What are the options for global electronic procurement and what are the benefits of such systems?

Question

What will be an ideal response?

Answer 1

Answers may vary but could have elements such as the following: Among the most basic transactions that can occur over electronic purchasing exchanges are catalog purchases. Suppliers will provide a catalog of the products available, and buyers can access, review, and place orders for desired items at a listed price. The supplier can keep the catalog updated in real time, adjusting prices according to inventory levels and the need to move particular products. Electronic exchanges can also permit buyers and suppliers to interact through a standard bid/quote system, in which buyers can post their purchasing needs online for all prospective suppliers to view and the suppliers can then submit private quotes to the buyer. The buyer can then select among the submitted quotations on the basis of price, delivery times, or other factors. Industry-sponsored exchanges can also facilitate obtaining letters of credit, contracting for logistics and distribution, and monitoring daily prices and order flows, among other services.

The benefits of electronic purchasing initiatives can be quite substantial. Research found that suppliers cut invoice and ordering errors by an average of 69 percent when using an e-marketplace, enhancing efficiency and reducing costs. Websites help companies simplify and standardize procurement processes, streamline supply chains, reduce costs, improve productivity, and reach new markets. Smaller companies are also using the Internet to purchase raw materials as well as to sell their products to customers, often on a worldwide basis. Developments such as e-procurement exchanges have opened the door for many smaller suppliers, which now have to spend very little to get into the market, lowering barriers to entry to domestic and international market opportunities. The promise of an exchange is that it allows smaller companies to leverage their size further and get into more markets, especially globally and internationally, than they ever have before. Overall, emerging industry-based B2B exchanges can help optimize the supply chain across an entire network of organizations, not merely within a single company. These exchanges can create value by aggregating the purchasing power of buyers, improving process efficiency, integrating supply chains, enhancing content dissemination, and improving overall market efficiency within and across nations.