Procurement: buying the e-way



Jennifer Major

Soapbox

Most large companies are moving to some sort of e-procurement strategy. But in doing this they have been...



Jennifer Major

Soapbox

Most large companies are moving to some sort of e-procurement strategy. But in doing this they have been focused on acquiring the technology to allow them to implement this at operational level. They haven't put in place the systems that will allow them to identify which suppliers should be moved to e-procurement, and measure the benefits after doing so.

Organisations are pretty good at understanding their direct suppliers, but few of them have the same level of understanding of their non-direct (maintenance, repair and operations) spend.

With e-procurement technology still in its infancy, we are told it is MRO spend where organisations can get the most benefit. My fear is that many organisations are tempted to move their more strategic suppliers to e-procurement, because these are the ones they understand the best.

However, these are also the suppliers that they have built a relationship with over many years and by dealing with them via a channel where the main emphasis is on cutting costs, they risk neglecting more important measures, such as quality and reliability.

As e-procurement technologies develop, we are seeing more facilities made available to assist with the sourcing of strategic suppliers.

The next logical step is for organisations to use more than one e-marketplace , depending on the facilities they require for dealing with different types of suppliers.

They should also be giving serious thought to how they plan to capture and compare information about the efficacy of the different channels they are using to deal with their suppliers, so that they can easily monitor and adapt their supplier strategies over time.

Jennifer Major is UK programme manager for SRM at the SASInstitute

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