Matching B2B e-procurement technologies with outsourcing needs

The management of a firm needs to have a rational framework to examine and analyze what goods and services should be outsourced and what others had better to be kept in-house. It is obvious that goods or services with the following characteristics should be outsourced: (1) being less significant to the firm's key missions and (2) suppliers are abundant and offers cost advantage. On the other hand, there are also goods and services that are considered "core competences" of a firm and traditionally are regarded as never to be outsourced. In addition, there are activities that a Finn keeps internally but should have been outsourced. Such situations can be the result of a temporary managerial tactic, such as avoiding layoff, or the result of a misstep in strategy that may lead to long-term vulnerability of the firm or even the decline of the entire industry. Furthermore, is it justifiable for a firm to outsource some goods or services of its core competencies? If so, what type of safeguard is necessary? These questions are not easy to answer. Thus, this paper highlights different needs and some pitfalls of outsourcing and discusses their strategic implications. It then analyzes the arguments of two opposing schools of thinking, namely, the competitive approach and the cooperative approach, and offer our own observations. The second theme of the paper addresses the use of B2B e-procurement technologies to support various needs of outsourcing. The B2B e-sourcing technologies not only alter the way transactions are conducted, but also bring unique challenges and managerial implications to buyer-seller relationships. Many firms will see their supply chains being shaped by these. new technologies. We review recent development of the B2B e-procurement technologies that are still emerging and in flux. As of today, many of these B2B technologies deal with simple transactions involving commodity types of goods and services. For companies who have adopted the partnership approach in outsourcing, the B2B technologies seem to present a dilemma. To address such a question, we analyze the B2B e-procurement technologies by their business models and competitive advantages that they offer to the buyers and sellers. We then discuss how outsourcing can best utilize these technologies for the procurement of different types of goods and services.