e-Procurement

UMW Toyota Motor Sdn Bhd procurement processes are originally on manual basis for purchases of Expenses items, Stationeries, Assets, Services and Contract items. Diagram below shows manual procurement processes:

Weaknesses of the manual operation:

• Purchases are not aggregated. This means that UMW are unable to manage and negotiate better prices with suppliers.
• Sourcing are done by individual division. This may lead to poor supplier management control at company level.
• Categorization of purchases and spending analysis are tedious and time consuming to extract.
• Increase of processing cost and handling cost due to duplication of current manual tasks.
• Manual monitoring and tracking of status of purchases.

The e-Procurement system was then introduced with operational flow improve as follows:

The changing points after implementation of e-Procurement are as follows:

According to a research conducted by the Aberdeen Group, implementing automated procurement solutions will lead to significant economic benefits for an enterprise, including:

• Reduce purchase cost by 5% to 10% through improved contract compliance
• Lower procurement administration costs by 73% (from $114 per order to $31, on average)
• Shorten the purchase cycle-times by 70% to 80% (from 8 days to 2 days)
• Reduce maverick buying by 50%
• Reduce inventory costs by 25% to 50%

Other objectives meant for the overall e-procurement implementation:

a)    Reduce the TOC (Total Cost of Ownership) of products purchase

• Reduced Number of Suppliers Used to Aggregate Demand and Realize Economies of Scale.
• Intensified Supplier Competition By Using Electronic Bidding
• Standardize Specification
• Aggregate and Manage Demand
• Contract Compliance
• Centralization Of Information – Provides Accurate And Timely Spend Information

b)    Improved Cycle Time

• Enhance Workflow Through Electronic Workflow Rules Based Driven
• Streamline Procurement Processes
• Transaction Status Tracking
• Effective Supplier Management

c)    Eradicate Corruption (Through Transparency In Procurement)

• Improve Process Transparency
• Streamline Procurement Processes
• Electronic Workflow Rules Based Driven Processes

d)    Enhance Corporate Governance

• Better Management Control
• Better Integration in the Supply Chain, which facilitates collaboration within the organization, between buyers and suppliers.

e)    Effective Supplier Management

• Streamline Supplies Sourcing
• Electronic Workflow Rules Based Driven Processes

For UMW Toyota Motor they select the “procure to pay” (P2P) module as the first phase implementation. This will enhance the current most manual processes faced by the operation staff at Head Office and branches.

Thus, data could be extracted at Head Office level by custodian of the system that is Property, Facilities and Administration Division. Report on spending can be generated accurately and timely. For the P2P process please refer following image:

E-Procurement process from requestor until payment process:

The security features for the system:

• User Login Authentication with Password Encryption

• User Definable Access Level by Modules, Functions

• Catalog Access Level based on Commodities

• Auto block user if wrong password has been entered for more that the allowable times
• Option to suspense user, if account has been inactive for a predefined period

Lastly, we share the post evaluation result as follows: