E-Procurement Challenges and opportunities in India

Transcription

1 Vl-1 Issue E-Prcurement Challenges and pprtunities in India Dr.J.Thirumaran Principal, Rathinam Cllege f Arts and Science, Cimbatre, Tamilnadu ABSTRACT Electrnic Prcurement (als knwn as e-prcurement) is the way f using internet t make easier, faster, and less expensive B2B (business-t-business) purchase and sale f supplies and service ver the Internet. Gvernment f India is leveraging Infrmatin Technlgy t attain a psitin f leadership and excellence in the infrmatin age and t transfrm itself int a knwledge sciety. The Tender Management System helps buyers and suppliers t reduce the cycle time, unnecessary paper wrk, waiting in lng queues and simultaneusly maintain the transparency in the entire prcess. The authr attempts t explain varius cncepts f e-prcurement. The authr tuched upn the challenges and pprtunities in the e-prcurement in India. This article aims t inculcate in the readers the understanding f the prcurement prcess, its framewrk and functinalities. Keywrds: e-prcurement, tender, b2b, infrmatin technlgies. Intrductin E-Prcurement is mre than just a system fr making purchases nline. A prperly implemented system can cnnect cmpanies and their business prcesses directly with suppliers while managing all interactins between them. This includes management f crrespndence, bids, questins and answers, previus pricing, and multiple s sent t multiple participants. Well e-prcurement system helps a firm rganize its interactins with its mst crucial suppliers. It prvides thse wh use it with a set f built-in mnitring tls t help cntrl csts and assure maximum supplier perfrmance. It prvides an rganized way t keep an pen line f cmmunicatin with ptential suppliers during a business prcess. The system allws managers t cnfirm pricing, and leverage previus agreements t assure each new price qute is mre cmpetitive than the last ne. Figure 1: e-prcurement system

2 Vl-1 Issue Objectives f the study The paper aims t enhance the capabilities f the participants in: Understanding the cntemprary management practices in prcurement. Deciding n the e-prcurement mdels apprpriate fr their business. Better knwing the technlgies available fr e-prcurement. Better realizing and assessing the risks invlved in e-prcurement adptin. Methdlgy The methdlgy is intended t apprise, engage & inspire. It is based n the paradigm f learning by ding. Benefits f implementing e-prcurement system Implementing an electrnic prcurement system ffers a cmpany many benefits t the cmpany, such as: 1. E-prcurement helps with the decisin-making prcess by keeping relevant infrmatin neatly rganized and time-stamped. 2. Well-managed e-prcurement helps reduce inventry levels. Knwing prduct numbers, bid prices and cntact pints can help businesses clse a deal while ther suppliers are struggling t gather their relevant data. 3. E-Prcurement systems that allw multiple access levels and permissins help managers rganize administrative users by rles, grups, r tasks. Prcurement managers d nt need t be as highly trained r paid because such systems are standardized and easy t learn. 4. With e-prcurement all purchases are easier t track because they are dne ver the Internet and the cmpany's managers can easily see wh made which purchases withut having t wait t receive a mnthly revlving credit statement. 5. E-prcurement saves times. Buyers d nt need t leave their desks r make phne calls t suppliers in rder t place rders; they simply g thrugh the Internet. And, because suppliers receive the rder almst immediately, they can als fulfil and ship it much faster than with the traditinal prcurement methds. Figure 2: e-prcurement life cycle

3 Vl-1 Issue There are sme real benefits that experienced by sme cmpanies that use electrnic purchase methd (eprcurement): 1. Lwer price f purchasing (5%-20%) Mre supply resurces that can be access New supplier will be easier t get Cmpetitive price Brader the gegraphic scpe 2. Time Efficiency f Purchasing Prcess (20-30%) Faster t lk the surces Faster t ask fr ffering request Faster t send the requested list Faster the ffering evaluatin Faster the release the requested item Faster the fllw up Easier t detect the ffering 3. Reduce the time limit fr claim and payment. Ptentially get the price reductin Reduce the ptential mistakes that can be happen in term f ffering dcument, receiving dcumentatins, and billing. 4. Reduce the administratin fee Reduce the manual jbs and paper wrk Increase the buyer prductivity 5. Develp the ability t create/ manage the ptimal supply basis Fix the market data Aviding the effect f high demand level 6. Expedite the cmmunicatin between buyer and seller Faster and mre accurate Mre faster in detecting prblem and prblem slving 7. Just-in-time purchasing Daily request cmmunicatin Daily delivery cmmunicatin 8. Supply Chain Management Transparent cmmunicatin and infrmatin delivering in supply chain in real time

