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• Leveraging Contracts
• Fragmented spending.
• Inadequate data available in market in order to leverage/control spending.
• Lack of contract metrics & measurement process.
• Developing Commodity Strategies
• Lack of established spending baseline.
• Long cycle time to negotiate contacts (and realize savings) “ typically two
months from Indent to placement of Supply Order.
• Limited resources.
• Limited savings realized to date from sourcing efforts.
• Unclear user measurements “ affects demand management.
• Buyer skills are transactional and not strategic.
• The earlier rates and specifications present available on files not easily
available.
• Transaction Processing
• Total processing cost is very significant.
• Indenting system is manually intensive/redundant.
• Possibility of errors as system is manual.
• Excessive cycle time required for purchases.
• Buyers are busy reviewing and approving Indents instead of managing
suppliers.


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374 Kansal & Arora


Figure 4. Functional view of end to end solution



SRM
•E-Tender
Logistics/Inventory
•Order Inside
Order/Indent status
Management
E- Catalogs
•CRM
E-Collaborate
•E-Catalogs

Directorate Supply &
Disposal
Buyer Side
/State Govt Sellers/Supplier Side
SCM,Invetory Mngt
Indenting
E-procurement, Security
Dept
Analysis & Data mining
CRM



Solution View
Govt. Employees



Supplier 1
Catalog Procurement and supplies/
delivery status
Catalog Based Tender
Procurement Enquiry

Exchange
Indent Indent
Supplier 2
Management Management
Catalog Procurement and supplies/
Documents delivery status
Purchase Inventory
Order Management

Finance Invoice &
Planning Payment Supplier n
Catalog Procurement and supplies/
delivery status
Workflow Management

Data Analysis & Business Analytics



Procurement System Supplier Enablement Soln.




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Corporate Strategies in a Digital World 375


• Too much time reconciling invoices to Purchase Orders.
• Systems are not real-time (mainly manual).


The Proposed System

An integrative approach has been proposed for DS&D. The proposed system will consist
of e-procurement and e-supplier enabled solutions. This would help increase flexibility
of orders (for consumer departments), reduce procurement time, decrease paper work,
and increase communication and coordination. This would help increase satisfaction of
all parties concerned.
Buy-Side Procurement “ eProcurement Solution for the Government Electronic Pro-
curement (eProcurement) represents the most significant opportunity for the Govern-
ment to continue to improve operational efficiency. The ability to automate the entire
supply chain for goods and services has the potential to deliver enormous cost savings
that directly impact the bottom line. In addition, operational efficiency is improved by
cycle time reduction, control of purchasing activity is increased, and purchasing
professionals can focus on more strategic projects rather than day-to-day transactions.
Sell-Side Procurement “ e-Supplier Enablement Solution to have the suppliers inte-
grate with the e-procurement Solution. The success of any procurement system depends
on its ability to attract Suppliers.
A functional view of the solution of the proposed system is shown in Figure 4.


The Conceptual Framework of the Solution

• Views. The processes as covered in the “Solutions View” (Dig 4) shall be
automated and a mix of “Web” and “Desktop.” Interface shall be provided to
facilitate the transactions happening at the front office and back office;
• Portal and Sections. An Interactive Portal consisting of separate Sections for the
Government Departments, Boards and Corporations, i.e., the buying side and the
Sellers/Suppliers on the supplying side shall be created to facilitate separate
sections of the supply chain;
• Codification. The present system lacks proper codification for the Departments,
Suppliers and the Products/Specifications. Accordingly, the Departments, Suppli-
ers and the Products/Specifications shall be codified in the new system to maintain
data integrity and to enable analysis on various parameters;
• Global Tendering and Participation. The new system shall enable global tendering
and shall invite participation from suppliers from across the globe. This will provide
better pricing and quality of the products to the State Government Department.




