Response to Request for Proposals in IT Industry: Critical Success Factors
Volume 21, Number 4; Article by B Mahadevan, December 2009
B Mahadevan is Professor, Operations Management, Indian Institute of Management Bangalore
The procurement of materials and services has become strategic and global today, driven by operational and economic imperatives. The rising costs and the saturation of the Western markets have led manufacturing organisations worldwide to go East towards India and China, and the Internet has provided the enabling mechanism. However, while electronic markets seem ideally suited for sourcing and procurement in emerging economies, their use has been lagging for several technical and cultural reasons.
The questions that arose from this context were debated by researchers and practitioners in the panel discussion and presentations on Global Sourcing through Electronic Markets, organised as part of the IMR Conference 2008 on Global Supply Chain Management: Role of Emerging Economies.
S Jagannivasan, founder of MatexNet, a prominent player in the emerging B2B market in India and a leader in e-disposal, described how his company developed an e-commerce engine over the past 15 years, moving from information mode to transaction mode, and fashioning e-auctions. The service offerings of MatexNet encompass a broad range, including sale of surplus inventory and scrap, and sale of used vehicles repossessed by banks and collaterals pertaining to non performing assets (NPAs); the company effectively uses barter in the retail space.
The Karnataka State Police Housing Corporation (KSPHC) has successfully used e-market technology to set up Mystore, the portal selling construction-related items to its contractors. The captive customer base and the cost benefits have led KSPHC to think about replicating the principle to provide consumer items to their constables, Mr Sharat Saxena, Chairman and Managing Director, KSPHC, said. Speaking from the manufacturing industry perspective, Mr S Lovekar, Vice President, Commercial Plant Management, Bosch, said that in the automotive industry, strategic sourcing and the development of partnerships with vendors was very important. In this space direct sourcing through e-marketing was not yet a feasible alternative; there was a need for further research to develop the tool to suit Indian requirements.
Harsha Kestur, General Manager, Global Procurement, Wipro addressed global sourcing and e-markets from the perspective of a global buyer, a global seller and a service provider. All round, e-markets would help widen choice for buyers and sellers, create healthy competition among vendors, improve efficiency, aid transparency, and bring forward competitive technologies and best solutions. Moreover, dovetailing with Mr Lovekar's observations, Mr Kestur pointed out that before the potential of the e-market can be fully realised, there are several issues that need to be resolved: the affordability of the tool for smaller players; the need for supplier relationship management and e-auction to co-exist; the rating of both the customer and the vendor; and the need to educate the community on the tool.
Vivek Agarwal, Founder and CEO, C1 India, spoke about e-government procurement (EGP), the use of internet technology to automate the government procurement process. EGP combines the options of a portal, transactional marketplaces and auction-based marketplaces. Mr Agarwal illustrated his case for EGP with the example of C1's EGP project with the Government of Andhra Pradesh-an end-to-end procurement solution, designed as a Build-Own-Operate-Transfer model, to cover procurement of all the categories of goods in all projects, to be implemented in all the government departments, corporations and local bodies. The initiative yielded tangible savings worth Rs 14,800 crores for the government in 2008.
The ability to scale e-market tools for different purposes, the groundwork and the education required to adapt the e-market tool and EGP for strategic sourcing, particularly the cultural aspect of the environment, came in for detailed discussion.
Reprint No: 09404a