E-Procurement

During the e-boom of the 1990s, academics, consultants, executives and investors alike claimed that e-procurement, and its increasingly central role in supply-chain management, would revolutionize how future business-to-business practices would take place: Efficiencies would be improved and procurement costs reduced; the flow of information along the supply chain enhanced; strategic partnerships between networks of firms deepened. Many predictions about the wide-ranging impact of these transformations proved to be exaggerated. However, it would be unwise to dismiss all this excitement as just smoke and mirrors, because the rise of e-technologies, in fact, has resulted in considerable changes for corporate supply-chain strategies and practices over the past five years.

The widespread adoption of enterprise-resource planning systems, spurred by the Y2K threat, provided a fertile platform for e-procurement growth. The ability to use ERP systems to capture data on companywide spending related to suppliers allowed companies to segment their supply base and separate strategic sourcing from tactical supply. The e-bust of 2000 did instill caution in those advocating for the expanded use of e-procurement; nonetheless, even today, when asked about their future plans, chief purchasing officers point to a diverse set of e-procurement initiatives, ranging from e-sourcing to purchasing process automation to expanded use of reverse auctions (Johnson and Leenders, 2004). So, where should management allocate limited resources? And how are managers to discern promise from pitfall and competitive wins from losses? To address these critical questions, a significant body of research on the advantages and disadvantages of the increasing use of e-technologies in the supply chain recently has begun to emerge.

E-technologies and their applications within the supply chain — including use by suppliers, manufacturers and retailers — range from the simple automation of long-standing business practices to complex networked real-time linkages. One specific area — e-procurement — remains critical to building and maintaining competitiveness for manufacturing and service firms. E-procurement encompasses a number of specific elements, including e-sourcing, e-coordination and e-communities (de Boer et al., 2001; Jap and Mohr, 2002). Current research in the field points to several key factors that favor stronger competitiveness and better performance.

E-Sourcing

E-sourcing includes forward and reverse electronic auctions and online bidding and tendering, which are also referred to as electronic requests for quotations or proposals (eRFx).