Negotiation Policies for E-Procurement by Multi Agent Systems

Negotiation Policies for E-Procurement by Multi Agent Systems

Paolo Renna (University of Basilicata, Italy)
DOI: 10.4018/978-1-61520-605-6.ch009
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Abstract

The development of Information and Communication Technologies (ICT) allowed the enterprises to adopt an e-marketplace approach to Business to Business (B2B) applications. In particular, these kind of applications are demonstrating their capacity to provide real added value to manufacturing industries by allowing their global performance to increase. The implementation of the e-marketplace by firms is not considered an easy job because of the lack of automation: the human participation is still in all stages of the B2B process. The chapter proposes a three value added services: workflow design, Multi Agent System and negotiation approach. In particular, two negotiation, an auction and single round approaches with three customer behaviors are proposed. A simulation environment is developed in order to test the proposed approaches. The simulations have been conducted in several scenarios in order to highlight what is the best approach to perform.
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Introduction

The development of Information and Communication Technologies (ICT) is deeply changing the way to do business for several manufacturing companies. Especially, Business-to-Business (B2B) applications are demonstrating the capacity to provide real value to manufacturing industries by allowing industry global performance to increase. According to Rangone et al. (2004) a basic classification of B2B solutions can concern their business model focus; indeed is possible to classify B2B solutions in those that are procurement oriented, and those that are supply chain oriented. This chapter focuses on procurement oriented solutions, that support the company in procurement transactions. These solutions are essentially referred as e-marketplace.

Several definitions of e-marketplace (EM) have been provided in the literature from 1998. However, a basic definition has been proposed by Grieger (2003) that is: “an EM brings multiple buyers and sellers together (in a “virtual” sense) in one central market space. If it also enables them to buy and sell from each other at a dynamic price which is determinate in accordance with rules of the Exchange, it is called an electronic exchange; otherwise it is called a portal”.

In practice an e-marketplace is not an easy job, mainly for the lack of automation: the human participation is still present in all stages of the B2B process. Recently, to ride out this limitation, the diffusion of software agents is increased and, in few years, has lead to the automation of several activities in order to reduce time consuming and diminishing transaction costs. The used software agents differ form “traditional” software because they are autonomous or semi-autonomous, customizable and can be coordinated with other agents.

The e-procurement use by firms, as a recent research of the Aberdeen group (2006) testify, leads to the following improvements performance:

  • Increased their spend under management by 36% ;

  • Reduced their requisition-to-order cycles by 75% ;

  • Reduced their requisition-to-order costs by 48% ;

  • Reduced their maverick spend by 36%.

Table 1 reports the trend of the e-procurement applications upon 2001 and 2006.

Table 1.
E-procurement performance
Performance area200120042006
Total Suppliers enabled30253361
Total End-Users1,0002,3091,381
Users: Current vs. Planned (%)12%43.5%68%
Transactions per Month1,3405,2442,977
Percentage of Indirect Spend managed by system18%37.6%55%
Percentage of Services Spend managed by system--32.7%29.3%

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