ECT 589 - PowerPoint PPT Presentation

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ECT 589

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Title: ECT 589 Author: schan Last modified by: Susy Chan Created Date: 2/17/2004 10:58:55 PM Document presentation format: On-screen Show Company: DePaul – PowerPoint PPT presentation

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Title: ECT 589


1
ECT 589
  • E-Procurement

2
Agenda
  • Market News
  • B2B E-Hubs
  • E-Procurement
  • Case Newark in One
  • Eastman Chemical
  • Next Week GHX

3
Classifying B2B Hubs
What business buy operating input manufacturing
inputs
How business buy systematic sourcing spot
sourcing
Catalog Hubs aggregation
MRO Hubs Aggregation
Yield Managers Matching
Exchanges Aggregation Matching
Source E-Hubs 2000
4
How Companies Conduct Purchases
  • Strategic sourcing
  • Long-term contracts based on negotiation between
    the sellers and buyers
  • Can be supported more effectively and efficiently
    through a streamlined supply chain
  • Spot buying
  • Purchasing of goods and services at market
    prices, as determined by supply and demand in a
    dynamic manner. Buyers and sellers do not know
    each other. Eg. Stock exchanges, or commodity
    exchanges (oil, sugar, corn)
  • Can be more economically supported by the 3rd
    party exchange

5
E-Procurement
  • Purchasing electronically, usually via an
    electronic procurement application
  • Value propositions
  • Increase efficiency in the buying process and
    reduce the internal cost per transaction.
  • Streamline and automate a companys purchasing
    process
  • Provide purchasing and finance with the
    information and time to better control spending
    and negotiate more advantageous supplier pricing.
  • Eliminate maverick buying.
  • Reduce the cost of products
  • Reduce the number of suppliers

6
Streamline the Procurement Process
  • Finding approved vendors and products
  • Creating requisitions
  • Getting necessary approvals
  • Placing orders with suppliers
  • Confirming the receipt of goods
  • Getting them to the requisitioner
  • Settling accounts.

7
Benefits
  • Industry average cost per MRO transaction is
    107, MRO e-procurement systems is 35 (72
    savings)
  • 25 of MRO purchases are maverick buys resulting
    in purchase costs 20 over contracted price.
    E-Procurement adoption results in a 51 average
    reduction of maverick spending
  • . An industry average of 5-10 reduction in
    prices paid for goods, through increased contract
    compliance.
  • The industry average MRO requisition cycle time
    reduction is 70-80.
  • A one time 25-50 reduction in inventory is
    possible by matching stocking requirements to
    actual and forecast demand.
  • Average inventory carrying costs are 20-45 of
    inventory value.

8
MRO and Direct Materials Purchase
  • MRO e-procurement reducing the cost of the
    transaction (20 of corporate purchase)
  • Direct Materials reducing the cost of materials
    for production
  • AMR Research Trim purchased goods costs by
    15-20 saving ranges from 5 (purchased energy),
    15-20 (chemical), 19 (metal and machinery
    components), 36 (for temporary labor), 40 (MRO
    items.)

9
Changing Relations
  • Negotiation 3 months? 90 minutes
  • Who benefits?
  • Quality and service?
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