Electronic Commerce - Savior or Pipe Dream
Kevin Williams, C.P.M.
Kevin Williams, C.P.M., Purchasing Specialist, ESPN, Inc. (espn.go.com), Bristol, CT 06010, 860/766-2220, firstname.lastname@example.org
85th Annual International Conference Proceedings - 2000
"There is a certain relief in change, even though it be from bad to worse; as I have found in traveling in a stage-coach, that it is often a comfort to shift one's position and be bruised in a new place." - Washington Irving
Abstract. This paper supports a workshop to be held at the 85th Annual NAPM International Purchasing Conference to be held in New Orleans, Louisiana from April 30 through May 3, 2000. This presentation will look at variety of options in Electronic Commerce today, and their proper implementation in your business.
It is important to note that key elements of this presentation may not be included in this Proceedings paper. The nature of E-Commerce is that it is still an evolving resource. Even if this paper was written a few weeks prior to the conference, it might still miss the latest developments in the industry.
Knowing the Options. Three general areas of resources are available to today's purchasing professional. They include internal systems (such as ERP systems), generic external tools (such as e-mail and e-fax) and commercial external systems (such as marketed E-Commerce solutions).
Internal Systems. These options include applications which are specific to your company. They can be purchased from a third party, developed by in-house staff or a combination of both. They range from small, PC based applications to large Enterprise Resource Planning (ERP) systems.
Generic External Tools. These are common applications that allow for communications to take place between parties (both internally and externally). E-mail is by far the most common generic tool used for communication. As technology has progressed, however, other tools have surfaced. Resources such as E-Fax are fast becoming standard accessories in the purchasing professional's toolkit.
Commercial External Systems. This list includes applications that have been developed by third parties to bridge the gap between customer and supplier. They are fast becoming the Internet's answer to Electronic Data Interchange (EDI). Unfortunately, they are also blurring the lines between internal systems and generic external tools, making the decision on which system to use more difficult.
Getting Started. Like most business practices, getting your e-commerce efforts off the ground is usually the hardest part. With so many tools and resources at your disposal, it can be difficult to decide what to do. A "paralysis by analysis" usually sets in. Instead of moving the organization forward, efforts to improve the purchasing process stall out.
To break down the barriers that prevent getting started, you need to sort out what your options are, what options are viable and what resources are needed to make those options happen.
First, list the resources you are aware of on a scratch piece of paper. Don't put any order to them at this stage. You're simply trying to brainstorm the possibilities.
Once you have the options written down, start to group them into three categories; easy, moderate and challenging. This will help you to develop an e-commerce plan that works for you.
Easy Options. Easy options are those that require little, if any, changes to the systems you have in place already. They will typically include generic external options, and may include some internal systems.
Start with the basics. E-mail is one of the most powerful tools available, yet it's full potential is still not used. It is ideal for any task that requires tracking. E-mail lends itself extremely well to expediting and follow up. It provides written backup, along with a time line that ensures key orders are not forgotten. E-mail can also be invaluable for bidding work. If a blank version of your bid analysis documentation is provided to your supplier, you can simply cut and paste their responses into your analysis document. The result is less chance for errors through re-keying, as well as time saved in data entry efforts.
E-fax is also a beneficial tool. There are many freeware versions sprouting up across the Internet. While the free versions do have limitations (they can basically receive only, and be viewed or printed), they also afford time saving efficiencies. E-fax files are sent to your desktop, so you do not have to pick up the document at your fax machine. They can be viewed on line, so hard copy printouts don't have to clutter your desk. Best of all, they are files, so they can be attached to electronic purchase orders for backup purposes.
If you already have a purchasing system (whether PC based or an ERP system), make sure you are using it to its fullest potential. Does the system allow for on line requisitioning? Are you using this function? Electronic requisitions cut down data entry time and reduce the potential for errors. Can files be attached? If so, are you attaching your bid analysis worksheets, e-fax bids and other supporting files? Are you running reports from the database that can help you plan better? Your system only helps you if you are using all of its features to your advantage.
Moderate Options. Moderate options require a little effort to get them off the ground, but can be implemented in a relatively short period of time (six to twelve months).
Resources (both people and budget) are usually the deciding factor in whether a solution can be implemented. Options in the moderate category require some effort, but are not considered "off the table".
Moderate options can mean additional hardware or software. Advanced e-fax applications, which require that fees be paid, can provide additional cost benefits. Most advanced e-fax options include additional features such as a personal 800 number (making it more attractive for people to use your e-fax service), Optical Character Recognition (OCR - allowing you to incorporate the content of a fax into other documents quickly and easily) and group faxing, allowing outbound faxes to be sent from your desktop to multiple outbound fax machines.
Scanners are also moderate options. With good quality models costing as low as $135, scanners allow you to convert hardcopy bids, sales literature and even policy and procedure documents into files that can be attached or incorporated into your other systems.
Web based price comparison sites should also not be ignored. Even if you do not intend to purchase directly from the merchants that are linked to these services, you can develop a strong feel for what you should be paying for a given product. Numerous sites exist for computing equipment, but more sites are surfacing every day for other commodity groups as well.
On line auctions can also be helpful. If you have surplus inventory you are looking to clear out, on line auction site provide a good place to shop the market.
Challenging Options. I say challenging because by using the word hard or difficult, I would give the impression that they cannot be achieved. Nothing can be further from the truth. Most challenging options can be implemented, but they require additional time and money that you may not have at your disposal immediately.
These options will usually require time (12 months or more). The key is to make the most effective use of the time it will take. For example, shop around to get a feel for what your favorite e-commerce solutions cost. Work on the justification and budget requests well before your budget figures are due. This will allow for proper planning, and a higher likelihood of success.
Separate the marketing hype from what your real requirements are. Write down a rough scope that lists the gaps that exist between your current systems and the system you would like to see implemented. Then compare your scope with the systems being marketed to see which one is the best fit for your organization.
Get Involved. I can't emphasize this enough. There are e-commerce conversations happening all around us. Unfortunately, purchasing professionals aren't even being consulted as the e-commerce models are built. We have a fabulous opportunity to develop the system of our dreams, but we need to get involved now.
Discuss the e-commerce solutions that are being developed with your suppliers. Make sure they know what features you really need their systems to be able to provide. Offer to "beta test" their e-commerce solutions. Beta testers not only get the advantages of working with software as early as possible, but can also shape the system by providing direct feedback about what works well and what does not.
Discuss e-commerce solutions with your peers. Organizations such as N.A.P.M. provide a great forum for the molding of more creative, more effective solutions.
Discuss e-commerce solutions with your government representatives. Many developments on the internet come from work performed by government agencies. Find out if there are local government sourcing professionals that you can speak with to get a new perspective.
Discuss e-commerce solutions with the suppliers that are marketing e-commerce solutions. The only way their product is going to get better is if we tell them where they are doing well and where their product needs to be improved.
Don't Automate Inefficiency. If no other message goes with you from this session, keep this one in mind. Automation should be used to remove tasks where manual processes do not add any value. When looking at solutions, don't incorporate systems that replace one task with multiple other ones to get the system to work.
Summary. Effective e-commerce deployment requires a review of all the options, determining the order in which they can be completed, and implementing them as quickly as possible. Whether or not e-commerce is your savior or still your pipe dream depends on how effectively you choose the right solutions for your business.