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376 Kansal & Arora


Government Side

• Departments™ Web Access. The Departments can Log On to the Web site using
the Web Interface and know about the status of their Indents placed with the DS&D
and the purchase/delivery status of the goods placed in the Indents can be taken
online using the Internet. Also, the Departments can update the Tenders and
Notices in the concerned section available on the Web site (increase product
quality);
• Indents and Inventory Control Mechanism. The Departments shall be provided
with authentication-based access rights to place the indents and update the
inventory levels of different indenting items as to how much is available in store
and how much has been consumed. This will facilitate not only the Departments
in maintaining proper inventory, but shall also facilitate the Government in
maintaining a check on the purchases made by different Departments (efficient
product delivery system);
• Budgetary and Financial Planning. The Government can carry out better budget-
ary and financial planning as the inventory information along with the indent
information shall be available collectively from all the indenting Departments. The
budgetary control in terms of the available budget vis-à-vis the purchase price can
be monitored on line on a day-to-day basis, which will also result in better financial
planning on the part of the Government (decrease cost burden despite multi-tier
system);
• Product Information and Catalogues. The Departments can access the information
about the Catalogue of products offered by different vendors as well as the quotes
for these products finalized by the Competent Authorities. Sometimes, the Depart-
ments place indents for various products having specifications that are not existing
or are outdated. The eCatalogues hosted by different vendors shall help in
formulating the right specifications and selecting appropriate products (increase
product quality);
• Testing and Inspections. The test and inspection reports can also be updated on
the dynamic Web site to provide proper access to the user Department. Also, the
schedule of tests and inspections to be carried out can be covered on the Portal
to provide instantly updated information (increase communication and definition
of product quality);
• Penal Clauses, Risk Purchases and Debarring. DS&D can impose the penalties
as per the terms and conditions of the contract, which can be in-built in the software
meant for the e-procurement System. The delay in risk purchases results in loss of
revenue/working of the concerned Department. Accordingly, the risk purchase
notices, etc., can be expedited by customization depending upon the requirement
and can be automated on the basis of delivery period/inspections, etc.;
• Parameterized Search Facility. The Government Section shall provide Products
Based, Catalog Based, Tender Inquiry Based, Indent Based, Purchase Order Based




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Corporate Strategies in a Digital World 377


search facilities in both normal as well as Boolean parameterized mode to the user
organizations (increase channel coordination);
• Workflow and Backend Operations. DS&D shall have an automated workflow
system at the back-end using the Desktop Interface to keep track of the indents,
purchase orders and invoicing, financial planning, payments and inventory man-
agement. The mail messaging and database-driven access control system shall be
used to establish the internal Work Flow;
• Analysis and Data Mining. Online Analytical Processing (OLAP) Application
shall be used for Data Mining and to analyze the purchases done over a period of
time on different parameters (increased channel management).


Supplier Side (Better channel management to increase Bargaining
power of DS&D)

• Supplier™s Web Access. The Suppliers shall be able to access the details of the
inquiries floated by the DS&D for different products and Departments using the
Web Interface;
• Classification of Suppliers. The suppliers will be classified into two broad
categories: Class ˜A™ and Class ˜B™ Suppliers. Class ˜A™ Suppliers includes all those
suppliers who had been doing regular successful business with the state govern-
ment in the past three years and meet defined parameters like annual turnover,
Suppliers Financial and Market standing, Suppliers performance and Business in
other state governments, etc. All other suppliers will be considered under Class ™B™;
• ECatalogs and Brochures. The ˜A™ Class Suppliers shall be given space on the
Web site to maintain their Web Catalogs and Brochures; however, other suppliers
shall be provided only the limited access to the Tenders and Notices issued by the
Department. These Web Catalogs shall contain the detailed information on various
products offered by the registered suppliers;
• Regularly Updated Product Information. The eCatalogs shall be updated online
by the ˜A™ class vendors to provide updated information to the buyer™s side, i.e.,
the Government;
• Updating of Status. The Suppliers that have been given orders by the Department
shall be provided access rights to update the status Online about the deliveries,
inspections, testing, etc., to facilitate the Indenting Departments. This system will
facilitate the Suppliers and shall be called as the Supplier Enablement System.




