Online procurement software solutions, commonly known as e-procurement systems, have been around since some time now. Back when these solutions were first introduced, the business world was wowed by the immense capability of these systems; but then the dot com bubble burst, taking down a huge number of businesses and technologies with it. E-procurement faded into a dark period of obscurity for some time, but those who knew how to properly harness the power of web-based purchasing have stuck by it, bringing about its resurgence.
Here are the some of the most talked about e-procurement implementation stories by global leaders who gained considerable competitive advantage through the technology.GlaxoSmithKline
A global research-based pharmaceutical company with revenues exceeding $42.4 billion (2013), GSK is known to spend millions of dollars each on lab supplies. Prior to e-procurement, the company relied on paper cataloging and phone communications for procurement purposes. GSK soon recognized the need to make the switch to procurement software solutions after an extensive spend analysis at the higher levels.
The company’s procurement officers chose to opt for a solution which enabled them to include content from any lab supply company in the world. Their system took a total of 8 months for complete implementation, and the final product included requisition creation, approval, distribution, and receipt creation, among other functionalities. Currently, the same software solution has over 200 suppliers enabled for GSK in the US and UK alone. More than half of all spend from the company are managed through e-procurement.
When asked on the reasons behind their wild success following the implementation of procurement software solutions, a spokesperson indicated towards the reasons being a strong support structure for the system, extensive change management, and an accurate content catalogue for end user compliance.Hewlett-Packard
One of the earliest adopters to spend management tools, including automated procurement, Hewlett-Packard has an annual spend of a staggering $60 billion! An amount this substantial warranted comprehensive spend analysis, triggering a focus on achieving aggressive savings. This led to the use of procurement software solutions back when the rest of the world was pretty much unaware of what spend management technologies entailed.
When choosing a solution provider for e-procurement, HP had its focus on global capabilities, since the company operates in 170 countries worldwide. Within a few years of implementation, it was reported that the company achieved over $1.8 billion in spend reduction. Contract compliance with suppliers also went through the roof, reaching an estimated 80%, while the supply base was further streamlined leading to an increased spend being directed towards preferred suppliers through the system. The immense procurement savings from e-procurement enabled HP to focus more towards corporate spending and strategic supply chain instead of indirect spend.
The primary lessons from HP’s shift to software-based purchasing were:
Necessity of executive level support in e-procurement processes. This drives system use and compliance.
System ease-of-use and accessibility should be a prime focus to promote adoption
Integration of the technology platform in use, and procurement software, should be seamless. A long-term technology road map can work wonders.
While the two companies we looked upon have their empires stretching all over the world, and their e-procurement systems are staggering in scope and breadth, the same underlying principles as these companies can be applied to any organization’s web-based purchasing system to attain similar benefits.
USA +1 888 237 9801
UK +44 (0)560 307 4470