Online sourcing

Online sourcingAs we reach the end of the decade to what extent has online sourcing croak a reality?The net profit has sprain a daily common describe or even inevitability for line of credites as well as it is for our individual needs. It enables us with numbers of possibilities and the new opportunities of its physical exercise argon still coming up. This essay examines the usage of the mesh in international and world(a) sourcing and gives brief description of how the role is being changed or developed over the last decade. It also describes the benefits which come from apply the net income in sourcing activities.Yip and Dempster (2004) call the internet as a driver of orbiculateization. Its technological characteristics accelerate the globalization process. The net is decentralized internet without any control so companies send packing use it to suit their own needs. It enables oecumenical communication with no limitation by geographical distance. It is easy and low cost way to send and get instruction in real duration from all over the world. Same authors summarise The Internet is highly complementary to the already trends that atomic number 18 forcing companies to become global, and at most a key operate force of the continued globalization of existing companies.While international acquire is simple buying process between buyer and seller from different countries, global sourcing has a wider meaning which includes worldwide integration and coordination of material, processes, technologies and providers. (Monczka, Trent, Handfield 2005). The majority of the companies, which decided to reference point globally, did it because of the motivation of getting the goods and materials as cheap as possible. However, Monczka, Trent, Handfield (2005) give us several(prenominal) separate reasons for worldwide sourcing. Companies ordure get access to the latest production and process applied science or they can obtain goods of higher quality. Som e companies average follow the practices of competitor in fiat to remain cost competitive. The aims of global sourcing could be achieved easier with integration of right technology and one of it is the Internet. Lysons, Farrington (2006) use the word e-sourcing which refers to the use of the Internet in decision making process about the ways and locations from where products and service are obtained. Rapid development of information technology affects the all condescension activities and also in supply orbit management the Internet has started to play significant role. Lancioni, Smith, Oliva (2000) argue that the Internet enables businesses to achieve the objectives of supply chain as change magnitude the cost or improving communication, more quickly and effectively. According their research about the role of the Internet in supply chain management, companies use the Internet mostly for separate processing, buy and communication with vendors. Next we closer explain the role o f the Internet in sourcing activities.Lancioni (2003) says that the usage of the Internet in business could be multidimensional. He compares years 1999 and 2001 in his research and in that location is an overall subjoin of using the Internet in various business activities. According his research the biggest increase is in purchasing nearly by 50%. Firms realised benefits as lower labour expenses as purchasing department staff is reduced, due to computerising of purchasing process. Next sphere of growth is transportation from 56.2% to 84.3% of asked firms in 2001. Implementing technologies for tracking shipment, placing claims or fleet management improved productivity and lowered level of stock. The usage of the Internet for customer service rose by 15%. Firms improved respond clipping what accelerates problem solution. There is 12% increase in the use of the Internet for maintaining races with providers. Firms use application as online catalogues, e-mails, Internet exchanges. B oth parties can be in closer touch and is easier to develop strategic partnership. Sourcing as the process of identifying, selecting and growing supplier (Lysons, Farrington, 2006) gives numerous opportunities to use the Internet in these activities even more if we consider sourcing in global context. In the term of identifying suppliers, the Internet represents an enormous source of information for buyer. Searching for the right suppliers has become easier and more cost effective. Barua, Ravindran and Whiston (1997) say that before the wide spread of Internet applications, supplier search using business askories, trade journal or yellow pages revealed only few results. Furthermore, much more focused group of suppliers can be made using the network entropybases as at that place is more information available on the Internet. Next, authors make statement about previous, present and future importance of the Internet. Electronic brochures of product and services with catalogues and determine lists were the first applications of the Internet in business. Later, there are search agents for finding the requested product and for comparison of prices. They predicted online processing of bids for products and services to beget place in the future. Now, it is obvious that this became reality in the form of online reverse auction. Van Weele (2005) defines it as an auction where price is restore by buyer and suppliers need to pertain it.Roberts and Mackay (1998) mention that E-mails, searching tools and file transfer were the most used internet applications before. As the World Wide Web has started to play role, more and more companies set their own website to become visible in electronic world. These days, it is necessity for company to mystify its own webpage. It is a marketing tool and communication place. Customers, business partners and the third base parities can easily get information about the company, look at lists of products or they can send their req uirements via contact links.Besides going to website of individual supplier, there are numbers of suppliers portals (e.g. globalsources.com, purchasing.com, powersourcing.com) on the Internet where can buyer search for supplier according to