Showing papers on "Procurement published in 2001"

Public procurement re-examined

Abstract: Academically, public procurement has been a neglected area of study even though governmental entities and public procurement practitioners have diligently worked to improve public procurement practices. This article will identify common elements of public procurement knowledge through a brief analysis of the literature and will provide a summary of government efforts to improve public procurement practices. In addition, this article will comprehensively re-examine public procurement by using a systems approach as a method of inquiry. Finally, implications of the proposed public procurement system regarding future research and study will be discussed.

Application of Delphi method in selection of procurement systems for construction projects

Abstract: A number of procurement selection systems have been developed over the last decade. The use of multi-attribute decision analysis has been considered the foremost technique for examining client needs and the weightings of preferences from experts for each procurement system in the most objective way available. However, the major difficulty of these selection models lies in the lack of consensus among the experts on the utility factor of the selection criteria. To overcome these deficiencies, a Delphi technique was adopted to develop a multi-attribute model. Four rounds of Delphi surveys were conducted. A statistically significant consensus on the weighting of the utility factors for each procurement system was obtained from eight experts. The results vividly reveal that the Delphi method is a powerful and appropriate technique for deriving objective opinions in a rather subjective area such as the multi-attribute model for the selection of procurement system.

Risk Assessment for Construction Joint Ventures in China

Abstract: The construction industry in China is developing toward the international procurement practice, and such development has attracted many foreign firms into the Chinese construction market through the formation of Sino-foreign joint ventures. Joint venture has become an important sector in the Chinese construction industry. However, the difference in management systems, technological practice, and cultural background among the partners within joint ventures brings difficulties to the function of joint venture. A significant degree of risk is involved in joint venture investments. Thus, foreign firms increasingly intend to spend more effort in studying proper strategies of managing risks in their joint venture businesses. Based on a survey, this paper establishes a risk significance index to show the relative significance among the risks associated with the joint ventures in the Chinese construction procurement practice. Real cases are examined to show the risk environment faced by joint ventures. The paper also investigates practical applications of risk management in the business of joint ventures.

System and method for ensuring order fulfillment

Abstract: The present invention provides a system and method whereby companies can optimally resolve the conflicts with respect to product availability. Embodiments of the invention allow users to search for product availability throughout its entire supply chain network to address conflicts as they arise. In particular, the present invention creates time-phased inventory plans that meet customer requirements while minimizing inventory and maximizing profit by ensuring that a company is carrying the right inventory at the right locations. Using the present invention, companies can orchestrate the time-phased storage and flow of a given product's supply to match demand by creating an optimal inventory strategy that includes deployment plans, master production schedules, and procurement requirements.

Incentives versus Transaction Costs: A Theory of Procurement Contracts

Abstract: Inspired by facts from the private sector construction industry, we develop a model that explains many stylized facts of procurement contracts The buyer in our model incurs a cost of providing a comprehensive design, and is faced with a trade-off between providing incentives and reducing ex post transaction costs due to costly renegotiation We show that cost plus contracts are preferred to fixed price contracts when a project is more complex We briefly discuss how fixed-price or cost-plus contracts might be preferred to other incentive contracts Finally, our model provides some micro-foundations for ideas from Transaction Cost Economics

Method for generating customized alerts related to the procurement, sourcing, strategic sourcing and/or sale of one or more items by an enterprise

Abstract: A method for generating customized alerts related to the procurement, sourcing, strategic sourcing and/or sale of one or more items by an enterprise is disclosed. The method is based on a Value Chain Intelligence (VCI) system that enables suppliers and procurement professionals to leverage enterprise and marketplace data in order to potentially improve decision-making in business enterprises. Accordingly, internal data from enterprises and external data from suppliers, catalogs, and marketplaces are integrated and analyzed in real time for their impact on supply chains processes. When an event occurs or data is received potentially affecting decisions regarding the procurement, sourcing, strategic sourcing, and/or sale of one or more items, the system correlates the data with predetermined conditions, which, when satisfied, trigger one or more software modules to send alerts to specified users about the potential impact of the event and/or data on the particular item/s. Alerts may be system-defined or user-defined, and customized according to types of users, messages, media, format, and other factors. Components for implementing this method consist of internal data collection components, external data collection components, data integration components, and data application components. Various methods for searching, extracting, transforming, integrating, analyzing, and representing both data internal to an enterprise and data external to an enterprise are also disclosed.

