E-Procurement: Reaching Out to Small and Medium Businesses
Maha Shakir, Graham R. Smith, Erkan Gulec
A main inhibitor to electronically extending supply chains is that large organizations and the majority of their smaller business partners have incompatible business systems. Big businesses’ sophisticated IT infrastructures support many kinds of information integration, manipulation, and reporting, whereas many small to medium businesses (SMBs) use IT only for simple clerical tasks. Big businesses will not be able to fully exploit their huge investments in internal integration capabilities until they can extend IT integration capabilities to the majority of their supply-chain partners. The case study in this article describes how Petroleum Development Oman (PDO), a large oil and gas exploration and production company, electronically integrated its complete vendor base through e-procurement. The key to success was outsourcing both the delivery of the e-procurement solution and vendor-relationship management to a third party. This approach avoided the need for huge upfront investment and provided support for vendors from day one. PDO’s experience shows that relatively IT-immature SMBs can successfully adopt e-procurement in a reasonably short time. The four main lessons from this case are: (1) address vendors’ negative perceptions of competitive bidding, (2) share the benefits with vendors, (3) make the system simple, easily accessible, and familiar, and (4) overcome public infrastructure constraints by focusing on service and substituting one technology with another.
Full Text: Subscribers Only