Fully automated end-to-end procurement is not practical

i. In the future, some suggest that the task of searching for suppliers and products may be taken over by software agents, which have refined rules or some degree of intelligence that replicates intelligence in humans.

ii. An agent is a software program that can perform tasks to assist humans.

iii. On the internet, agents can already be used for marketing research by performing searches using many search engines and in the future they can also be used to search for products or even purchase products.

iv. What is not clear is how this agent will assess trustworthiness of a supplier or their competence as a business partner or associate.

v. Hence, fully automated end-to -end procurement is not practical.

Risks and Impacts of e-procurement:

i. Internet-based e-procurement systems and B2B electronic market solutions need to be compatible to the greatest possible extent with the existing technologies, to have a reasonable chance to be widely adopted in the marketplace. Even e-procurement system provides numerous benefits to the firms; there is certain amount of risks associated with e-procurement implementation. These risks could be viewed as negative driving force affecting the e-procurement implementation.

ii. Security concerns and lack of faith in trading partners are the most significant factors holding back e-procurement.

iii. Trusted third party certification is required for the level of trust to increase.

iv. The risks associated with e-procurement can be classified into following types:

a. Organizational risks:

1. Companies are uncertain about having the appropriate resources to successfully implement an e-procurement solution. Implementing an e-procurement solution not only requires that the system itself successfully performs the purchasing process, but it integrates with the existing information infrastructure.
2. The threat of redundancy or redeployment is likely to lead to resistance to the introduction of the systems and this need to be managed.
3. Since the cost savings of e-procurement are achieved through empowerment of originators throughout the business to directly purchase their own items rather than through purchasing department there is s risk that some originators may take advantage of this.
4. This is known as ‘maverick or off-contract purchasing’, and it has always happened to some extent.

b. Technology risks:

1. Companies also fear the lack of a widely accepted standard and a clear understanding of which e-procurement technologies best suit the needs of each company.
2. The significance of this risk factor seems to suggest the need for clear and open standards that would facilitate inter-organization E-procurement technologies.
3. Without widely accepted standards for coding, technical, and process specifications, e-procurement technology adoption will be slow and fail to deliver the benefits as expected.
4. There is a different models for procurement. The models are evolving fast, so it is difficult to know which one to select.
5. Problems introduced by large-scale ERP systems may not dispose organizations to e-procurement.

c. Failure to achieve real cost reductions:

1. There is a risk that the return on investment (ROI) from introducing e-procurement may be lower than that forecast and the introduction of the e-procurement system may not pay for itself.
2. This may occur if the assumptions used to calculate savings from e-procurement are too simplistic.