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Collaborative E-Procurement: Information, Systems Required, Cost-Benefit Analysis and the Key Success Factors
in Information Sharing
Information sharing in a supply chain faces several challenges, such as aligning incentives, sensitivity of information and confidentiality of information.
4.1.1 Aligning Incentives
The first challenge may be the aligning incentives of different partners. Sharing of information in the supply chain does not imply that it can bring in revenues as there is a possibility that the partners are abusing information; and reaping all benefits from information sharing. It is necessary to build up trust in the supply chain, even though it is difficult to gain trust from the internal players.
4.1.2 Sensitivity of Information
Another concern associated with information sharing is the sensitivity of information. Most parties are not willing to share sensitive data. For example, cost data and bill of materials. Without sharing these data, the efficiency of the whole supply chain may be reduced to some extent.
4.1.3 Confidentiality of Information
The confidentiality of information shared is the third challenge. Undoubtedly, information sharing among the supply chains may lead to a possibility of being acquired by competitors. For example, a supplier supplies a critical component to two manufacturers competing in the final product market, the supplier will find it difficult to link information to the other two parties. The situation may be out of control if the supplier has a closer relation with one of the two manufacturers, or they are from the same company (Lee and Whang, 1998).
4.2 Technology
To select the right e-procurement solutions, an organization shall first review their business processes and identify their requirements (Ernst & Young, 2001). After that, the organization can determine the best technological approach. There are some common criteria that should be taken into consideration for appropriate technology selections.
Based on the four technology sections in Diagram 4 and discussion, a case study is adopted to show the relationships between the key issues and needs of the organisation affecting the organisation e-procurement vendor selections.
The Diagram 5 below summarises the technology selection steps based on the four main categories: Functionalities, Implementation, System Features and Customer Service.
The flow of the Diagram 5 is explained by using BMW Group as the case study. Due to the length of the report, only the important parts are selected for discussion.
Every organization has its approach and solution, so as for BMW Group. Although there is a wide range of functionalities provided in the existing e-procurement technologies, the formality of proper technology and consultant selection in adopting the e-procurement system remain unchanged.
Functionalities
Sourcing
Strategic sourcing of supplier section is critical. Therefore, after adopting Ariba service (Ariba, 2001), BMW Group e-procurement system has improved and it is able to source for its suppliers directly via Internet to transmit and manage orders, and connect to a variety of commerce services.
Implementation
Integration with existing systems
Many organizations have their own on-going systems, such as ERP system. It is vital for any system solution to be seamlessly integrated to the existing systems. For example, BMW Group selected a solution from Ariba, which integrates easily and seamlessly into the existing multiple ERP systems (Ariba, 2001).