International Federation of Purchasing and Materials Management

EDITORIAL - E-Business Procurement Marketing by Dr. Josef Vlcek

Gathering information, research and communication are the base of e-business. In the wide range of information channels on the Internet it is difficult to find the efficient information quickly. Therefore a systematically search via search engines is very important.

The following types of search engines are available

  • Request-based Search Systems, Index Search Tools, Search Engines
    Request-based search systems or search engines organize information by means of allocating them to keywords in a reference database. In other words, a register of keywords of all registered web sites is created.
  • Menu-based Search Systems, Category Search Tools, Web Directories
    Menu-based search systems (web directories) structure information hierarchically according to categories and subcategories (themes), with a refined selection by the provider. Specific information is located by following the relevant path in the keyword hierarchy. An increasing number of search sites are now offering (index) search engines as well as (category) directories. If one search fails, the system switches to the other search tool.
  • Meta search Systems
    Meta search systems are used like request-based search tools, however, they do not have their own databases. Instead, they link up to other search sites and provide the user with a complete list of search results found by these sites.
  • Search bars
    The search bars in browsers are often mistakenly referred to as meta search tools. Search bars simply provide quick links to a collection of search sites. While the advantages are quick and easy access to the listed search sites via hyperlinks, the disadvantage is that each search site must be accessed individually for a separate search.

Platforms for specialist and sector-specific information
There already are a large number of providers which offer specialist, procurement- and purchasing-oriented information. They save the user the trouble of a comprehensive search for special topics or providers of trade pages, procurement home pages, supplier databases, virtual marketplaces or procurement software etc.

One example for helpful procurement information is: Net Market Makers: http://web.netmarketmakers.com (very good international links database, links to marketplaces, procurement software, auction software, but no description of the links)

Supplier and Customer Data Base Search Sites
In order to find new suppliers for the products required, purchasers can refer to trage pages which is usually free of charge. The trade pages mostly offer products when there is an actual demand, e.g. in case of overcapacities.

Much more professional and detailed information on certain products and suppliers can be found in numerous supplier and company databases. The purchaser can, against a set fee, search for specific suppliers or products.

Virtual marketplaces require a supplier/product database as basis for their service as well. Some e-marketplaces allow registered subscribers against a set fee access to their database. This is particularly attractive for users who are initially interested in using the Internet for procurement marketing only before possibly implementing e-procurement.

Example: Kompass: http://www.kompass.com (Business-to-Business Search: 23 million products from 70 countries)

Trade Boards and Trade Pages
Trade pages and trade boards (also called Bulletin Board Services or Trade Leads) are highly efficient ways to invite tenders via the Internet and to attract the attention of potential suppliers world-wide. Just like traditional search engines they are based on a database in which both the suppliers can offer their products and customers can invite tenders. On most trade boards users can chose from a selection of industrial sectors, products and/or the role of the player (Buyer/Seller). The use of trade pages and placement of tenders is usually free of charge as the services are financed through advertisements.

Example
UNCTAD Trade Development Center This is the trade page of the United Nations which has set itself the objective of supporting electronic trading globally. When an invitation to tender is placed, it is passed on and distributed via a trade net that has been created within the UN. Today, this network links 135 so-called Trade points world-wide, nearly all Chambers of Commerce as well as seven million companies.

Procurement Home Pages of Purchasing Departments
Having an own procurement home page offers the possibility to present the procuring company and required products in such a way that only those suppliers establish contacts with the department who are potentially capable of meeting the stipulated requirements.

This procurement marketing tool has been used intensively in the USA and Japan for quite a few years now and is becoming increasingly popular in large corporations in Europe as well.

Example
Nasa Procurement Office: http://www.hq.nasa.gov/office/procurement/ (The "Mother" of all procurement home pages; NASA handles all orders of up to 50,000 USD exclusively via this site).

Suitable products and services for e-procurement
Direct goods Direct goods with a high level of strategic importance for the production process must be very carefully selected for e-procurement because a change of suppliers is related to the confidence of the supplier, the product quality and the logistic.

Indirect goods/MRO goods
These products are highly qualified for internet transactions. They are characterized by low cost per unit, small ordering quantities and frequent order placement. In addition MRO products are of low strategic importance and have a nearly world wide standard.

Services
Services can be ordered by Internet if they are standardized or exactly described. The description and definition costs necessarily time and is difficult. The standards are in development, only some are common. The content could be internationally different.

The outlook and expectation of e-procurement from two positions

 
Consultants
Practitioners
 
IT % of all business transactions
IT % of all business transactions
Direct goods
30%
10 – 15 %
MRO products
80%
60%
Services
25 – 40 %
5 – 15 %

The development of the portion of e-procurement in the purchasing departments depends on the strategy of the company, the qualification and education of the staff and on the extent of accepted standards of products and services. Finally the purchasing managers have trust in e-business and successful experience in e-procurement.

 

 

 

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