COMM 226.

Business Technology Management

2017 Winter

A note on e-procurement
and Assignment 3
Agenda

• About Assignment 3
• E-procurement
• Exchange mechanisms
• Demo of e-procurement auction system
• iClicker
• Reminder
Assignment 3: Objectives

• Give hands-on experience with procurement

processes (Chapter 3, EMIS)
• Show how procurement process can be implemented
as an e-business activity (Chapter 9, PSI)
• Give hands-on experience in which students play
roles of sale managers who want to secure a business
contract (compare Chapter 7, PSI)
• Show how to manage business transactions that
require agreements on more attributes than the price
only
Assignment 3: Premises

Assignments 1 and 2 are problem-based; you get a

problem and are asked to give a solution
Assignment 3 is process-based; you participate in a
real-life-like procurement process
• You are playing a role: you are a sales manager
• You are competing with other sales managers
• Your task is to get a contract for your company
• But not just any contract; it has to be a profitable contract;
• It is better not to get a contract than get a bad contract
Assignment 3: Managers’ role

What a good sales manager needs:

1. Effort — hard work, being involved and proactive
2. Knowledge — having good understanding of the
problem, thinking about the other managers plan
3. Luck — other sales managers may make errors or
they cannot participate so that you get
the best contract without much effort
Assignment 3: Grading

Grading includes grading on effort and knowledge

but not on luck
• Getting a good contract requires understanding of
the transaction problem and effort to understand
the other managers
• Effort is required to keep checking the process,
be active or even proactive
• In real life luck may have a great impact; in this
assignment luck can affect the results but
it will not affect your grade
What is procurement?
• Purchasing (buying) of goods, services or works from
external sources.
• One of the support activities in Porter’s value chain
• Has great impact on organizations: the average
procurement department manages over 60% of the
total enterprise expenditures (spent).

• In procurement:
One buyer interacts with one, two, or more
sellers
E-procurement
• Supply chain management (SCM) systems include
systems for buyers and sellers to meet and transact.
• SCM and e-marketplaces have been designed by IBM
(Websphere), Ariba, SAP (SRM), Oracle, PeopleSoft,
Hubwoo (eBuy), Capgemini (IBX), …
• E-procurement allows
for 8% to 32% savings
on purchasing costs.
E-procurement transactions

Transactions can be conducted through the use of one

of the following exchange mechanisms:

1. Catalogues (posted price)

-- used in Assignment 1

2. Auctions

3. Negotiations
Catalogues, auctions & negotiations

• When are these mechanisms used?

• Catalogues (posted price): simple goods, no
competition, no savings
• Auctions: goods are simple or of low complexity,
sellers compete allowing the buyer to achieve big
savings
• Negotiations: goods are complex, many different
attributes (e.g., quality, delivery, warranty) are as
important as the price
Auctions

• Indeed, auctions have been used when goods are

simple or of low complexity, sellers compete
allowing the buyer to achieve big savings.
• But, there are now algorithms and systems that
allow using auctions to procure complex goods and
agree on two, three, or more attributes
• One of such algorithms was developed at the
J. Molson School of Business and implemented in
the Imaras system (US Patent 8,965,793; 2015).
E-procurement auctions
assignment
• This assignment gives hands-on experience with
a state-of-the-art e-procurement auction system.
• The system allows for bidding over many attributes,
e.g., price, delivery time, warranty.
• The buyer sets up an auction.
• You will be using the system playing the role of a
sales manager and:

Remember: You want to get a contract from

the buyer but so do the other sellers!
Demo

• To better acquaint yourself with the system you

will see a demo.
• Watch carefully because after the demo we are
going to have a few i-Clicker questions about it.

• Video demonstration of the Imaras system

http://invite.concordia.ca/imaras/demo_a.cfm