The Challenges of E-Procurement

Supply chain functions must operate in an integrated manner in order to optimize performance. However, the dynamics of the organization and the market make this challenging. In particular, the procurement function is a crucial link between the sources of supply and the organization. With most organizations spending at least one-third of their overall budget to purchase goods and services, procurement holds significant business value. Emerging technologies, especially e-procurement, are promising to change the picture of traditional procurement processes. However, the implementation of e-procurement is facing significant reengineering and change management challenges. This study identifies four main challenges in e-procurement implementation: business process integration, technological issues, value creation, and change management. The major challenge among them is change management. Critically, leadership is one of the primary requirements to make the change successfully. IntroductIon The supply chain is a network of suppliers, factories, warehouses, distribution centers, and retailers through which raw materials are acquired, transformed, and delivered to the customers. Supply chain management is the strategic, tactical, and operational level decision making that optimizes supply chain performance. The strategic level defines the supply chain network (i.e., selection of suppliers, transportation routes, manufacturing facilities, production levels, warehouses, etc.). The tactical level plans and schedules the supply chain to meet actual demand. The operational level executes plans. Tactical and operational level decision-making functions are distributed across the supply chain. In order to optimize performance, supply chain functions must operate in an integrated manner. However, the dynamics of the organization and the market make this challenging; materials do not arrive on time, production facilities fail, workers are ill, customers change or cancel orders, and