photo: Michael Klemen
Many organisations spend 60% or more of their revenues buying goods and services, so reducing and controlling this cost has a direct effect on the bottom line. There are IT solutions available to make purchasing both time- and cost-efficient for all sizes of company.
A centralised procurement application can help your purchasing manager analyse cross-company spending and identify savings opportunities and preferable suppliers. Armed with this knowledge, you can use fact-based negotiation to get better deals from a controlled number of suppliers.
You also might consider investing in an Internet-based application so you can set up an online community with your suppliers, in which you can all communicate and trade electronically, reducing lead times and administrative overheads for all parties. Internet procurement enables companies to acquire goods and services at the lowest possible cost by automating the entire purchasing lifecycle from planning to procurement to payment.
The Internet offers wonderful opportunities for doing business in new and more efficient ways. Small businesses can use it to jointly negotiate bulk discounts on essentials like stationery and office equipment. All your company needs is one computer with an Internet connection and a web browser. You can then investigate which web sites offer co-operative buying or other types of discount. For an idea of what's on offer, look at www.works.com or www.buyerzone.com, and keep an eye on the press for news of similar sites in Europe.
If your business is larger, you could use an Internet-based procurement application to establish direct electronic links with suppliers. This means that your orders can be raised, transmitted and processed faster, saving you money on admininstative costs and fostering better supplier relationships.
On the other side of the coin, online exchanges offer suppliers an exciting new way of doing business on the Internet. The lead partner in a supply chain invests in a private e-business web site in which all of its suppliers worldwide can participate and interact. Purchases are made electronically, resulting in faster lead times and reduced inventory. Secondary suppliers can instantly offer to make up for any shortfall of the primary supplier, and suppliers can also band together to share freight costs. Ford is leading the way with its AutoXchange site, which will be launched in January.
Michael Klemen is Senior Vice President, Applications Marketing, Oracle EMEA. Questions and comments may be sent to firstname.lastname@example.org