eCommerce Support of Procurement Models

Acuity (Consultants) Ltd Executive Interm Manager and ACUITY Director, Tony Colwell’s Blog post this week titled 5 Models for Procurement Organisation, discusses the differences in the definition between Procurement and Purchasing. It also outlines the different types of procurement models. There are three basic models for procurement, any others being a combination of these three:

Local – All activity, decision making and control is performed locally and is autonomous.

Central – Decision making and procurement activity is centralized. (There may be local activity and controls outside the scope of procurement, for example, calling off supply under a centrally negotiated contract.)

Networked – Activity is co-ordinated across local units. Decision making is not independent but is controlled in some way by a node, or nodes, on the network

Being a great advocate of eCommerce, I was struck by how eCommerce was compatible with each of the models.

In a Centralized system, Company/Agency wide contracts can be offered and easily used by anyone with ordering capability. Rules and workflows can be put in place to facility large buys and prevent rogue purchases. Consolidated purchasing data is collected which can be used for strategic sourcing and other business analysis.
In a Localized system, a centralized eCommerce site can still be used. Rules can be put in place to display local contracts only to local users. These users can receive regional pricing. Each local buying group will have the feel and control of a local system, but the company can still gather the consolidated purchasing data for business analysis.
A Networked system can show both the Centralized and Local contracts and include business rules for specific items.  It could allow unrestricted purchasing for certain dollar thresholds and workflows for higher priced items or items whose […]

Online Shopping: Nine Benefits to the Government Buyer

As is the case with commercial shoppers, government buyers can also benefit in a number of ways from shopping online.

1. Convenience and time saving

From the Contracting Officer’s perspective – writing a general purpose contract one time and letting buyers make purchase orders against that contract saves a lot of time. A number of federal agencies have used this strategy to save both time and contracting dollars.
From the Buyers perspective – A buyer does not have to travel to a store site or adjust his schedule around the store’s hours. No longer does the buyer have to wait on hold for a customer service representative to answer the phone. Without leaving the office, government buyers can access thousands of websites, or their own agency specific website, to research products, and purchase items which have been approved and made available through agency wide contracts.

2. Broader selection – By writing broad based contracts for vendor catalogs, the contracting officer can make more items available to the buyers without knowing the exact requirements. This prevents the contracting officer from having to go back and amend contracts. This policy is especially good for consumable products like office supplies and building supplies where the requirements vary greatly from day to day.

3. Global choice – While the federal government is restricted to multiple procurement regulations, online shopping can make Buy American Act products more easily available overseas. It can also give government personnel access to locally approved vendors worldwide.

4. Better information – Access to a fuller range of information about product availability, descriptions, reviews and pricing.

5. Lower prices – By writing multiple broad based contracts, the government can take advantage of their buying power and negotiate better prices […]

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