Technology Drives eProcurement Acceptance

Author: Ron SOuthard, SafeSourcing; Tim Hull, TDH Marketing

April 2010

Technology advancements are broadening the acceptance and utilization of e-procurement processes worldwide and making it available through internet access without the need for technology investment. The retail industry has been somewhat slow in considering e-procurement initiatives than have other industries. As a result, much of the lower tier one and tier two retail chains do not use the e-procurement resources that are readily available in the marketplace today. Some companies would like to, but do not quite know how to get started. In several cases, even the big retail chains are sourcing a smaller percentage of their total spend than the levels being recorded in other industries.

E-procurement processes have been utilized in maintenance, repair and operations (MRO) applications in a variety of industries in addition to manufacturing materials supply. The purchase of office supplies, consumable items and numerous types of hired services from snow removal to landscaping and facilities maintenance can all realize great savings by using the e-procurement process which can range from a simple RFQ to a very detailed RFI. Although e-procurement is oftentimes perceived as merely the purchase of products and services over the Internet, e-procurement is much more than just a means for making purchases online. It is a well-managed, organized process that handles all interactions between the purchaser and the supplier. This process includes optimal management of communications, questions and answers, bids, previous pricing information, inventory utilization and reorder sequences, access to suppliers, historical cost savings, supplier transactions and much more. With built-in monitoring tools, a well managed e-procurement process provides numerous benefits, the most recognizable ones being improved cost control and maximized supplier performance.

With the technology based e-procurement services that are available today, there is no excuse for overlooking this opportunity to reduce supply costs and boost the bottom line. Getting started is easier than ever and more user-friendly, thanks to continuing technology advancements. With high speed bandwidth, reliable security solutions, enhanced software and integrated programs, the e-procurement process is proving itself on a daily basis in terms of performance and reliability.

Getting Started

First and foremost in getting the e-procurement process right is to select a solution provider or partner that knows what they are doing and is willing to work closely with you during the early part of the process. The e-procurement plan for each company will be somewhat different in order to meet the specific needs of the company. There is however a general order to things that will provide the best opportunity for success.

To realize the most benefit from your e-procurement process, you will need to:

• Develop your strategy

• Complete a detailed discovery

• Learn to understand how to set up your procurement events, even if handled by your provider.

• Use a provider with a high quality process and an extensive database for sourcing suppliers

• Clearly communicate how events will be run or executed to all involved parties • Review the process for sustainability and adjust as necessary

As mentioned earlier, it is incumbent upon your e-procurement solutions provider to be able to assist you in completing these tasks in a reasonable period of time. You should be checking the background of the team and the leadership that will be assisting you to ensure their understanding of your industry such as operations, technology, procurement, warehouse management, logistics, transportation, loss prevention, store management and other functional areas of your business that will be sourcing products and services. It is all about detail because knowledgeable attention to detail will improve quality, reduce costs and ensure the success of your company’s new e-procurement process.

Reasons to Use E-Procurement

Sometimes an explanation can be lost in translation so we have developed the following 20 reasons why utilizing the technology-based e-procurement process can provide significant benefits to you and your company. These are certainly not all of the benefits that can be derived from the use of the e-procurement process, but it is a good starting point.

While this list is not ranked in order of importance, many might argue that not much is more important than the #1 item which is improved earnings.

• Improve net earnings

• Enhance safety

• Reinforce corporate social responsibility

• Find new sources of supply

• Streamline the procurement process

• Elevate supplier accountability to meet your standards

• Improve quality

• Reduce costs in a volatile market

• Ensure a competitive environment

• Buy at market pricing

• Maintain a reliable history for comparison

• Educate suppliers as to how you wish to procure products

• Eliminates questions through effective supplier training

• Maintain consistent product specifications

• Improve negotiation

• Improve carbon footprint

• Simplify your “award of business” process

• Free up time for other tasks

• Process works for all product categories

• Provide a detailed audit trail

E-procurement offers many benefits for a broad range of companies in a variety of industries, assuming that the process selected is a high quality system with an extensive supplier database. We must also assume that the e-procurement process is implemented properly with the purchasing company and that the experienced e-procurement system provider works in concert with the buyer in order to realize optimal cost savings.

Numerous technology advancements have streamlined the e-procurement process and made it more user-friendly and less expensive. A company today can expect to reap significant benefits from e-procurement, including: saving money on purchases, reducing the time involved in the purchasing process, tracking current and archival activities and results, eliminating waste and improving the overall efficiency of the supply chain. Take advantage of the technology advancements and don’t overlook the benefits of implementing an e-procurement process to strengthen your company’s bottom line.

Ron Southard is President & CEO of SafeSourcing, LLC, a leading e-procurement company that is headquartered in Scottsdale, Arizona. SafeSourcing helps buyers save considerably on costs by providing tools that enhance the ability to do business in a smarter, more streamlined and cost effective way. SafeSourcing increases efficiency, improves customers’ profitability, and provides superior value for customers’ stakeholders. SafeSourcing pro-actively supports consumer safety and environmental standards throughout the global supply chain management process.

Tim Hull is President & CEO of TDH Marketing, Inc., a Dayton,Ohio-based marketing firm with alliances and joint ventures in the U.S., England and Singapore that support its global client base. The firm provides business development, strategic, marketing, communication and operational planning and implementation for large, mid-size and small corporations looking to develop profitable, technology-driven business growth. Mr. Hull is a shareholder and serves on the Board of Directors of SafeSourcing LLC.