Procurement Systems, Component of B2B Market

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Procurement systems were a pioneering component of the B2B market. Vendors and suppliers in this market saw immediate advantage in being able to share information about products and services that others needed for their own internal needs. An obvious problem for many organizations, both commercial and government, was (and remains) the cost of procurement. The clear benefits of B2B systems include avoiding the creation of complex approval cycles for insignificant items. The paperwork required for small office supplies, for example. can cost more than the items themselves.

While this benefit is significant, automating and enforcing business rides for the purchase of a wide range of systems became the focus for procurement. E-business applications that depended largely on suppliers realized some huge benefits including:

1. Reduced costs of items in the procurement market.
2. Improved availability.
3. Ability, to reduce inventor, for buyers.
4. Controlled procurement processes.
5. Ability to control quality standards more effectively.
6. Improved cash management.
7. Supplier control expansion and improvement.

These systems now form the heart of many supply chain environments. Most of their functions are now accessed across the Internet directly into the supplier's organization. Some are through links and others are a sublicensed component of the digital market itself. For example, Staples and are suppliers of digital procurement services that businesses can use through on-line ordering. By. moving one step further, it is possible to offer a customized catalog, with prices (and discounts) reflected for each of the companies in the program. The large procurement systems - such as those used by the State of California to improve their e-government initiatives- are often the ones that steal the headlines. However, the market is expanding, with simple applications that meet many e-business requirements. Examples of B2B procurement solutions include:

1. Corporate travel: on-line travel agency.
2. Hardware and software acquisition: hardware and software supplier with configuration control.
3. Payroll and 401k: online payroll services, retirement management services.
4. Banking: on-line banking and accounting services.
5. Shipping: on-line shipping services.

These are all simple e-business market services. Although straight forward, many of these services were too expensive to offer when most of the work required considerable human effort. However. once the business rules are electronically applied, a self-service approach made the offering efficient and affordable.

The range of these services will expand dramatically over the course of the next few months. Companies such as CitiCorp are trying to become one-stop-shopping locations for e-Business applications. By combining payroll, shipping, office equipment, credit services, travel, e-commerce, and investment and insurance services, a wide range of business functions can be centralized around a single procurement system. More organizations will start to understand the value of these services, and alliances will occur making it easier for buyers to comparison shop for these services.


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