Procurement through the Internet has many industries running for cover. Companies that seek quicker procurement solutions, especially on basic consumables, are now looking toward the Internet. E-procurement is essentially changing the buying method. E-procurement allows your employees to order and receive supplies and services while never leaving their workstation. E-procurement streamlines the traditional purchasing process through the use of Web-technology. The result both cost savings and improved responsiveness from your strategic partnering alliance suppliers.
An issue of Inter@ctiveWeek reported both Ford Motor and General Motors had moved their $80 billion each purchasing online. Ford is Partnering with Oracle and GM with Commerce One to build their systems. “This is the only way we’re going to do business going forward,” says Harold Kutner, vice president of worldwide purchasing at GM. “It’s not going to be an option [for GM’s suppliers]; it will be a requirement.”
In EC World it was stated that, “Enterprise-wide electronic procure-to-pay solutions truly deliver on the promise of the Internet to provide streamlined solutions for business.” “Early adopters of online ordering primarily opt for employees to shop in virtural megastores such as Office Max or Staples.”
Listed below are five types of suppliers that can effectively participate with you in E-procurement, regardless of their size.
1. Companies currently conducting e-commerce with transactional Web sites.
2. Suppliers with Web sites for marketing purposes but not for taking orders.
3. Suppliers without Web sites who can still support EDI and/or CD-Rom catalogs.
4. Merchants without Web sites.
5. Internal suppliers from within your own company.
ECWorld talked about Los Angeles County taking the plunge into Internet purchasing. Chrys Varnes, director of electrical commerce for Los Angeles County’s Internal Services Department said, “Lead times were too long, agreement prices were often too high, and the agreements themselves were too hard to find and use.”
Los Angeles County is the largest in the United States, overseeing 4,083 square miles, two-thirds unincorporated. The geography includes packed urban areas, sparsely populated maintain ranges, 76 miles of coastline and offshore islands. The County employees a total of 84,000 people and has buyers, working out of 36 different buying locations to serve its 9.5 million residents.
To create the County’s Acquisition Management Information System (CAMIS), they selected an Internet-based system that had browser-based access. This allows even the smallest potential supplier to participate. Commerce One emerged as the winner with their Commerce Chain Solution. The CAMIS consists a Web-based automated procurement system and an extranet application that allows real-time links between the suppliers and the county. Not only does this allow automating order processing, additionally suppliers can provide product and pricing updates to their catalogs. At writing, Los Angeles County can select from over five million items from over 5,000 suppliers. Also buyers are able to compare prices across suppliers, insuring the best price for individual items.
It cost Los Angeles County approximately $2 million to implement CAMIS, but it is only less than one third of one percent of the total purchasing dollars processed in a single year. Recently, the County’s central warehouse was closed. This represents savings of nearly $30 million over five years. As paper catalogs become obsolete no sooner than they are printed, CAMIS is constantly updating.
Now that I’ve gotten your attention, what are you doing to take advantage of this trend? If you think the graphic arts supply industry is a safe harbor in which to weather this cyberstorm, think again. We are in the midst of an incredible economic revolution. The rules are changing before your eyes. Those who can see past their nose will receive the rewards, unfortunately that will not be everybody who reads this column. Will it be you?
Ed is the Founder and CEO of the 501(c)(3) non-profit public charity, Cigar PEG Philanthropy through Fun, and president at Rigsbee Research which conducts qualitative member ROI research and consulting for associations and societies. He has been called “the dynamite that broke up our log jam” by association executives—rarely politically correct and almost always provocative—and from a dozen years as a United States Soccer Federation referee, Ed calls it the way he sees it. Exceptional resources at www.rigsbee.com.