Increasing Competition and the Winner's Curse: Evidence from Procurement

Abstract: We empirically measure the effects of increasing competition on equilibrium bidding in procurement auctions In common-value auctions the winner's curse counsels more conservative bidding as the number of competitors increases First we estimate the structural parameters of an equilibrium bidding model and test for the importance of common-value components in bidders' preferences Second we use these estimates to calculate the effects of increasing competition on both individual bids as well as winning bids ie procurement costs We analyze bid data from construction procurement auctions run by the New Jersey transportation department Our results indicate that for a large subset of these auctions the median procurement cost rises as competition intensifies: increasing the number of bidders from 3 to 6 raises median procurement costs by about 15% In this setting then asymmetric information overturns the common economic wisdom that more competition is always desirable

e-Procurement: From Strategy to Implementation

Abstract: From the Book: Preface Business people these days are becoming weary of new fads, movements, and revolutions, and rightly so. We have, in less than a decade, been taken through such "revolutionary" transformations as total quality management, business process reengineering, enterprise resource planning, activity-based costing, and retail e-commerce. Companies have downsized, outsourced, empowered employees, shifted processes and organizational structures from vertical to horizontal, completed strategic sourcing initiatives, and purchased IT systems (often on the basis of dubious return on investment), with investments amounting to millions of dollars. And, of course, they have paid management consultants and software companies many millions more for advice on implementation and change management. Yet, completing business-to-business transactions over the Internet is genuinely something very different. The unexpected emergence of the Internet as a tool for business has meant that we have once again been thrown inescapably into the fray of major investment and change. As I have argued before1 it is all part of an accelerated pace of change that will bring about a fundamental restructuring for all industries, worldwide, and participation is essential for the survival in the new economy. I have written this book about e-procurement in part because I believe that there has been a mistaken emphasis on e-commerce (electronic retailing) in our approach to the use of the Internet. Swayed by the activity around online retailing-the fortunes to be made with dotcom startups, the venture capital that was available, the relative ease in which a Web site for retail sales could be built, themassive coverage of the subject by the business press-we have failed to understand that e-commerce is a relatively unimportant step in the development of the Internet. It is a vital part of an overall e-business strategy, of course, but online retailing-unless it is fully integrated into the supply chain-is simply a mildly effective extension of the sales process. Moreover, expanding revenues, given the margins made in most industries, is far less effective as a strategy than is fundamentally and permanently reducing major costs-something that affects the bottom line directly. The real value of the Internet, as many companies are beginning to experience first hand, comes instead from business-to-business, buyer-vendor transactions that include electronic procurement and full integration of the electronic supply chain from customer to supplier. In fact, as electronic procurement and supply chain software continue to evolve, the relative value to companies of online retailing will almost certainly continue to shrink in relation to the enormous cost savings and fundamental restructuring of companies that will come about as a result of the evolution of Internet-based business-to-business activity. The purpose of this book is threefold. First, it is simply to explain to those who have not previously dealt with the area of procurement the fundamentals involved with purchasing and replenishing materials. Though certainly not as glamorous as many (in fact, most) areas of business, procurement-whether for everyday office supplies or for materials used directly in the manufacturing process-is nonetheless an enormous expense for companies, large and small, and in every industry. In fact, so enormous is the expense and potential savings that e-procurement should from this time forward be seen as an integral part of your company's overall e-business strategy. I hope that the book can therefore serve as a primer for introducing the importance of the subject to organizational leaders and for elevating the subject from the tactical to the strategic. The second purpose of this book is to explore the phenomenon of the electronic trading communities-the volatile and fast-growing area of online e-markets, auctions, reverse auctions, and exchanges-that is effectively revolutionizing the relationship between buyers and sellers in virtually every industry, worldwide. A battle for control over the influence and utility of these online exchanges is now being waged between a powerful group of software companies, industry-leading alliances, and third-party application service providers in a volatile mix of competition and collaboration that is at once both explosive and effective, and that will eventually affect virtually every supplier and buyer in the economy. And finally, this book is intended to help managers, executives, and other organizational leaders to take the first important steps necessary for defining and implementing their e-procurement and overall e-business strategies. I have therefore devoted several chapters to the development of strategy, to project approach and structure, and to the activities necessary to creating an effective plan of change management. As many have learned from past lessons with enterprise resource planning systems, business benefits come not only from the functionality of the software system, but often more importantly, from changes in the way employees do their work. Just as e-procurement should be seen as strategic rather than tactical, we should also avoid seeing it solely as a technical solution. After all, to be effective, the behavior of employees in the purchasing department (not to mention the behavior of those employees throughout the organization who today buy "off contract" with little concern for price or administrative overhead costs) will need to change dramatically. For this reason, I have dedicated several chapters specifically to "lessons learned" around project and change management, relating at a more detailed level some of the leading techniques that have worked well for successful companies and consultancies in the recent past. I hope these will be useful to the soon-to-be managers of enterprise-wide e-procurement initiatives. I should, at the outset, admit that although the book examines the basic software platforms and major players in the e-procurement industry, the business-to-business e-procurement marketplace is extremely volatile. Software vendors merge, realign, and bring forward new offerings on an almost continuous basis. Electronic markets and auction sites are multiplying rapidly, while at the same time beginning to falter and collapse, as competitors vie for dominance. The models for e-procurement-enterprise-based, outsourced, or networked-are all in a state of evolution. In short, it is a marketplace that is constantly changing and evolving, and therefore this book is by no means the last word on the subject. But the fundamental principles behind electronic procurement are sound and well understood, and it is critical for organizational leaders to understand these principles, the major players, the marketplace, and the key issues in order to be in a position to create an e-procurement strategy with confidence. E-procurement initiatives are seldom simple, compared with building a Web page, but their potential for cost savings are enormous, and few companies have the luxury of waiting for a much more settled marketplace before acting.

