eprocurement Hub and Features of an MRO Hub
An example of an eProcurement or MRO (Maintenance, Repair, and Operating) hub might be an enterprise that helps capital-intensive industries tackle the MRO materials-procurement market.
The enterprise might do this by linking an online community of MRO suppliers and buyers to a group of Internet-based desktop requisition
and online procurement software products designed to reduce purchasing and inventory costs.
Features of an MRO hub
Maintenance, repair and operations refers to fixing or maintaining any sort of mechanical, plumbing or electrical equipment.
An eProcurement or MRO hub might do the following:
- Build a community of interest, including MRO suppliers and buyers
- Include an entire spectrum of MRO products, supplies, and information
- Aggregate data for both suppliers and buyers of MRO products, including equipment and spare part performance, failure histories, and industry-specific buying patterns
Introduction to Modern Day Electronic Procurement
e-procurement was the next technological revolution for corporations, governments, and consumers worldwide after corporations connected through LANs and WANs. It became a technological priority for most top executives during the e-business boom era (1996- 1999) and continues to be on many corporate technological agendas, even today. E-procurement has proven itself at some of the prominent corporations in the
United States and also efficiently supplies the U.S. Marines. Fed Ex partnered with SupplyWorks to resolve the Marines problem of not having all supplies at the base's supply store when the ships came to port. With this partner solution, personnel now have the ability to order online while at sea through the Fed Ex website using an Internet browser. The orders would be completed and delivered to the base
store by Fed Ex ready for the personnel when they arrive.
Example of eprocurement
Another example of an early adopter of eprocurement is General Motors (GM). GM began seeking an e-procurement solution in 2000 and implemented
its first version the following year. With a $67 billion procurement expense, GM achieved substantial cost savings through the use of e-procurement. Savings would be captured through reduced prices, better analysis and information, better supplier control, and so on. It was also a logical transition as GM was already familiar with and using EDI. In early 2000, the automotive industry made a significant announcement regarding procurement. All three major U.S. manufacturers were about to embark on the creation of a single Internet-based procurement network involving Covisint.
The purpose was to lead, control, and benefit from the significant technological advancements that were taking
A large part of e-procurement savings comes not from the reduced transaction costs and prices, but through strategic information and negotiations. Database management is a large part of e-procurement and a fundamental characteristic of sourcing decisions is their uncertainty.
A buyer never has all the information about all aspects of supplier performance and future development. The goal for most e-procurement solutions
is to provide more information in order to gain substantial benefit in varying ways, including cost savings, negotiating power, more accurate forecasting and analysis, reduction of uncertainty, and mitigation of risk. These are clearly reasons why GM wanted to enter into e-procurement sooner, rather than later.
eProcurement is represented by a fully capable electronic web application for purchasing goods and services.
In addition, eProcurement allows shoppers to browse online catalogs, add items to a shopping cart and submit the requisition electronically as in the case of Amazon.
Orders may be created manually for complex purchases of capital equipment and professional services.
Completed requisitions are routed for review or approval via electronic workflow. Requisitions to select suppliers included in the hosted "eCatalog" will automatically generate purchase orders and transmits them to the suppliers. All other approved eProcurement requisitions are routed to purchasing agents for Procurement review and processing into purchase orders.