A01 chaf6542 06 se fm indd

 Vendor‑  managed 

inventory (VMI)

Supply chain 

partners manage the 

replenishment of parts 

or items for sale through 

sharing of information on 

variations in demand and 

stocking level for goods 

used for manufacture 

or sale.

Efficient consumer 

response (ECR)

ECR is focussed on 

demand management 

aimed at creating and 

satisfying customer 

demand by optimising 

product assortment 

strategies, promotions 

and new product 

introductions. It creates 

operational efficiencies 

and cost savings in the 

supply chain through 

reducing inventories and 

deliveries.

Figure 7.2

Digital business e‑value grid

Source: Riggins and Mitra (2007).

Efficiency

Value Creation

Planning

Dimension

Implement rich

media for company-

wide interaction

Development

Standardise

platform for cross-

functional design

Inbound

Support electronic

transactions with

supply partners

Production

Integrate

internal

systems

Outbound

Support electronic

transactions with

customers

Effectiveness

Provide

online executive

Information systems

Share detailed

requirements

between partners

Generate supply

flexibility through

e-hub communities

Exchange

production data

between partners

Furnish customised

instantaneous

order status

Strategic

Facilitate knowledge

management

between partners

Enable concurrent

design across

virtual organisation

Offload replenishment

responsibility to

supply partners

Optimise

utilization of

global capacity

Institute direct

fulfilment via

logistics partners

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Part 2  Strategy and applications

Mini Case Study 7.2

Mark Rowley, the head of purchasing at Herbert Smith, one of the ten largest law firms in the UK, explains 

how they use e‑procurement systems to manage recurring orders and gain budget control. As a  client‑ 

 facing service, project managers at a law firm need to react straight away to a client’s needs, and the system 

provides  real‑  time visibility of their budget and spend at every stage so they maintain full control.

Video Explanation:  www.proactis.com/resources/videos/ herbert‑  smith‑  freehills‑  llp‑  video‑  case‑  study.aspx

IT procurement at a law firm

Case Study 7.1

Cambridge Consultants reduces costs through e‑procurement

Illustrates the potential benefits of e‑procurement by 

reviewing the original and revised process and costs. 

The e‑procurement system in this case is a direct link 

between the purchaser, Cambridge Consultants, and 

the  web‑  based catalogue of one its major suppliers, RS 

Components.

Cambridge Consultants is a manufacturer offering tech‑

nical product design and development services to com‑

merce and industry. With hundreds of projects in hand 

at any one time, Cambridge needs a diverse range of 

components every day.

Purchasing is centralised across the company and 

controlled by its Purchasing Manager, Francis Pullen. 

Because of its varied and often unique requirements, 

Cambridge has a supplier base of nearly 4,000 com‑

panies, with 20 new ones added each month. Some 

of these companies are providing items so specialised 

that Cambridge purchases from them no more than 

twice a year. Of the total, only 400 are preferred sup‑

pliers. Of those, just 10% – 1% of the overall supplier 

base – have been graded key supplier by Cambridge. 

That number includes RS Components. Francis Pullen 

says, ‘We charge our clients by the hour, so if a prod‑

uct is faulty or late we have engineers waiting for new 

parts to arrive. This doesn’t align with our fast time to 

market business proposition. RS Components’ guar‑

antee of service and range of products fits in with our 

business ethos.’