Method for automatically invoking a software module in response to an internal or external event affecting the procurement of an item

Abstract: A method for automatically invoking a software module in response to an internal or external event affecting the purchase or sale of an item is disclosed. The method is based on a Value Chain Intelligence (VCI) system that enables suppliers and procurement professionals to leverage enterprise and marketplace data in order to potentially improve decision-making in business enterprises. Accordingly, internal data from enterprises and external data from suppliers, catalogs, and marketplaces are integrated and analyzed in real time for their impact on supply chains processes. When an internal or external event occurs, directly affecting the purchase and/or sale of an item, and/or decisions regarding procurement, sourcing, strategic sourcing, and other business processes, the system understands the event, correlates the event with the aforementioned processes, automatically invokes one or more software modules, which make recommendations and send alerts to users about the potential impact of such an event. Components for implementing this method consist of internal data collection components, external data collection components, data integration components, and data application components. Various methods for searching, extracting, transforming, integrating, analyzing, and representing both data internal to an enterprise and data external to an enterprise are also disclosed.

Framework for Critical Success Factors of BOT Projects in China

Abstract: The impending entry of China into the World Trade Organization is expected to result in immense demand for basic infrastructure. There are great opportunities for project sponsors, especially in the competitive tendering of build-operate-transfer (BOT) projects. However, the road to winning and managing a BOT project successfully in China is not easy. The process is complex, time-consuming, and expensive, and each phase9s success determines the fate of the next phase. Foreign investors must pay attention to the critical success factors (CSFs) in every phase. This article summarizes a study conducted to identify and analyze CSFs of BOT projects in China and their relative importance. Analysis of these CSFs should help foreign investors improve their decision-making process for investing in Chinese BOT projects.

Method for managing a workflow process that assists users in procurement, sourcing, and decision-support for strategic sourcing

Abstract: A method for assisting a user with procurement decisions, sourcing decisions and strategic sourcing decisions in an enterprise is disclosed. The method implements a plurality of software modules in a logical workflow process based on the results of integrating and analyzing data. The workflow process provides a plurality of steps for discovering data, analyzing data, alerting the user about the data, recommending actions to the user based on the data, and executing those actions. The workflow process is based on a Value Chain Intelligence (VCI) system, which integrates and analyzes internal data from enterprises and external data from suppliers, catalogs, and marketplaces in real time for their impact on supply chains processes. Components for such a system may consist of internal data collection components, external data collection components, data integration components, and data application components. Various methods for searching, extracting, transforming, integrating, analyzing, and representing data internal to an enterprise and data external to an enterprise are also disclosed.

