E-procurement System

1. A case study on
-Procurement in
Honeywell & Vedanta
BENCHMARK-2011
PSG Institute Of Management, Coimbatore
Authors:
Sunam Pal
Kiran Varghese Jacob
Alliance University School of Business
E-Business
&
Business Intelligence 1
Friday, 25th January 2011

2. PSGIM, Coimbatore E-procurement system of Honeywell & Vedanta
Purpose of this case:
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• Understanding the nature of transaction in Honeywell & Vedanta
• To know the e-procurement process in Honeywell & Vedanta
• How they differ from each other
• IT technology incorporated in each company to carry out the
procurement system
• Benefits of e-procurement system
• Challenges faced by each company
• Why Honeywell uses SAP(ERP system)
• How Vedanta manages with other alternatives instead of using
SAP(ERP system)
• Future of both companies with respect to e-business
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Fri
25 Feb

3. PSGIM, Coimbatore E-procurement system of Honeywell & Vedanta
Implementation of SAP in Honeywell’s e-business applications and how other
industry like Vedanta manage their procurement system without using SAP
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keeping the system simple by incurring less cost on technology
Nature of transaction
Honeywell Uses SAP Vedanta uses other Alternatives
• Number of items ordered are very • Number of ordered raise are very
high. ( Thousands orders a month per less. ( 5 or 6 times a month per plant)
plant) • Volume of transaction is huge
• Volume of transaction is less (1000 tons per week/team)
( 10 to 100 electronics items per • Safety is an important concern
week/team) • Delivery on right time is must
• Security is an important concern • Multiple orders is met from same
• Authentication and approval is must vendors
• Single order is met from multiple • The products are much standardized
vendors and thus repeatability of same order
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• The products are much customized and is more Fri
thus repeatability of same order is less
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4. PSGIM, Coimbatore E-procurement system of Honeywell & Vedanta
Overview of -Commerce
Consists of the Buying and Selling of
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Products or Services over Electronic
Systems such as the Internet and other
Computer Networks
Internet and WWW plays a very important
role .
E-Business gave birth to
Intelligence
Organizational Structure
• CIO
• Technical Support team Knowledge
• Admin Operators
Evolution of Studies Information
• Server Management
• Knowledge Management 4
• Database Management System Data
• Software Engineering Fri
• IT Management 25 Feb

5. PSGIM, Coimbatore E-procurement system of Honeywell & Vedanta
e-Procurement
BENCHMARK – 2 0 1 1
Benefits of e-Procurement
Buyer Productivity Increased
Functions Organized
of e-Procurement Increased predictability
Healthy Forecast of arrival of
Purchase of Raw orders before hand
Materials Redundant Data Entry limited
Tracking Vendors
Lower Transaction Cost
Real time inventory
updating Shorter Order-Time Cycle
Billing, Payment, Invoice Lower Inventories(Low Taxes)
Tracking Shipping Increased Visibility of key
Knowing status of orders business goals 5
Improved Product quality
Fri
Improved Customer satisfaction 25 Feb

6. PSGIM, Coimbatore E-procurement system of Honeywell & Vedanta
Honeywell Overview
Major conglomerate company that produces a
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variety of consumer products, engineering In India
services and aerospace systems.
1. Aerospace ( market Leader) • Technology Solutions
2. Automation System ( market Leader) Lab
• Automation ( Turbo )
3. Transportation System ( market challenger)
• Industry Process
4. Speciality Materials ( Niche market) Automation
5. Building construction solution ( Niche
market)
It is a Fortune 100 company.
It is a $36.556 billion Company.
( as per 2008)
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Fri
25 Feb

7. PSGIM, Coimbatore E-procurement system of Honeywell & Vedanta
Honeywell e -procurement system
Users Involved
BENCHMARK – 2 0 1 1
Departments Involved
Production and Operation
Department
Procurement Department
Marketing Department
Finance Department
Direct Users Indirect Users
Operational Engineer ( Intranet) Auto generic mails
Project Managers ( Intranet) HR
Procurement Team ( Intranet) Domain/BU Leads
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Inventory team ( Intranet) Alert
Vendors ( Extranet)  Accounts Team Fri
25 Feb

8. PSGIM, Coimbatore E-procurement system of Honeywell & Vedanta
Honeywell e -procurement system
Technology Used
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SAP(ERP package)
Data warehouse Routers/Switches
(Data-mining)
Intranet/Extranet
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Auto generic Mail
Servers Fri
25 Feb

9. PSGIM, Coimbatore Effective Communication
Concept Behind
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- - Procurement System
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CLIENT SERVER MODEL Fri
25 Feb

10. SERVER
EXTRANET
S-2 DATAWAREHOUSE
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D-2
SERVER-1
D-3
PROCUREMENT D-1
S-1 USER-3
D-4
INTRANET
VENDORS
PROJECT MARKETING ACCOUNTS 10
ENGINEER MANAGER
MANAGER MANAGER
Fri
USER-1 USER-2 USER-3 USER-4 25 Feb

