LDSS – Logistics Decisions Support Systems

ECommerce and System Integration (Part 2 of 3)

4 May 2020
Advantages of E- Procurement
Lower operating costs
• Reduce paperwork
• Reduce sourcing time
• Improve control over inventory and spending

Improve procurement efficiency

• Find new supply sources
• Improve communications
• Improve personnel use
• Lower cycle times

Reduce procurement prices

• Improve comparison shopping
• Reduce overall prices paid
Electronic Procurement

• Common uses of E-commerce for Procurement

• Research vendor and product information (Catalogue)
• Electronic check of available stock
• Price negotiation
• Order products or services
• Check on the status of an order
• Issue invoice and receive payment
• E-Procurement catalogues are of three types
• Buyer-Centric solutions
• Seller-Centric solutions
• System-Centric solutions
 Types of E-commerce Models

• Buyer-Centric Model
• Catalogue is administered by the buyer
• Sellers are connected once approved
• Buyers sets guidelines and determines pre-requisites
• Larger organisations use this to help control procurement costs and spend
• Expensive to maintain catalogues and usually the domain of large companies
• Buyer controls marketplace and wields more power..
• Rapid response to user requirements
• Initial capital outlay is required
Types of E-commerce Models

• Seller-Centric Model
• Catalogue is administered by the seller / sellers
• Buyers are connected via Internet to browse and
purchase products / services
• Seller assumes responsibility to maintain catalogue
and make available to other intermediaries
• Amazon.com / Standardbank.co.za
• Many buyers have access at little or no expense
• Buyer power is diluted
• Contract prices are difficult to negotiate
• Typical for B2C environments
 Types of E-commerce Models

• System-Centric Model
• Involves a independent portal site where both buyers
and sellers meet to transact business (c-2-c model)
• Portal is available to all buyers and sellers, and both parties may be
charged a fee to maintain the portal
• Many on-line auction stores such as eBay operate with this model
• This model allows online price negotiation
• Transaction costs may be high
• Business rules between buyers and sellers are difficult to maintain
Types of E-commerce Models
E-Procurement - Disadvantages

• Security of electronic messages

• Risk of Credit Card numbers transmitted over the internet
• Lack of face-to-face contact
• Other technological concerns
• Standard protocols
• System reliability
 ERP – E-Business – E-Market

• Customers expect their demands to be met faster, with greater

accuracy and at time that suits them… E-Commerce is driven by
customer demand.

• Traditionally, EDI filled the function of communication between

ERP and customers (internal and external)

• ERP / EDI is internally focused, and only considers the one

enterprise database as main source of information

• E-Commerce & E-Business extends information into the external

environment of suppliers; customers and vendors. This extension
of ERP to the E-marketplace is called ERPII