An analytical hierarchy process based procurement selection method

Abstract: Procurement selection continues to be topical, and several advanced studies have been reported. One of the key concerns of procurement selection is how to enhance objectivity. A selection method developed using multi-attribute utility technology (MAUT) and the analytical hierarchy process (AHP) is proposed. With the input of industrial experts, critical procurement selection criteria and procurement strategies commonly used in Hong Kong were identified. Against these criteria, utility factors corresponding to various procurement strategies were then assigned by the experts to create a utility factor table. To cater for individual project characteristics, the relative importance weightings of the selection criteria were assessed using the analytical hierarchy process. Final selection was then based on the highest utility value derived from the procurement strategies, taking into account the relative importance of the selection criteria. The use of the model is illustrated with actual data.

Business models for Internet-based e-procurement systems and B2B electronic markets: an exploratory assessment

Abstract: Information technology (IT) has long been applied to support the exchange of goods, services and information between organizations. It is with the advent of Internet-based e-procurement systems and business-to-business (B2B) electronic markets that the real opportunities for online transactions have opened up across space and over time. The authors draw on IS and economics theory to investigate the motivation for the various online business models, and the adoption requirements of purchasing firms, through the examination of a set of mini-cases. Our exploratory study finds that private aggregating and negotiating mechanisms are being adopted for large quantity business supply purchases, while public market mechanisms are more often adopted when firms face uncertain and high variance demand. Moreover, market facilitation, expertise sharing and collaboration are gradually attracting more attention, and call for future investigation.

Restructuring supply chains through information channel innovation

Abstract: This paper examines the optimisation of purchasing for maintenance, repair and operating supplies (MRO) through purchase process re‐engineering. In particular, the use and development of the Internet as a channel for procurement of MRO items was examined from a transaction cost perspective. The focus of this paper is on the impact of Web/Internet based electronic commerce on the structure of MRO supply chains. The paper provides a discussion of the theoretical basis for analysis of the impact of e‐commerce on supply chain structure, and presents existing literature in the area. The empirical research involved a series of semi‐structured interviews with UK, European and US based manufacturers, retailers, government bodies, and service organisations. Respondents ranged from experienced users of e‐procurement to organisations just starting out on their pilot investigations of the contribution of Internet trading to their purchasing efficiency. The impact on supply chain configuration of greater information transparency may be posited to be one which will lead to increased outsourcing, improved procurement processes and more strategic management of MRO purchases.

Electronic Procurement in Supply Chain Management: An Information Economics‐Based Analysis of Electronic Markets

Abstract: SUMMARY Electronic procurement is currently one of the most discussed topics in supply management. Without doubt, it will dramatically change the way purchasing is done in the near future. Telgen (1998) calls it a “revolution through electronic purchasing.” This article analyzes the possibilities of electronic marketplaces for buyers, primarily from a theoretical perspective. The article develops an analytical framework that is based on information economics theory, which may be the most important theory to analyz market problems in general. It is combined with a systematic approach for procurement transactions based on Williamson's (1985a) transaction theory. An e-procurement matrix is developed that could help to systematize different e-procurement instruments. Various data types available from electronic marketplaces are analyzed with a business model for electronic marketplaces. These business models show the real value added by e-procurement.

Operational Drivers of Customer Loyalty in Electronic Retailing: An Empirical Analysis of Electronic Food Retailers

Abstract: The relationship between customer loyalty and the order procurement and order fulfillment processes of electronic retailers is empirically examined in this paper. The study sample contains data from 52 electronic food retailers. After controlling for the retailers' product categories based on design flexibility, our regression analysis results indicate that three order procurement variables--website navigation, product information, and price; and three order fulfillment variables--product availability, timeliness of delivery, and ease of return have significant association with customer loyalty. In terms of their relative contributions toward improving customer loyalty, these variables can be ordered in a descending order as follows: ease of return, timeliness of delivery, website navigation, product availability, price, and product information.

