The Optimization and Design of Procurement Strategy in E-commerce

Procurement management is one of the most valuable parts in supply chain management (SCM). In e-commerce era, the complexity and levity of procurement management become greatly outstanding because customer demands are changing faster and faster. Modern information technology (IT) plays an increasingly important role in procurement management and brings a global e-procurement /e-purchasing. In this paper, we establish a two-period replenishment model of (s, S) strategy to analyze the operation cost efficiency of the traditional procurement in strategic partnership, e-procurement and the mixed procurement strategy respectively. The model quantifies the effect of the Internet on procurement management. Then, the validity of the model is verified through a case study of a state-owned extra-large steel enterprise of China. The study concluded that the implementation of e-procurement technology can effectively reduce supply base and increase the profit margin of both the buyer and the supplier