e-Procurement : from strategy to implementation

Business people these days are becoming weary of new fads, movements, and revolutions, and rightly so. We have, in less than a decade, been taken through such ?revolutionary? transformations as total quality management, business process reengineering, enterprise resource planning, activity-based costing, and retail e-commerce. Companies have downsized, outsourced, empowered employees, shifted processes and organizational structures from vertical to horizontal, completed strategic sourcing initiatives, and purchased IT systems (often on the basis of dubious return on investment), with investments amounting to millions of dollars. And, of course, they have paid management consultants and software companies many millions more for advice on implementation and change management. Yet, completing business-to-business transactions over the Internet is genuinely something very different. The unexpected emergence of the Internet as a tool for business has meant that we have once again been thrown inescapably into the fray of major investment and change. As I have argued before 1 it is all part of an accelerated pace of change that will bring about a fundamental restructuring for all industries, worldwide, and participation is essential for the survival in the new economy. I have written this book about e-procurement in part because I believe that there has been a mistaken emphasis on e-commerce (electronic retailing) in our approach to the use of the Internet. Swayed by the activity around online retailing?the fortunes to be made with dotcom startups, the venture capital that was available, the relative ease in which a Web site for retail sales could be built, the massive coverage of the subject by the business press?we have failed to understand that e-commerce is a relatively unimportant step in the development of the Internet. It is a vital part of an overall e-business strategy, of course, but online retailing?unless it is fully integrated into the supply chain?is simply a mildly effective extension of the sales process. Moreover, expanding revenues, given the margins made in most industries, is far less effective as a strategy than is fundamentally and permanently reducing major costs?something that affects the bottom line directly.