E-commerce will allow the purchasing department to focus on value added tasks, eliminating many manual and repetitive non-value added tasks.

The answer to the above question is “YES”. That is E-commerce will eliminate purchasing, transactional purchasing. It will not, however, eliminate value added purchasing tasks, or sourcing. For many companies, e-commerce will allow the purchasing department to focus on value added tasks, eliminating many manual and repetitive non-value added tasks. To fully address this issue, we will address the benefits and costs associated e-commerce.

E-commerce benefits:

a)      E-commerce saves money because:

a.      Orders placed can be verified for accuracy

b.      Confirm order placement/shipment via e-mail

c.      Reduced in-house customer service requirements

d.      Reduce frequency and size of physical catalogs

b)      E-commerce reduces inventory. E-commerce allows for instantaneous transmission of purchase orders that are created by ERP planning modules or by planners directly. All the information can be up-to-minute.

c)      E-commerce provides good service. The internet is always on, 24 hours, 7 days a week. A good application can provide transactions such as goods selection, orders and delivery without supplier involvement.

d)      E-commerce provides information that may not be available otherwise: where views come from, path traverse through the site, where they leave from, and how long they stay

E-commerce costs – risks:

a)      Lack of trust in the internet

b)      Cost to implement (primarily borne by suppliers)

c)      Valid profitable business models (although the market capitalization is high for e-commerce based companies, minority has proven profitable)

d)      Perception of a lack of privacy

e)      Cost to re-engineer in order to take advantage of e-commerce.

Although e-commerce provides competitive advantages to its users – both supplier and customer, it will not eliminate non-value added purchasing tasks if it is used as a stand-lone tool, or is not viewed as a strategic directive requiring full attention. Specifically, however, in order to incorporate e-commerce, a company must:

a)      Understand the capabilities of e-commerce

b)      Understand what tasks the purchasing department completes

c)      Select the appropriate e-commerce package

d)      Re-engineer purchasing procedures to incorporate e-commerce (not vice versa)

e)      Review and test supplier base for e-commerce preparedness

E-commerce provides the technology that enables companies to effectively share the information they will need to drain the chain of inventory, operating expenses, and delays. Never before has the purchasing department been so able to provide competitive advantages to their company. Utilizing e-commerce to refocus efforts from transaction tasks to strategic sourcing tasks is an opportunity now.