Retailer Littlewoods is implementing an online sourcing system
following a pilot project which cut procurement costs by 24% -
equivalent to £80m a year if used across the whole company.
The company is implementing Oracle Sourcing, an Internet-enabled
application that facilitates online auctions and traditional
requests for information, quotes and pricing. The application only
requires a browser to use it and, during the project Littlewoods
found that this allowed suppliers to respond to requests for quotes
quickly and easily.
David Hallet, chief information officer at Littlewoods Retail, said
the successful pilot convinced the company that e-procurement was
the way forward.
"Littlewoods Retail spends around £320m a year on purchasing goods,
a significant amount that we believe can be reduced through the use
of online auctions," he said.
"The cost savings, superior features, functionality and decreased
procurement timescales demonstrated in the pilot convinced us that
Oracle's system will deliver real benefits."
Increasing numbers of organisations across all sectors are looking
at e-procurement projects.
Barclays Bank is aiming to handle all of its £500m requisitional
spend online by the middle of 2002, while in the public sector the
Association of Colleges, the representative body for the further
education institutions, hopes to save up to £100m per year with a
procurement portal.
While many early e-procurement projects were over-ambitious,
analysts suggest firms with sensible strategies are able to reduce
purchasing costs by up to 75%.
Frances Howarth, an analyst at the Aberdeen Group, said companies
that implement e-procurement best practices, such as thorough
business process analysis before implementation, had the best
chance of success.
"Companies need to plan their spending, set out benchmarks, train
all their users and work closely with suppliers," she said.