Analysis of the Results
The interactivity approach will allow Governments to slash printing and mailing budgets
by 75%, and that™s an immediate savings. By streamlining the work processes associated


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378 Kansal & Arora


with purchasing, governments can cut the cost of administering a purchase order by 50%.
To add further, the benefits of the e-procurement and the Supplier Enablement solution
are:
• Cost Efficiency
• Lower prices via aggregated buying and increased competition
• Reduction in inventory and supply chain cost via a reduced average PO line
item order value
• Reduced transaction costs
• Reduced Inventory Costs “ management of inventory and strategic buying would
reduce inventory in hand and will result in significant savings for DS&D and other
Departments down the value chain.
• Better Financial Planning and Control “ management of indents and the inven-
tory will result in better financial control and planning. The integrated system of
indents and the budget shall help in reducing the cost overruns beyond the
budgetary sanctions.
• Process Efficiency
• Lower procurement cycle times
• Automated transactions (Indent, Ordering, payment)
• Supplier and procurement process measures and management
• Increased flexibility and customization options to the customer departments.
• Ensure that goods and services are in accordance with the expectation set (evolved
or old) and at best prices.
• Smart governance “ Make the entire process transparent, this will result in
effective customer satisfaction by sharing the channel control with them.


Each of these in turn would help remove the bottlenecks of the old system, while making
the expected set equal to actual set in minimum time possible and in a cost effective way.
Thus, increase the satisfaction level of the consumer department.




Conclusions
The DS&D department predicts that the benefits of their integration efforts will lead to
• Significant reduction in the DS&D Human Resource requirements.
• Reduction in cycle time from two months to less than a week.
• Reduction in the cost of goods due to better negotiation and volume purchase. It
is estimated that the Government will save a minimum of 2% off.


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Corporate Strategies in a Digital World 379


• Inventory and its carrying cost will be reduced to the extent of 10-12% by optimizing
the inventory system.


Thereby, providing a strong argument for adopting an integrated approach of SCM and
CRM in developing economies. The investment in IT is more than the manufacturers of
these countries might be willing to make but in the long-term the benefits would outweigh
the initial investment. Moreover, in today™s competitive environment where the bound-
aries are shrinking and spillover effect is leading to increased customer awareness can
a manufacturer afford not to cater to customers what they want?
However, the company should not ask themselves if they want to adopt this approach?
What they should wonder is if in today™s progressively liberalizing developing econo-
mies, where cross-border competition is educating customers about their powers, can
they afford not to adopt this approach?




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permission of Idea Group Inc. is prohibited.
About the Editors 381




About the Editors


Harbhajan S. Kehal is a Senior Lecturer in Economics at the University of Western
Sydney, Blacktown Campus, New South Wales, Australia. Previously, he completed his
Ph.D. at the University of Western Australia, Perth. The author of chapters in various
books, which have been published in Australia and other countries, Dr. Kehal has
received international recognition for his achievements in various facets of life. A well-
travelled person, he has been a Visiting Fellow and Visiting Professor in many overseas
Universities and Research Institutions. His research interests center around digital
economy, foreign investment in developing countries, economic relationships of Aus-
tralia with Japan and other countries. An Academician, Researcher and Philanthropist,
his name has appeared in Australasian Who™s Who since 1987, Who™s Who in the World
since 1995, Directory of International Biography since 1996 and many other publications.
He is an Eminent Fellow of the American Biographical Institute. He is a member of a vast
number of economic societies and is well known in the contemporary economic world for
his leadership and active participation in international conferences. His recent confer-
ence travels have taken him to Hawaii and Cancun in Mexico, among his trips to Asia and
the US.


Varinder P. Singh was born in 1974 in India and earned a Master™s in Commerce,
specializing in Information Systems from the Faculty of Management, the University of
Western Sydney, Australia (2002). Earlier he received his bachelor™s and master™s
degrees in Biochemistry from Panjab University, Chandigarh, India. Being exposed to the
field of digital economy during his commitments with this book, in the future he intends
to pursue research in the less explored field of health economics emphasizing on the
financing and delivery of medical services, with extensive emphasis on federal and state
legislation of current policy issues.




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382 About the Authors


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