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TopSetting The Stage
Over the web, Commerce One was a leader in the software industry for business transactions. Off-contract buying of small-ticket products can translate into big dollars lost when multiplied by hundreds or thousands of purchases across a global organization. To have formalized procedures for purchasing something as mundane as paper clips, may be overkill, but it makes a good deal of sense. Although most large enterprise resource planning (ERP) systems such as SAP AG's R/3 come with inventory management and procurement modules, they lack the depth and breadth of functionality that the niche systems contain. As Weston (1997) estimated that operational supplies account for one-third of all costs in a company. Software packages targeting this overlooked area of spending were beginning to hit the market. Thus, many of the ERP vendors were partnering with the niche players. These third-party systems were designed to give corporate procurement departments central control over buying allowing them to cut deals for volume discounts with just a few suppliers.
Key Terms in this Chapter
Mergers and Acquisitions: A merger is a combination of two companies to form a new company, while an acquisition is the purchase of one company by another in which no new company is formed.
E-procurement: A system utilizing Internet technology to streamline the purchases of goods and products in order to reduce costs.
Supply Chain Management (SCM): The process of strategically managing flows of goods, services and knowledge, along with relationships within and among organizations, to realize greater economic value.
E-commerce (electronic commerce or EC): The buying and selling of goods and services over the Internet.
Trading Network: A series of routes or paths by which trade can take place.
Open Architecture: A type of computer architecture or software architecture that is designed to make adding, upgrading and swapping components easy.
E-payments (online payments, Electronic Payments, Internet Payments, Web Payments, and e Payment): An electronic payment made via a web browser for goods and services using credit or debit cards or other related payment means.
Strategic Partnerships: A long-term agreement between two commercial enterprises for sharing of physical and/or intellectual resources.
Supplier Network: A network of screened and qualified small-scale producers and committed medium-sized suppliers.