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Samsung Group Purchases From Imarketkorea: Online File W5.5

Samsung Group established iMarketKorea in 2000 as a joint procurement exchange for managing their maintenance, repair, and operations (MRO) purchases. The exchange provides integrated e-procurement functions like online catalogs, ordering, payment, and allows Samsung affiliates to procure items seamlessly. By 2002, iMarketKorea had expanded to include over 130 companies and Samsung China plants, procuring over $1 billion annually. Its success is due to Samsung's purchasing power, commitment to the exchange, and procurement expertise.

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79 views1 page

Samsung Group Purchases From Imarketkorea: Online File W5.5

Samsung Group established iMarketKorea in 2000 as a joint procurement exchange for managing their maintenance, repair, and operations (MRO) purchases. The exchange provides integrated e-procurement functions like online catalogs, ordering, payment, and allows Samsung affiliates to procure items seamlessly. By 2002, iMarketKorea had expanded to include over 130 companies and Samsung China plants, procuring over $1 billion annually. Its success is due to Samsung's purchasing power, commitment to the exchange, and procurement expertise.

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Dương Dương
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8 Part Three

ONLINE FILE W5.5


SAMSUNG GROUP PURCHASES FROM IMARKETKOREA
Samsung Electronics Company Ltd. (sec.co.kr) is a leading commitment and its strategic procurement know-how.
manufacturer of TVs, mobile phones, semiconductors, and Competing companies have built their own MRO market-
home appliances. In December 2000, Samsung and its sub- places. Although some of these other marketplaces have
sidiaries established a joint exchange, named iMarketKorea similar IT technology, they do not have sufficient purchasing
(imarketkorea.com), for their MRO procurements. This exchange volume and procurement know-how. Therefore, the third-
works like a desktop purchasing system in an internal market- party B2B marketplaces in Korea control less than 4 percent
place, providing integrated electronic catalogs, e-procurement, of market share, even though they were the first movers. The
online ordering and status tracking, inventory checking, and other 96 percent is controlled by the exchanges of Samsung,
electronic payment and account settlement functions. LG, and several other large conglomerates.
To ensure a streamlined service, iMarketKorea is tightly By 2002, iMarketKorea had expanded its buyer base to
integrated with the buyers’ software (including SAP A/R3 and allow some 130 companies, including banks, steelmakers,
mySAP). To the employees of Samsung Group, the procure- and a confectionary, to use its exchange. Its customer base
ment process works seamlessly and simply, even though the was also expanded to include Samsung’s plants in China.
exchange sits outside of the specific companies’ systems.
iMarketKorea performs the necessary sourcing services for the Source: Written by Lee (2002).
buying companies and arranges group purchasing deals for
lower prices. The number of suppliers has been reduced to Questions
generate quantity discounts. This procurement process has
brought benefits in terms of costs and purchase cycle time: 1. Describe the MRO procurement marketplace built by
iMarketKorea reported that its customers have had their pur- Samsung Electronics.
chase prices cut by 13 percent, procurement time reduced by 2. How can a company or a group of related companies
70 percent, sourcing staffing lowered from 15 to 5, and implement streamlined e-procurement using a private
inventory reduced by 50 percent. exchange?
The exchange procured more than $1 billion of MROs in
3. List the critical success factor of this exchange.
2002. The exchange is successful largely due to Samsung’s

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