Future Trends in Purchasing Paper
For two decades manufacturers have concentrated on continuous improvement efforts to strengthen the organizations competiveness and profitability. To assist organizations in continuous improvement efforts, programs like just-in-time (JIT) and total quality management (TQM) were introduced. Yet organizations continue to seek methods to continually improve ones strategic position and planning. As a result “The procurement function and purchasing managers in a business system become significant to the overall business success” (Mehra & Inman, 2004, p. 1, para. 1). This paper will review the benefits and risks of e-business, future opportunities and trends in purchasing, and the future challenges in purchasing.
Benefits of e-business
E-business offers organizations many benefits. Benefits of e-business include: developing cost-effective communication and marketing strategies, the ability to reach new markets worldwide, reach and locate local customers and prospects more effectively, reduce advertising and marketing costs, streamline order processing by taking orders online, and reduce communication and telephone costs.
An obvious benefit of conducting business via e-business is that it provides a critical web presence that becomes the focal point of communication and marketing strategy. In addition, the ability of being there 24/7 is important when large numbers of prospective customers use the web as their first source of product and service information (Hendershot, N. D.). The ability to reach new markets worldwide is another benefit of e-business. The Internet offers different ways to promote products online that specifically target a customer base an organization seeks whether locally or on the other side of the world.
Moreover, e-business is beneficial in assisting organizations reach and remain in contact with local customers as well as identifying prospects for development in the future instead of relying on classified ads or the yellow pages for references. Online advertising is more efficient than other advertising media but is often less expensive. In addition, after sales training expenses can be reduced by using online seminars, training videos, and tutorials.
E-business can reduce and streamline the order process by taking orders online eliminating manual paperwork or telephone order taking. Furthermore, e-business offers the ability to integrate the order taking function with the order fulfillment and shipping process to accelerate the progress throughout all the functions of the sale and delivery process. E-business can also reduce communication and telephone costs. Through the use of ‘live chat’ customers can speak live with customer support staff or with advances in Voice over Internet (VoIP) technology, traditional communication, and telephone costs can be reduced.
Risks of e-business
On the other hand, risks abound for organizations that use e-business. Organizations face different e-business risks including: costs are difficult to quantity, requires highly educated employees, exposure to currency, virus, and other security issues, and a reduction in the number of employees needed in an organization. Often e-business costs are difficult to quantify. However, careful cost-benefit analysis can reveal strategic benefits, operational benefits, and implementation costs. By measuring and comparing this data, results often indicate that e-business can assist organizations improve the processes within the organization.
However, some processes are difficult to implement. E-business requires highly educated employees. Highly educated employees operate integrated systems that replace employees less educated who normally perform actions that transfer data from one media to another in the form of hard disc, e-mail, or fax paper (Fleisch, 2004). Without replacing less educated employees will result in time-consuming, error-prone, and costly functions. E-business can create too much data creating the risk of exposure to currency issues, viruses, and other security issues. Even though over half of the residents of the United States are online, Internet users are reluctant to conduct transactions with e-retailers without certain assurances. Even by overcoming the issues of time, place, and distance that provides economic benefits, trust is necessary between buyers and sellers before a transaction occurs (Wakefield & Whitten, 2006). Protection of privacy, secure transactions preventing financial currency theft or computer viruses is important. With technology comes the need for better educated employees. In addition, new technology often streamlines processes and functions within an organization. As a result, organizations downsize the number of employees necessary to operate the new processes and tasks.
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- James Tallant (Author), 2010, Future Trends in Purchasing , Munich, GRIN Verlag, https://www.grin.com/document/167298