationship highly commits into the joint activities in the supply chain to create values and benefits for all participants. The main underlying concept is the sharing of information, knowledge, risk, and profits among all participants along the whole supply chain (Foggin and Golicic, 2000). The success of a collaborative SC depends on how well information can be shared among the participants.
The characteristics of collaboration can be classified into three categories. They are buy-side collaboration, sell-side collaboration and collaboration with competitors. Table 1 further explains them.
Buy-side collaboration
Sell-side collaboration
Collaboration with competitors
Joint effort between the company and the upstream participants in the supply chain, such as n-tier suppliers, contract manufacturers and logistics companies. Collaboration effort between the company and other parties that involve in downstream supply chain, such as distributors, retailers, value-added resellers and customers. Collaboration among competing companies is realized through the concept of consortia marketplace.
Table 1: Three categories of collaboration
Information needs to be shared to achieve a successful collaboration in production. It is important to have a good information forecast system supported with advanced information technology for the ordering and fulfilment process and a transparent inventory system which supports dynamic inventory replenishment.
It is important to note that implementation of collaborative supply chain is not only a technological challenge, but a process and management challenge. According to Foggin and Golicic (2000), the following issues need to be resolved before an actual profitable collaborative SC can take place:
- Doing things the old way
- Conventional accounting practices
- Tax laws
- Limited view of the supply chain
- Annual negotiation process
- Extensive time and human resource investment
- Inadequate communication
- Inconsistency of behavioral attitudes and operational execution among partners
- Betrayal
According to Foggin and Golicic (2000), collaboration can create values for [next page]