4 Vl-1 Issue Synchrnizatin and autmatic payment 9. Supprt the partnership practice. Supprt daily, fast, and accurate cmmunicatin Supprt transparency between partners. Impact f e-prcurement E-Prcurement cause the lwer cst with many ways. Fr example: sale price, administratin fee, inventry cst, and ther cst, and that s why e-prcurement can increase cmpany ROI (return n investment). With all the benefit that achieved frm E-Prcurement, the cmpany can significantly increase ROE (return n equity) and ROI (return n investment). The price can be reducing directly frm the sales price frm selling prcess expense. Increased efficiency due t cmpetitin, transparency and lwer transactin csts, Reduced pprtunity fr fraud & crruptin due t autmated prcedures and Public prcurement mnitring. Challenges f e-prcurement One f the main challenges fr an e-prcurement is the establishment f an apprpriate and cntext tailred strategy. Every prject r initiative needs t be rted in a very careful, analytical and dynamic strategy. This seems t be a very difficult task, requiring a fcus n many aspects and prcesses, a hlistic visin, lng-term fcus and bjectives. The gvernment must have a clear strategy t vercme the barriers t change. Part f the strategy is t engage in a rigrus assessment f the current situatin, the reality n the grund and the inventry f prjects, articulate csts, impacts and benefits f prgramme as well as cntinuusly mnitr and evaluate the prject upgrading. Brrwing a lessn frm the private sectr, e-prcurement must be custmer-driven and service riented. This means that a visin f e-prcurement implies prviding greater access t infrmatin as well as better, mre equal services and prcedures fr public and businesses. In a typical large PSU and Gvernment, prcurement runs int hundreds f crres and cmplexity is inherent in the prcurement prcess. What is required t be prcured is whlly dependent n the nature f its business, and therefre varies frm enterprise t enterprise. In tday s scenari, adpting an effective cst saving mechanism is integral t any cmpany s cntinued existence. Anther imprtant aspect that the Gvernment and PSU s need t lk int is driving rganizatinal cmpliance with negtiated cntracts. This wuld enable Gvernments t keep and sustain their savings. Opprtunities in e-prcurement E-prcurement, a new avenue fr buying direct and indirect gds and services, is an effective prcurement system, making waves in purchasing circles. The service prvider plays a crucial rle in ffering surcing and prcuring slutins that satisfy custmer needs and prvide ample value additin t the service prvided. In the past, traditinal methds f prcurement ffered little transparency and lesser satisfactin f negtiatin with suppliers. E-prcurement ffers the benefits f greater transparency, wider gegraphical reach and lesser time f transactin and better pricing. Als sustained savings can be achieved thrugh autmated, easy-t-use purchasing, invice management, and supplier enablement capabilities. There is n pint in expecting higher revenues every year frm the same existing lines f business r the panel. They have t diversify and bring in newer prducts as als larger number f clients. Als cntract cmpliances have t be ensured. Suggestins Fr a successful implementatin f an e-prcurement initiative the gvernment must ensure that the fllwing parameters are taken care f, in the slutin which they intend t implement: 1. Analyse: Accurate, thrugh analysis

5 Vl-1 Issue Surce: Efficient, in-depth surcing 3. Cntract: Effective cntracting 4. Prcure: Efficient prcurement 5. Settle: Effective settlement Cnclusins The cncept f e-prcurement (e-gp), as it is being implemented in India, is explained. Furthermre, a set f challenges encuntered during implementatin f e-prcurement is discussed in depth. The challenges discussed generally cvers are: lack f skilled persnnel; multi-departmental implementatin; inadequate IT and netwrking infrastructure; challenges in implementatin f state-wide system; the need t regulate e- prcurement market; and replicating best practices in federal state setup. While this paper deals specifically with e-prcurement in India, certain aspects f it can be generalized t e-prcurement implementatins elsewhere in the wrld. Such generalizatin is pssible since gvernment prcurement is driven by the same set f principles such as efficiency and transparency. References [1] Aberdeen Grup (2001).E-surcing: Negtiating Value in a Vlatile Ecnmy - An Executive White Paper. Bstn (MA). Aberdeen Grup (September, 2006). The Maintenance, Repair and Operating Supplies Benchmark Reprt: Strategies fr Imprved MRO Spend Management. [2] Al-Ghatanni, S. & King, M. (1999).Attitudes, Satisfactin, and Usage. Factrs Cntributing t Each f the Acceptance f Infrmatin Technlgy. Behaviral & Infrmatin Technlgy, 18(4), [3] Angeles, R. and Nath, R (2005) Critical Success Factrs fr the Adptin f Business-TBusiness Electrnic Prcurement, Cmmunicatins f the IIMA, Vlume 5 Issue 1 [3] AOT Cnsulting (2003).Review f the GEM Purchasing E-Prcurement Business System. Perth, Australia: AOT Cnsulting. (AOT).Eurpean Scientific Jurnal May 2013 editin vl.9, N.13 ISSN: (Print) e - ISSN [4] Auditr General Victria (AGV) (2003). Electrnic Prcurement in the Victrian Gvernment. Melburne, Australia: Gvernment f Victria (AGV). [5] Awin Z. B. (2011) An empirical investigatin f selected strategy variables n firm s perfrmance: A study f supply chain management in large private manufacturing firms in Kenya, Jurnal f Public Administratin and Plicy Research Vl. 3(8), pp [6] Bagga, R., and Piyush, G. (2009), Transfrming Gvernment, e-gvernance Initiatives in India. TheIcfai University Press. Bedell, D. (May, 2002). Slving the Headaches f eprcurement. Crprate Finance. [7] Birks, C., Bnd, S. & Radfrd, M. (2001).Guide t e-prcurement in the Public Sectr: Cutting thrugh the Hype. Lndn, UK: Office f Gvernment Cmmerce, HMSO. [8] Brwn, D. (2005). Electrnic Gvernment and Public Administratin.Internatinal Review f Administrative Sciences. 71(2),