E-Procurement

I. Executive Summary

II. Introduction

III. E-Procurement

a. Definition

b. E-Catalogues

c. Digital Signatures & Data Retention

IV. Overview of Contract Law in Malaysia and Relevant Acts

a. Contracts Act 1950 (Act 136) (Revised 1974)

i. Offer

ii. Acceptance

iii. Terms and Incorporation

b. Malaysia evidence Act 1950 (revised 1993)

c. Digital Signatures Act 1997

d. Electronic Commerce Act 2006

V. Literature Review (Previous Research)

VI. Impact of e-procurement on the organization

VII. Concluding Remarks

VIII. Further Research

IX. Bibliography

X. Appendices

XI. List of Figures

XII. List of Tables

I. Executive Summary

Procurement departments are strangled with transactional purchasing. E-procurement as web based tool has the potential to devolve buying of low value items back to the end user through use of tools such as e-catalogues. The outcome would be the freeing up of resource and the change in focus from transactional to partnership (strategic). We find the partnership model requires a win/win approach supported by interpersonal communication between buyer and seller. We also look at the legal aspects of the tool. We find it will support certain areas of contract law including consent, terms and incorporation but due to potential loop holes in the Malaysian E-Commerce Act, organizations buying and selling on the internet without a written contract in place are leaving themselves open to issues on whether or not a contract has been formed.

II. Introduction

This paper will look at the use of the popular internet based e-procurement tool - e-catalogues and assess based on the B2B environment in Malaysia if they can support the legal requirements of contract and purchase. Additionally it will consider what impact the process may have on an organization in terms of supporting interpersonal interaction to achieve a win/win outcome for the supplying and buying organizations.

III. E-Procurement

a. Definition

The CIPS definition: “E-procurement is using the internet to operate the transactional aspects of requisitioning, authorizing ordering, receiving and payment processes for the required services or products” CIPS highlight “one of the key goals of e-procurement is to devolve buying to local users” .

In this paper E-procurement is a subset of e-business as an intranet and internet based process to manage the procurement of indirect materials from office supplies and travel to MRO (Maintenance Repair and Overhaul) items

b. E-Catalogues

With the use of xml organizations are able to make greater use of the internet to manage low value MRO spend. E-Catalogues are: �A web page that provides information on products and services offered and sold by a vendor and supports online ordering and payment capabilities’

The type of e-catalogues range from sell side , buy side and third-party catalogues. Here we will focus on sell side, where there are very low setup costs for the buyer, but difficulties maybe incurred in connectivity to the �back end’ system of the buyers ERP system to automate approval and payment. Overall though the major advantages of e-catalogues were highlighted by Lysons - 2006

• Facilitate real-time two way communication between the suppliers and sellers

• Allow for the development of closer purchaser-supplier relationships due to improved services and information about products

• Enable supplier to respond quickly to market conditions and requirements by price adjustment and repackaging

• Virtually eliminate the time lag between the generation of a requisition by a catalogue user by online authorization which can be automatically generated without the intervention of the purchasing department вЂ" back to the end users

• Maverick or вЂ?off’ contract spend is reduced because it is simpler and quicker to purchase from contracted suppliers than to go outside the official system

Another key consideration to the above is devolvement of procurement back to the �end users’

c. Digital Signatures and Data Retention

For obvious reasons it is important to ensure a secure connection so when the buyer contacts the sellers website over the internet a verification process is needed to ensure the identities of the parties. This is managed through the use of digital signatures. “A message signed with a sender's private key can be verified by anyone who has access to the sender's public key, thereby proving that the sender signed it and that the message has not been tampered with. This is used to ensure authenticity”

Figure 1 вЂ" How Does the Internet Work?

Above is a simplified diagram of the internet that shows the many stages information will pass through until it reaches the recipient. It is important therefore to encrypt part of the message using the public and private keys to �ensure authenticity’.

At the time of writing in Malaysia it is not a legal requirement for ISP’s (see figure 1 above) to retain data for any period of time so therefore specific arrangements would be needed for the collection and storage of data.

IV. An Overview of Contract Law in Malaysia and Relevant Acts

Following is an overview of the main areas of the act, significant

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