Early adopters win with e-procurement

Organisations with early investment in e-trading and e-procurement technology are reaping significant benefits according to...

Organisations with early investment in e-trading and e-procurement technology are reaping significant benefits according to market research company Benchmark Research.

The survey found that almost two thirds of high-performing companies have made savings of between 10% and 49.9% in procurement budgets compared with 3% of low-performing companies who have made similar savings.

Benchmark defined high performers as those in the top 30% of companies measured on a range of business performance measures. These include market share, profitability, cost control and savings on procurement budgets. Low performers were in the bottom 30%.

The survey showed that 40% of high-performing companies are making use of auctioning technology to source products and services, compared with 12% of low-performing companies.

It also revealed that 36% of high-performing companies are using e-procurement to manage internal requests for purchase, compared with 16% of low performers.

These performance gains are largely technology driven, said Benchmark Research, with the biggest improvements being made when e-procurement technology is integrated with supplier's databases and corporate enterprise resource planning systems.

John Rees, UK country manager of supply chain vendor Commerce One, which commissioned the research, said: "E-procurement systems can deliver dramatic return on investment."

Defence and aerospace company BAe Systems has saved £10.5m on procurement costs since deploying Commerce One e-trading technology at the beginning of 2001.

Andrew Mellors, BAe Systems capability development director, said cost savings were not the only benefit of e-procurement. "We now understand more about our purchasing needs and have improved the overall efficiency of our processes," he said.

"We have also improved our relationships with our suppliers, and some of these savings are starting to spread across the supply chain."

Benchmark Research questioned senior purchasing and procurement strategists at 150 of the largest companies in the US, UK and Germany. Half the organisations employed 5,000 to 9,999 staff, while the remainder employed more than 10,000 staff.

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