Roles of knowledge management in online procurement systems
| Published date | 01 October 2002 |
| DOI | https://doi.org/10.1108/02635570210439454 |
| Pages | 365-370 |
| Date | 01 October 2002 |
| Author | Chang‐tseh Hsieh,Huiqing Yang,Binshan Lin |
| Subject Matter | Economics,Information & knowledge management,Management science & operations |
Roles of knowledge management in online
procurement systems
Chang-tseh Hsieh
University of Southern Mississippi, Hattiesburg, Mississippi, USA
Huiqing Yang
University of Southern Mississippi, Hattiesburg, Mississippi, USA
Binshan Lin
College of Business Administration, Louisiana State University in Shreveport,
Shreveport, Louisiana, USA
Introduction
Procurement requires a time-sequenced
schedule of material and components needed
to support business requirements (Bowersox
et al., 2002). For decades, businesses of all
sizes have been searching for ways to cut
paperwork, reduce costs and to increase
efficiency of their procurement systems.
Techniques ranging from forecasting,
material resources planning (MRP), to
electronic data exchange (EDI) have been
evolved with the use of the ever-changing
information systems (IS) and information
technology (IT) (Girishankar, 2000). The
state-of-the-art IS/IT allows a company to
link its internal inventory management to all
parties in its supply chain. For some
companies, such applications of IS/IT help
them gain enormous competitive advantages.
For others moving toward online
procurement systems become the absolute
necessity to survive.
The implementation of online procurement
systems, however, has never been easy due to
the barriers created by the different
hardware/software, diverse corporate
culture and varying users' skills of
interacting with IS/IT. As a result, use of
technology such as EDI tends to be limited to
well-established businesses and their trading
partners. Recently, the Internet has largely
removed those barriers and opens the door
for businesses of all sizes to seriously
consider linking with suppliers for
electronically exchanging supply/
procurement-related information.
As the Internet penetrates every corner of
our society, its use for determining optimal
order size, identifying best suppliers,
tracking orders online, managing
production/shipping schedules, maintaining
lowest possible level of inventory, etc., can
now be at the command of users at even pop-
and mom-type stores.
Unfortunately, the Internet technology has
its down side. Today, the Internet has become
a major source of obtaining information
about potential suppliers, customers, and all
parties in between. The Internet, however,
does not belong to anybody, and is not
governed by any official entity. As a result,
immense amounts of information can be
retrieved to respond to even just a simple
query. Much returned information is
outdated, irrelevant, or inaccurate. Such
information may confuse the decision
makers, and thus could lead to wrong
decisions regarding problems associated
with the online procurement activities. Other
issues such as bandwidth, reliability of the
Internet service providers, security breach,
etc., all contribute to increased complexity of
managing the online procurement systems.
Recent development in knowledge
management technology may help alleviate
the problems associated with the
implementation of the Internet-enabled
online procurement system. The major
purpose of this paper is to explore how
knowledge management technology may be
incorporated into the framework of an online
procurement system to enhance its
effectiveness and efficiency.
Some benefits of online procurement
systems will be addressed followed by the
discussion of some potential problems. Roles
of knowledge management technology in
online procurement systems will then be
presented. An algorithm to reduce the
uncertainty in knowledge management
mechanism will be described in the following
section. A brief remark concludes this paper.
Benefits and potential problems
A procurement system is a vital component
of a company's supply chain system. It
typically involves the following major
business activities:
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[ 365 ]
Industrial Management &
Data Systems
102/7 [2002] 365±370
#MCB UP Limited
[ISSN 0263-5577]
[DOI 10.1108/02635570210439454]
Keywords
Internet, Information systems,
Information technology, Inventory,
Purchasing
Abstract
The implementation of an online
procurement system has never
been easy due to the barriers
created by the different hardware/
software, diverse corporate
culture and varying users' skills of
interacting with IS/IT. Recent
development in knowledge
management technology may help
alleviate the problems associated
with the implementation of an
online procurement system. This
paper explores how knowledge
management technology may be
incorporated into the framework of
an online procurement system to
enhance its effectiveness and
efficiency.
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