Business-to-business electronic commerce

Abstract: Business-to-business electronic commerce has dramatically changed the landscape of inter-organizational relationships. Now in its third year, this HICSS minitrack continues to provide a forum to bring researchers together to discuss the implications to information systems research. Our general focus is on systems and processes that support the flow of information within and between organizations in the context of procurement, manufacturing, and sales, and the distribution of goods, information, and services. A total of seven papers will be presented in the two sessions of this minitrack. The presentations cover a number of different topics, mirroring the diversity of the area, as well as its complexity, including adoption management, considerations of B2B e-commerce in an international setting, supply chain management, and the exchange of XML-based business documents. The research approaches used by our presenters vary equally, as they include case studies, economic modeling, conceptual frameworks, and prototypical system implementations. Ada Scupola (Roskilde University, Denmark) opens the minitrack with an explorative case study on the benefits and adoption barriers of B2B applications, as perceived by small and medium-sized firms in Southern Italy. The

Fully automated, requisition-driven, competing authorized suppliers, web site-based, real-time, reverse-auction, centralized e-procurement system for government, with bifurcated internal and external modules, requisition pooling, order formulation and management, consolidated in-bound shipment and distributed J.I.T. delivery, procurement-needs prediction, centralized catalog management and numerous additional features

Abstract: A fully automated, requisition-driven, “J.I.T.”-based, centralized e-procurement system, suitable for governments or entities with similar procurement needs. A Web site-based reverse-auction among competing authorized suppliers is employed for purchases of all goods and services, except those that must be procured by other means. Automated processes for: requisition handling and pooling; order formulation, processing and tracking; consolidated, distributed, and other shipping arrangements; procurement accounting and payment authorization; supplier-relations administration; centralized procurement catalog management; procurement data analysis and report and alert generation; procurement needs analysis; and inventory management are included. A structure of separate internal and external modules is created for security. To the extent possible, all communication from and to and within the system is preformed digitally.

Enabling Customization Using Standardized Operations

Abstract: This article presents four standardization techniques—product, part, procurement, and process—that help mitigate the negative impacts of product variety on a firm9s operations. The ability of a firm to use these standardization approaches depends on the degree to which it can modularize its products and processes, on what it is trying to achieve for its customers, and on the costs associated with standardization. The article presents a framework for thinking about these options and choosing among them.

System, method and apparatus for aggregation of cooperative intelligent agents for procurement in a distributed network

Abstract: Cooperative intelligent negotiation agents (C-INAs) operate in a distributed communications environment for the automated negotiation and procurement of products, services and bundles. Buyer-side aggregation occurs by pooling C-INAs with common interests within specific time frames that are activated by seller INA promotions. Buyer C-INAs can have several modes, including neutral agency (broker or intermediary) role, the leader role and the follower role. C-INAs use multilateral and multivariate negotiation parameters. Sellers (using S-C-INAs) may cooperate in order to share information so as to provide correct pricing for complex combinations of items from buyers. Buyers can cooperate in order to receive aggregated pricing opportunities on multiple item bundles from a plurality of sellers using combinatorial auctions. Dynamic INAs, which switch buyer and seller role, may also use aggregation and combinatorial auction methods. Because they are autonomous, C-INAs use evolutionary computing technologies to move beyond their initial programming constraints to adapt to complex changing circumstances. Analytical agents inform C-INAs and transaction agents complete and track transactions.

Method for communicating, collaborating and transacting commerce via a communication network

Abstract: A system and method providing comprehensive, end-to-end collaboration and transaction functionality for a world-wide market for products and services. Buyers suppliers and distributors are electronically connected, via a communications network for the procurement and delivery of both standard and custom products or services. Purchase orders are received at an electronic repository connected with the network, such as a website and associated memory. In response to the received purchase orders, one or more quotes are received at the repository. One method includes aggregating buyers based on a purchase order commonality, while another method includes aggregating suppliers based on capacity similarities. After a match is made and processed, a procurement transaction is executed between a buyer and one or more suppliers via electronic communication over the communications network.

Quantitative Analysis for Internet-Enabled Supply Chains

Abstract: A supply chain, from an operations perspective, has three components: sourcing or procurement, manufacturing and distribution, and inventory disposal. In each component, the Internet is significantly affecting how supply chains are being managed, leading to new challenges while ultimately promising to provide value. The likely future is collaborative supply-chain management that promises to make, for the first time, the dream of virtual integration a reality. Quantitative modeling provides companies decision support as well as insights for better management of supply chains. But there are still a number of challenges that require further OR/MS analysis.