Enterprise Procurement

Most companies have to buy goods or services from other companies in the course of doing their business. The procurement can be for physical components such as silicon chips, plastic components, or power modules, as well as for services such as contract manufacturing or overnight courier services.

Procurement within an enterprise environment is extremely complex. Just some of the key issues that must be addressed include:

  • There are multiple vendors that provide the same or similar goods or services.

  • There may be existing relationships or most-preferred statuses in place with one or more of the vendors to provide preferential pricing, and these change constantly.

  • There may be component or service credits due from one or more vendors that motivate purchasing from those vendors, even if the unit price is slightly higher.

  • For strategic or political reasons, the company may want to give or withhold business from particular vendors.

  • The number and set of vendors depends on what is being procured and may include small-to-medium businesses (including so called "mom-and-pop shops").

  • Some vendors may offer a good price, but will not have the required quantity, thus necessitating procuring from multiple vendors.

  • The price and quantity available may change, and often may do so rapidly.

  • Different vendors may have different means of interacting with their sales offices, including phone, e-mail, and fax.

The person responsible for procuring a particular product or service must analyze these and many more issues. What is worse is that often once the optimal vendor has been identified, by the time the order is ready to be placed the price or quantity available may have changed, requiring complete reanalysis. Moreover, partnerships, most preferred status, and buying policies change quickly, often within hours. Propagating these changes throughout the entire procurement staff (that may be geographically distributed) takes time. The result is inefficient and non-optimal purchasing decisions. Moreover, simple human-error and negligence result in costly purchasing errors such as incorrect part numbers, shipping addresses, or quantities.

Procurement management applications are available. But they have limited value, as the applications themselves cannot always interface with each vendor's inventory and sales processes.

Web services have the potential to change this. The widespread adoption of Web services technologies by companies will allow easy access to enterprise processes and functions, such as inventory and sales. This will enable the development of truly useful enterprise procurement applications.

Figure 12-1 depicts the functionality of an enterprise procurement application. The application essentially acts as a gateway to the inventory and sales processes of vendors, each of which sells the products of manufacturers.

Figure 12-1. An enterprise procurement application acts like a gateway between the procurement administrator and the vendors that sell goods and services.


Next, we take an in-depth look at the required functionality for our enterprise procurement application, as well as the desired system architecture.

Developing Enterprise Web Services. An Architect's Guide
Developing Enterprise Web Services: An Architects Guide: An Architects Guide
ISBN: 0131401602
EAN: 2147483647
Year: 2003
Pages: 141

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