11. DOMAIN MAIL
PRODUCTION COPY OF INVOICE
LEAD ( Buyer)
• Fill the Form,
• Raise Order
PROJECT INVOICE
A
• If pending MANAGER INFORM
L ACCOUNTS
• Wrong Code E TEAM
O • Approve Order,
R R • Reject any
specific Item
T D
E
R
PROCUREMENT RECEIVING
ORDER DISPATCH HOUSE
TEAM
OUTSIDE If not available If available
VENDORS
INVOICE
• Quantity Available ERP/SAP
• Code mapping
MAIL
EXTRANET USERS BENCHMARK-2011,PSGIM,Coimbatore 11
DATA WAREHOUSE

12. PSGIM, Coimbatore E-procurement system of Honeywell & Vedanta
VENDORS of Honeywell
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Fri
25 Feb

13. PSGIM, Coimbatore E-procurement system of Honeywell & Vedanta
VEDANTA Overview
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It is an international mining and metals
company
It is the largest mining and non-ferrous
metals company in India
It has the highest capacity power plant
Its main products are
copper ( market Challenger )
Zinc ( Market Leader)
Aluminium ( Market Leader)
lead ( Niche market )
iron ore ( market Challenger)
It is a $7.9 billion Company.
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Fri
25 Feb

14. PSGIM, Coimbatore E-procurement system of Honeywell & Vedanta
Vedanta e -procurement system
Users Involved In Vedanta
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Departments Involved
Production and Operation
Department
Procurement Department
Marketing Department
Finance Department
HR Department
Direct Users Indirect Users
Operational Employee
Procurement In charge
HR (Reimbursement)
Project Manager 14
Accounts Team Inventory Team
Fri
Supplier
25 Feb

15. PSGIM, Coimbatore E-procurement system of Honeywell & Vedanta
BENCHMARK-2011, PSGIM ,Coimbatore
Vedanta e -procurement system
Technology Used
Microsoft excel
Routers/Switches
Internet
Common Share
drive.
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Servers Fri
25 Feb

16. PSGIM, Coimbatore E-procurement system of Honeywell & Vedanta
Concept Behind
- Procurement System
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SHARE DRIVE ON NETWORK Fri
25 Feb

17. PRODUCTION Common share drive on network
( Buyer)
C ( Both A & B)
B A
HR
Data A
DATA DATA
ACCOUNTS C
Data A
PROJECT
MANAGER
Data A TEMPORARY ACCESS
SUPPLIER
(Seller)
Data B
BENCHMARK-2011,PSGIM,Coimbatore 17

18. Fill the excel sheet SHARE PROCUREMENT FORM
Raise Order
DATA Supplier
A UPDATE THE FILE & SHARE
(Buyer)
Production TEMPORARY ACCESS
(Buyer) SHARE INVOICE
S
S
H
A H Check the orders
R A Check Availability
E R Prepare invoice
E SALARY
I ACCOUNTS
N TEAM Quantity
F Available
V
O O Code
I R mapping
C M APPROVE
E
If reimbursement DATA WAREHOUSE
DATA HR
B SHARE DATA B
SHARE DATA
Approves
reimbursement Inform by MAIL
MARKETING
ACCOUNTS PAYEMENT DONE E-Transfer
TEAM BENCHMARK-2011,PSGIM,Coimbatore
If direct payment
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19. PSGIM, Coimbatore E-procurement system of Honeywell & Vedanta
VENDORS of Vedanta
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VENDORS
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25 Feb

20. PSGIM, Coimbatore Effective Communication
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Teaching Notes
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21. PSGIM, Coimbatore E-procurement system of Honeywell & Vedanta
Honeywell Vedanta
Merits of Honeywell Merits of Vedanta
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High Security. Cost-Effective.
Less Data Entries. Easy Understanding.
Higher Reliability. Less Time-taking.
Highly Organized. Less Maintenance Cost.
Less Updates required.
Auto generated Mails.
Demerits of Honeywell Demerits of Vedanta
Always Honeywell Codes Accessibility is less.
are not available. Less Security.
Over standardization- Lot of Data Entries.
Difficult to Access. Individual Responsibility.
More number of steps.
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Time-taking process. Fri
25 Feb

22. PSGIM, Coimbatore E-procurement system of Honeywell & Vedanta
Parameter to compare
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Honeywell Vedanta
4 days to place an order 2 hours for placing order
Time (Because of approval & (No approval, No authentication
authentication online) needed online)
Steps • 8 to 11 serial transactions • 5 to 6 serial transactions
• 2 parallel transactions • 1 parallel transactions
• Only 1 to 1 access • Many users involved at a time
• No leakage of information to • More than 2 people can be
3rd party operating on the same
Security
• Login system for all members document at the same time
• No login system
• Initial one time form fill-up is • In the whole process you have
required to undergo filling up of excel 22
Simplicity • Rest is just clicking sheets at least 4 times
• Not much automated

23. PSGIM, Coimbatore E-procurement system of Honeywell & Vedanta
Conclusion
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• Different companies implement different e-business
technologies
• The adoption of technology depends upon nature of
business, resource availability, complicacy, cost, time,
security concerns and the culture of business.
• Ability to cope with change as managing a change
is a greater risk.
• Honeywell where the culture motivates them to accept
changes easily would switch over to next generation
technology.
• Vedanta may adopt ERP system in near future if generates a
good return on investment on technology. 23
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24. PSGIM, Coimbatore E-procurement system of Honeywell & Vedanta
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Questions Please ????
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