CHAPTER 7: Benefits/Risks and the techniques to assess risk/benefit.   Different selection of different types of e-procurement including the B2B marketplaces

Purchased goods and services are often the largest expenditure at many companies so it is of high strategic importance to drive down these costs.

Procurement: all activities involved with obtaining items from a supplier such as purchasing & inbound logistics (goods-in, transportation, warehousing), and even the distribution

Procurement performance improvements are based on
  * The right price
  * Delivered at the right time
  * Are of the right quality
  * Of the right quantity
  * From the right source

Two broad categories of procurement 1) those that relate to manufacturing of products production related procurement 2) operating (non-production-related) procurement that supports the operations of the whole business and includes office supplies, furniture, Info Systems, MRO goods and a range of services from catering, buing travel, consulting and training

Two methods of buying products:
Systematic Sourcing: negotiated contracts with regular suppliers, typically in long-term relationships
Spot Sourcing: fulfillment of an immediate need, typically of a commoditized item for which it is less important to know the credibility of the supplier
+ Straight rebuy vs. Modified rebuy

Direct cost reduction are achieved through efficiencies in the process.   Efficiencies result in less staff time spent in searching and ordering products and reconciling deliveries with invoices.   Savings also occur due to automated validation of pre-approved spending budgets, leading to fewer people processing each order , and in less time.   It is also possible to reduce the cost of physical materials (order forms and invoices).
Indirect benefits = cycle time between order and use of supplies is reduced.   Greater flexibility in ordering goods from different suppliers