Daily Archives: September 1, 2010

Optimization is Supply Chain’s Simulation

A recent article over on Industry Week pointed out how Simulation is “Empowering Product Engineers to Save Time, Money (and the Planet Too)”.

According to the article, simulation helped:

  • NatureWorks design a new biodegrade chip bag for SunChips,
  • Balzer Pacific Equipment Co. design and manufacture a new barge to carry 6,000 tons for a client that required less steel and saved $20,000 in steel costs, and
  • Unverferth Manufacturing Co to create a new strip-till subsoiler in only 3 months that was ten times stronger than its predecessor, required less parts and cost thousands less to make.

Optimization offers similar benefits to your supply chain. It:

  • allows you to redesign your supply chain network to be more efficient,
  • allows you to source the optimal amount of product at the optimal cost, which saves you a ton of money,
  • and allows you to complete sourcing projects in weeks that used to take months.

So stop waiting and just do it.

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A Hitchhiker’s Guide to e-Procurement: Terminology

Mostly Harmless, Part XXIV

Previous Post

The first post of the series indicated that this brief guide will define what e-Procurement is, isn’t, and how it relates, or fails to relate, to e-Purchasing, EIPP, P2P, and e-Sourcing. Now that the basics of e-Procurement have been covered, this post will address the terminology before the series concludes.

EIPP stands for Electronic Invoice Presentation and Payment. It is not the same as e-Procurement because any system capable of accepting invoices, processing invoices, and queueing them up for payments can be labelled an EIPP system. Such a system does not need to support requisitions, purchase orders, or analysis, all key steps of the e-Procurement process.

P2P stands for Procure-to-Pay. By definition, such a system only needs to support core purchase order functionality, which lets the supplier know that goods and services are desired, invoice functionality, which lets the buyer know that the supplier has shipped and/or delivered the goods and payment is expected, and payment approval, which lets AP know it can queue a payment against an approved invoice. Like EIPP, such a system does not need to support requisitioning and the associated approval process, does not need to support goods receipt, and does not need to support analysis or tax reclamation. It may or may not include catalog support.

e-Sourcing stands for the electronic implementation of the strategic sourcing cycle, which starts with spend analysis, moves onto RFX and/or e-Auctions, then to optional decision optimization, and concludes with an award and contract. Such a solution does not need to contain any e-Procurement functionality whatsoever.

Then, there’s e-Purchasing , the doctor‘s personal pet peeve, as it has no well defined meaning outside of the UK public sector, where it is a hybrid of the core e-Negotiation technology of the e-Sourcing process, namely RFX and/or e-Auction, and the core capabilities of the e-Procurement cycle, namely requisitioning, approvals, purchase orders and SOWs, invoices, and e-Payments. When used by a vendor, it could refer to any combination of e-Procurement and e-Sourcing technology and such a solution should be reviewed with care.

Of course, many vendors will misuse all of these terms as well as e-Procurement, so one will have to review any shortlisted solutions with extreme care, but this is what the terms mean and why none are synonymous with e-Procurement.

Next Post: Summary

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