required product, industry or country of supplier. Buyers are provided with product information and contact details of suppliers, some of portals offer a brief description of a company or there is a possibility to enjoin or look to its catalogue as well as to contact supplier. Besides free accessible websites which offer lists of supplier from all over the world, there are also specialized marketplaces. Van Weele (2005) defines electronic marketplace as a place on the Internet where actual operation can take place between buyers and sellers. UK national B2B centre presents on its website (unknown, 2009) various types of such markets and describes the range of services which they provide as lists of suppliers, electronic catalogues, online purch asing or online auction. ecumenical benefits of e-marketplaces include forming new trading partnerships or operating on a round-the-clock basis. An international e-market place gives opportunities which otherwise buyer would not be sure of. However, the first beliefs about e-market places and independent business exchanges were not meet as many e-market places failed. Sites were the Internet is used to target customer are the most in(predicate) (Tieman 2003, cited by Laseter).As we talk about the software equipment there are numbers of software programmes design for businesses to manage business activities electronically and over the Internet e.g. SAP, Oracle, Ariba. These programmes have also applications for e-procurement. Nowadays, investments to information technology are inevitable for each company which want to success internationally. Schalibly (2004) says Company that does not have electronic data cannot even begin to think about the global sourcing. Also some companies r efuse to cooperate with firm which do not meet their information technology requirements. Companies have recognised that and the investments to IT became the regular line item in their expenditure. Even more it is increasing every year.As the Internet provides us with number of supplier after the initial search, they can be both efficient and inefficient suppliers on the list. Therefore it is necessary to implement strategy for selection and evaluation of supplier. whiz possibility is to reduce selection according buyer requirements as price of product, size of company or number of years a company operates. in one case buyer has a shortlist he can starts to evaluate suppliers. Buyers transaction cost would increase if he wants to evaluate all suppliers (Barua, Ravindran, Whiston, 1997). Trucker and Jones (2000) emphasize other beta issues with selecting a supplier. These are using the right searching engines, intelligent agents and training procurement staff to guide the Internet effectively in order to minimize the irrelevant results.As far as developing relationships with suppliers is consider, the Internet is an important communication media. It supports these relationships as it is not costly and easy to connect. Even more, buyers have same opportunity if they deal with local or supplier from greater distance. We talk more about benefits of online communication later. As we mentioned above the Internet is astray used application in online sourcing. The main benefits include improving communication, getting better access to information or possibility to complete the entire purchasing process over the Internet. All these benefits results in cost saving enhance efficiencies and increase profit (Lancioni, Smith, Schau, 2002). Bartezzaghi and Ronchi (2005) give these benefits of applying e-sourcing. Buyer gets product for lower purchasing price and he achieves higher level of efficiency. Number of supplier also decreases by using e-sourcing tools.Communicati on over the Internet involves e-mails, website contact links and Internet exchanges. From global point of view, the possibility to communicate across the whole world and in different time zones represents the one of the main advantages which the Internet offers in global sourcing (Walters, 2007). Companies are able to contact supplier via E-mail on 24 hour basis as time zones barriers are removed. That was not possible before with using e.g. telephone lines. Sending documents and other files through the Internet became possible as now we have electronic data and electronic signature. Companies save time as sending takes few minutes while post delivery several days. There has also been improvement in customer service as customers can access company website or send requests any time. Results are in reduction of service costs and respond time (Lancioni, Smith, Oliva, 2000). Besides the advantages, there are issues as security and reliability which eliminates the potential use of the In ternet. Walters (2007) conducts that as buyer and seller can contact directly via the Internet in a conciliative and convenient way there is no need to us services of intermediaries. Transaction costs are reduced. One of the problems is protection of business emails with sensitive information against hackers (Roberts and Mackay, 1998).Although tools of online communication give advantages to salespersons they cannot replace their work. Deeter-Schmelz and Norman Kennedy (2004) argue that organization should design their website in the way to support sales representatives not to replace them. In fact, by using the Internet salesperson can get easier access to required information and by using of online sourcing tools they are free of paper work and they can concentrate on developing customer relationships. There is an example of effective communication system launched by Kia Motors (unknown 2002). The company introduced the distributor communication system in 2002 to connect subsidia ries, distributors with head office around the world through the Internet. The system enables to share information, placing orders or export document in real time. Achieved information from distributors helps KIA to certify strategy according the current market situation for the specific place. Distributors reduced their stock as they have better access to production and shipping information. not least, trust has been built on both sides.The Internet