Advantages and Disadvantages of E-Commerce Essay
1946 WordsJan 9th, 20128 Pages
Advantages and Disadvantages of E-commerce
November 22, 2010
In today’s economy, business moves at a rapid pace and shows no sign of slowing down. Many of the revolutionary changes that have taken place and supplied this economic engine with fuel are due to electronic commerce. The introduction of the computer into the workplace has brought about manifold changes and seemingly unlimited possibilities for merchants. This new technology offers many advantages for businesses but there are disadvantages as well. Each company must weigh the pros and cons while determining what direction they will take.
Advantages and Disadvantages of E-commerce Electronic commerce is a fundamental part…show more content…
(Boyer, 2001) E-commerce increases the speed in which transactions take place. Customers no longer have to wait in line to purchase items but can now securely complete transactions online. Customers do not have to travel to pick up their merchandise but can have it shipped directly to them. If a customer needs to contact the business, this can be done quickly via e-mail. Most companies now provide adequate information so that customers are able to place their own orders and answer their own questions (FAQ). This is called self-sourcing and it encourages consumers to do some of the work normally done by the business. This reduces costs and errors while also engaging the consumer. Example: Fed-Ex was a pioneer in the use of online tracking. They allowed customers to enter a tracking number on the Fed-Ex web site and monitor their packages. This removed the operator from the transaction, cut expenses, and satisfied the customer. It is also common for companies to set up account profiles for customers that reduces errors and speeds up processing. Businesses can add new features to their products and services such as updates, activities, or new products. Many companies spend large amounts of money to encourage consumers to visit their web site. Contests and prizes are often used to prompt return visits. (Boyer, 2001) E-commerce allows companies to increase the specialization of their employees and streamline their operation.
5 E-procurement advantages
E-procurement advantages are becoming more evident as the wider understanding of its many uses become apparent. The main reason companies have embraced e-procurement is to increase productivity, provide visibility into day-to-day transactions and make it easier for users to get the supplies that they need.
It has not been an easy road for e-procurement as implementation has its challenges and it has taken time for business managers and procurement departments to fully accept it. The advantages of e-procurement are slowly being understood:
Costs can be reduced by leveraging volume, having structured supplier relationships and by using system improvements to reduce external spend while improving quality and supplier performance. E-procurement eliminates paperwork, rework and errors.
Visibility of spend
Centralized tracking of transactions enables full reporting on requisitions, items purchased, orders processes and payments made. E-procurement advantages extend to ensuring compliance with existing and established contracts.
Internal customers can obtain the items they want from a catalogue of approved items through an on-line requisition and ordering system.
Procurement staff can be released from processing orders and handling low value transactions to concentrate on strategic sourcing and improving supplier relationships.
Standardized approval processes and formal workflows ensure that the correct level of authorization is applied to each transaction and that spend is directed to draw off existing contracts.
Compliance to policy is improved as users can quickly locate products and services from preferred suppliers and are unable to create maverick purchases.
E-procurement advantages can only be fully realized when the systems and processes to manage it are in place. Software tools are needed to create the standard procurement documentation: electronic requests for information (e-RFI), requests for proposal (e-RFP) and requests for quotation (e-RFQ).
These are proven methods to source goods and make the framework agreements that offer the best prices.
An adequate, fully integrated e-procurement approach is needed for overall success. Additional programs provide the framework for the supplier databases and spend management as well as holding key vendor information and being an electronic repository for contracts.
All these facilities cost money and a clear business case must be made for e-procurement. In most cases this is fairly clear that cost savings are possible.
It pays for companies to spend money on e-procurement technology, this investment will boost efficiency. The longer term reduction in costs will enable companies to direct their resources to more strategic initiatives.
E-procurement advantages are significant bottom-line benefits, including cost reduction, process efficiencies, spending controls and compliance.
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