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 purchase is controlled within a specific Network.
No matter what type of procurement model your company/agency uses, eCommerce can facilitate purchasing products and services and help to collect and aggregate data for your financial system.