E-Procurement System and Adoption for SMEs

Introduction

The electronic procurement (e-procurement) system is a key system that facilitates effective communications between buyers and suppliers whilst also providing opportunities for making the system more flexible and efficient. It enhances the selection of products, and makes information more effortlessly accessible. There have been many studies on e-procurement systems. According to these studies, e-procurement allows enterprises to decentralize operational procurement processes and centralize strategic procurement processes as a result of the higher supply chain precision supplied by e-procurement systems.

The study in this chapter aims to illustrate the significant importance of e-procurement for SMEs enabling the implementation of e-procurement within an adoption plan. The plan will be illustrated in a case-study. The remainder of the chapter is organized as follows:

The first part of the chapter explains the e-procurement system and its impacts on enterprises and literatures about e-procurement systems will be addressed in this part. Since the mid-1990s, especially after the development of the internet, e-procurement has taken an important role in the supply chain. Via the Internet, communications amongst the supply chain network became much easier. The internet and aspects of it have made e-procurement enablement more viable and new concepts of communication like Business -to- Business (B2B) i.e. commerce transactions between businesses such as between a manufacturer and a wholesaler, Business -to-Consumer (B2C) i.e. activities of businesses serving end consumers with products and/or services have been encompassed in the supply chain. Today, the e-procurement system is almost crucial in the competitive market where it is necessary to be flexible in order to survive especially for SMEs. Even though there is a small cost associated with integrating the supply chain with this kind of system, the return on investment (ROI) is comparatively high.

The next part of the chapter is to propose an e-procurement adoption plan for SMEs. The adoption can be seen as an innovative strategy that begins with the identification of the process. The next step in the plan is to identify the interaction / integration points in the process. The integration point is not restricted to users but to all members of the supply chain including vendors, banks etc. The interaction points should be implemented with IT as the enabler of the innovation.

The chapter is concluded by a case study that illustrates the application of the adoption plan for a SME. It consists of a procurement process and graphical representation of the process with a BPM tool. The process also includes the web services that supply the information flow among the members. Those web services are implemented within the case study and supplies an appropriate approach to implementing an e-procurement system for SMEs. In the implementation, free licensed tools (software) are used in order to encourage SMEs to use them frequently.