presents an enormous pool of information and it is simple to create own appearance on this worldwide network. This is important in global sourcing as buyers have access to broader number of suppliers. On the other hand, buyers need to pay more attention to evaluate these suppliers. It is necessary to take aim their real presence, look for recommendation if they are new on the market or there is not enough information about them.The Internet allows complementary the purchasing transaction online. Companies can use it from initial searc hing and contacting supplier through placing order to final payment of invoice. By doing so, decline of cost of transaction process can be achieved. Paper work is reduced as well as errors appear less. Notably, the whole process of ordering is done quicker. As a result of online purchasing in General Electric there has been a reduction of purchasing staff by 50%. Time consequence between sending order to receiving product decreased by 40% in the company (Lancioni, Smith, Oliva, 2000).The other benefits include informing vendors of changes in orders, checking the status of order or paying invoices electronically. Companies can track and plan shipment, schedule pickups and deliveries (Lancioni, Smith, Oliva 2000). Same authors give various examples of companies about using the Internet in supply chain management. By using the Internet for shipment scheduling, General Electric can more precisely and cost effectively deliver product on time to the customer. The Internet notifies Air Pr oducts and Chemicals of most suitable terminal and plant for serving customer as the company uses the Internet in global sourcing process.Roberts and Mackay (1998) in their word on the role of electronic commerce describe the anticipations coming from the use of the Internet. They talk about the possibilities for buyers as browsing in electronic catalogues, placing order or advancing bids. Suppliers could better organise their production and deliveries as they respond to bids. There are also the third parties which facilitate the marketplace. They offer services as supplier certification, referral, brokering and specialised directories. On the other hand, according to the research made by Deeter-Schmelz and Norman Kennedy (2004) about the usefulness of the Internet in supplier selection and relationship maintenance, statistic shows that buyers consider the Internet to be slightly important as an information source the more useful sources are sales representatives or users of the pr oduct. In the area of selection supplier 42.6% of buyers say that the Internet does not play any important role. As far as communication and relationships with supplier are consider, the Internet is moderately or very important. Additionally, it has been more used in ongoing relationships than in initial stage of contacting supplier.The Internet has in global sourcing process its unreplaceable role. The main role is simple search and communication between buyer and supplier which lead to cost cutting and effectiveness. The Internet became like a run across place for both supplier and buyer thus their active presence and involvement on this network is inevitable if they want to succeed. However, many expectations have become reality, some still remain in stage for future developing or were simply overrated. There are also activities and situation where human coming or face to face contact can not be replaced with technology. In term of sourcing it is the building trust and long te rm relationships with trade partners.Referencies1. Bartezzaghi, E., Ronchi, S. (2005) E-sourcing in a buyer-operator-seller perspective Benefits and criticalities, Production Planning and Control. Jun, 16 (4), pp.405-412 online for sale from2. Barua, A., Ravindran, S., Whiston, A. (1997) Efficient selection of supplier over the Internet, Journal of management information system. 13 (4), pp.117-134 online Available from3. Deeter-Schmelt, D.R., Norman Kennedy, K. (2004) Buyer-seller relationships and information sources in an e-commerce world, Jornal of Business and Industrial market. 19 (3), pp. 188-196 online Available from4. Lancioni, R., Smith, M., Jensen Schau, H. (2003) Strategic Internet application trends in supply chain management, Industrial Marketing Management. 32 (3), pp. 211 217 online Available from5. Lancioni, R., Smith, M., Oliva, T. (2000) The role of the Internet in supply chain management, Industrial Marketing Management. 29, pp. 45-56 online Available from6. Ly sons, K., Farrington, B. (2006) Purchasing and Supply Chain Management. 7th ed. Essex Perrson command limited, p.3677. Monczka, R., Trent, R., Handfield, R. (2005) Purchasing and Supply Chain Management. 3rd ed. Southwestern Thomson, p.304, 306-3088. Roberts, B., Mackay, M. (1998) IT supporting supplier relationships The role of electronic commerce, European Journal of Purchasing and Supply Management. 4, pp.175-184 online Available from9. Schaibly, L. S. (2004) qualification global sourcing asuccess, World Pumps. March, pp.34-36. online Available from10. Tieman, R. (2003) E-procurement and E-sourcing Corporate buyers show stronger interest in cost saving online system, Financial Times. November 24, p.311. Trucker, D, Jones, L. (2000) Leveraging the power of the Internet for optimal supplier sourcing, Industrial Journal of Physical Distribution and Logistic Management. 30 (3-4), pp. 255-267 online Available from Accessed 21.11.200912. Van Weele, A. (2005) Purchasing and Supply Cha in Management. 4th ed. London Thomson Learning, p.169-17113. Walters, P., (2008) Adding value in global B2B supply chains Strategic directions and the role of the Internet as e driver of competitive advantage, Industrial Marketing Management. 37, pp. 59-68 online Available from Science direct Accessed 21.11.200914. Yip, G., Dempster, A. (2004) Using the Internet to enhance global strategy, European Management Journal. 23 (1), pp. 1-13 online Available from Science direct Accessed 21.11.200915. unknown 2008 E-marketplaces, online auctions and exchanges Accessed 21.11.200916. unknown, (2002)Kia Motors to launch Kia Distributor Communication organization Accessed 21.11.2009