E-auctions extended after Littlewoods sees 24% saving

Retailer Littlewoods is implementing an online sourcing system following a pilot project which cut procurement costs by 24% -...

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.

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