Agent Based Purchasing Activity

Purchasing: An effective purchasing system requires several essential components. It starts with a good organization staffed with well-trained people. Roles and related responsibilities must be clearly defined and be adapted to meet the unique operating environment of the organization. Although purchasing organization structures may vary, most provide similar functions. Traditional Purchasing Process
Where information technology is not heavily ingrained - Traditional Purchasing processes tend to be characterised by high levels of bureaucracy, encumbered with manual authorisation (often requiring multiple signatures independent of the order value.), slow communications and a focus on unit price rather than long term commodity arrangements. Due in part to the lack of readily available Management Information. The diagram below provides an example of a traditional purchasing process.

The process may require authorisation at various intervals including at the requisition, Purchase Order, supplier payment process this may be multiple authorisations at each stage e.g. the operator and his/her supervisor. Sourcing and tendering may focus on obtaining multiple cost/availability options from various suppliers rather than leveraging formal long term contracts. There may be little to no pressure on limiting the number of suppliers used. Manual Purchase Orders are raised and sent to suppliers manual acknowledgements are also requested. Communication is slow and paper based. Periodic expediting activity takes place to ensure delivery schedules are adhered to Items are delivered and forms/documents are transferred within the business to close down orders

Manual invoices are submitted and subject to authorisation procedures often requiring signatures to indicate that the Purchasing process has completed satisfactory (and that the order has been met.

Contemporary Purchasing Process Where information systems are prevalent much of the authorisation and communication methods that are present in the traditional process can be automated or abolished. Management Information is also more widely available (and of better quality) and enables the organisation to move towards Automated processes which rely more on exception management rather than transaction management. The resultant culture is therefore one that focus's more on Supplier Relationship Management and a long term approach that one that focuses purely on Transactions.

* Modern ERP systems monitor inventory and trends and automate requisitions based on forecast need * Automated workflow and approvals engine route requirement to be authorised (where applicable) * Where formal orders are required suppliers informed electronically either as part of established B2B network or via electronic message. Supplier acknowledgement and changes to terms updated in real-time.

* For low value or less complex commodities a mixture of Procurement Cards and online catalogues can be used negating the need for formal orders whilst ensuring that robust controls are still in place * Use of barcodes/RFID speed up the delivery process, electronic messages covering proof of dispatch and delivery are transmitted by the ERP and stakeholders are advised in real-time * Electronic Invoices are submitted and are matched by the ERP against the Purchase order and delivery and then routed for payment negating the need for human intervention. Where Procurement Cards are used Transaction Management systems route and aide process activity Systems can dramatically reduce the amount of paper documents within a purchasing environment while streamlining the process via use of workflow systems.

Purchasing activity has changed dramatically to new heights recently with advent of technology and information revolution. As the whole world is embracing the Computer and Information Technology completely with a vision of Global competition and advantage of new technology adoption. The advent of new technology has brought forward the less usage of paper and traditional purchasing has given way to things like e purchasing. The Industry also has no other options but invest and search for more competitive technology in world to be advantageous and beneficial in competition. The latest of Technology is the approach of Agent usage which is being nascent adoption and still in basic Research field only throughout the world.