Everyone’s doing it. It’s old news, most businesses say, e-procurement was embraced by both private and public sector enterprises years ago in a drive to become more efficient, cut costs and improve supplier relations. But has it lived up to everything it promised? And is it being done well enough to ensure that real savings are being achieved? Last week, a major supplier of electronic components told a purchasing conference that his company had taken part in 1,400 e-procurement projects over the past few years, but only a handful were truly successful. How can that be? According to Keith La Roche, e-commerce manager at RS Components, it comes down to poor planning. Companies are not thinking their e-procurement strategies through and failing to involve key suppliers at the earliest stage of implementation.
Further evidence of firms struggling with e-procurement were highlighted by a recent survey by Oracle and the Bristol Business School. Of the 105 private and public sector purchasing managers polled, nearly a fifth reported they were yet to see any tangible benefits of their e-procurement adoption. A further third said they were encouraged by results from other firms. Interestingly, 60 per cent cited a lack of participation in the supplier community as a barrier and more than 50 per cent said it was just too difficult to make a case for investment.
Over the past five years there has been a definite uptake of and improvement in e-procurement technology, complexity and skills. But despite this it seems organisations are still struggling to make it work.
La Roche said this is because both purchasers and suppliers are finding e-procurement is much more difficult to implement than originally thought.
“Some organisations are on their second or third attempt and have spent millions on implementation only to see it not live up to expectations. The technology is easy. What’s difficult is getting buy-in from suppliers, the end-user and driving compliance.”
The Oracle survey also found 67 per cent of respondents thought inadequate training on e-procurement use was one of the biggest barriers to adoption.
La Roche said firms fail to achieve the benefits by not delivering change to their whole supply chain and educating their staff. Firms should reinforce training with an e-procurement exercise promptly after training or knowledge and confidence in the new system will be lost. And he suggests nominating internal champions to promote the value of e-procurement. Altering buying processes to fit the new technology was also key to a successful transition, he added.
“When setting up e-procurement meetings with customers, we ask them get the HR department to talk about training - something most of them didn’t consider.”
The difficulty of enforcing process change is something Silla Maizey, procurement director at British Airways, has experienced. Speaking recently at a CIPS event she described how hard it was to ensure staff were sticking to new processes she put in place. “You have to be nasty before you can be nice,” she quipped. Employees caught buying off-process receive a warning letter from herself then one from the chief financial officer.
According to an analysis by Deloitte, the public sector could save £1.1 billion over three to five years using e-procurement.
The December 2005 deadline for local authorities to go live with e-procurement is looming and the Office of the Deputy Prime Minister announced last week that funding for local e-government will be cut from £150 million-a-year to just £7million next year.
David Parry, senior consultant at Impower, a consultancy specialising in supporting 50 local authorities with e-procurement, says it is often more difficult for public sector projects to convince suppliers to take part and employees to adhere to new processes.
Andrew Douglas, senior procurement specialist at Oracle, said he hears “all too often” from public sector clients that “while there is pressure to deliver savings there is not nearly enough investment in purchasing skills to achieve it.”
The key to e-procurement success is not just getting a system up and running but achieving buy-in from staff and suppliers. That’s where the real effectiveness and returns on investment will be seen.
Quelle: SupplyManagement, 06.10.2005
