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So you've decided to take the plunge and invest in an e-procurement tool, but how do you choose which vendor to work with? How do you know which will provide the technology that works best with your existing backend systems? What about the services around the deployment of that software? How do you determine whether the partner you select now will be around in the future?
There is a myriad of offerings out there all promising to provide an automated procurement mechanism. These promises come with a multitude of pricing structures that reflect different value propositions from each vendor. How do you cut through the hype and ensure that you select the most appropriate partner?
First, you need to understand and define what your business needs - not what vendors and 'experts' say you need.
Then evaluate the value propositions of each vendor against your requirements. Make the vendors do the work - this will help you understand the value of their intellectual capital.
Finally look at the credibility of the other partners and customers that have selected to work with each vendor.
How can you define your business needs? Try asking yourself the following questions:
1. Are you looking for a system that just automates your internal procurement processes? If so then a simple order entry and purchase order system that offers no external communication or integration would be sufficient.
2. What about workflow requirements - are these catered for sufficiently to scale with your business? Also, what about the reporting facilities - do you have sufficient management information to enable you to understand who is buying what from whom within your organisation, so that you are better able to manage this spend and your inventory levels?
3. How do you communicate with your suppliers? How do you access their catalogues? Is this paper based and regularly outdated? Do you require an electronic mechanism? If so - is an EDI or similar system sufficient for your requirements?
4. Do you need to trade in an environment with access to a consolidated supplier base so that you have access to a multitude of suppliers instantly, enabling you to compare pricing across multiple categories at any point in time? Would an electronic marketplace be the most feasible solution to provide this?
5. Must the technology you choose fit with your accounting systems? And should this be over-riding criteria for selection of your system or not? What are the integration issues and how easily can they be resolved?
6. Apart from technology issues, what business services are provided by the operator around the successful deployment of the proposed solution? This should include not only the business analysis and training around the deployment, but the adoption and take up programmes initiated by the marketplace operator.
7. What about follow-up services to ensure that the system is fully utilised within your organisation?
8. What happens after the deployment of the solution - does your relationship end there? Have you determined whether this investment is just an isolated element of your business deployment; or is this a more strategic element of your future e-business strategy?
9. If so - what implications does this hold for your choice of marketplace operator? Do they share the same vision as you? Do they have the capacity to change and grow in the same direction as your requirements? Is the marketplace operator able to offer strategic services that enable you to capitalise on your investment and use this as the basis for further efficiencies?
10. Have you considered what your next investment post the rush to deploy e-procurement will be - what about logistics management, what about transportation and
fulfillment, what of end-to-end supply chain management? Will these become a fundamental requirement for your business? Will the partner you have selected for your e-procurement solution be able to
fulfill your requirements for these solutions?
The answers to these questions should form the basis of your evaluation criteria. Get the vendors to do the legwork in answering these questions for you. Get them to demonstrate the vision of the path they are able to walk with you - and then see whether their road map fits the destination you are aiming for.
MOST PEOPLE tasked with spending a
South African company’s money should know more about the concept of cost
management and its impact on profitability.
Cost
management - not price management -
is what professional procurement should be about.
However, too few SA buyers, especially those involved in the indirect
goods, MRO, purchasing space, understand the concept or how to implement it
properly. Indeed, SA buyers’
obsession with getting the cheapest price can be the antithesis of
professional procurement
While
cost management has become “the hot-button” of the purchasing world, it
should not be dismissed as just another fad.
Cost management is about cost
avoidance across all aspects of the procurement process. Price is just a
single factor that might impact negatively on other cost elements such as
total cost of ownership (TCO).
SA buyers need to be able to
evaluate the validity of the TCO principle and learn practical methods on
implementing it. Other elements include quality of service, type of service
from supplier, shelf life of products, exchange rates, clearing, transport,
etc.
It is just as important to ensure
proper supplier evaluation is implemented because the cost of poor delivery in
delayed manufacture, lost business or bad quality can quickly erode any price
saving made.
Procurement is not about
“horse-trading” alone. A
skilled procurement officer looks at all aspects and manages the cost drivers
relating to individual purchases.
The advent of supply chain
collaboration with integrated computing systems means one has a lot more
supplier information readily available. It is then possible to manage supplier
performance more effectively. As importantly, one gets an insight into what
drives supplier costs and gets to understand what is entailed when demands are
made on suppliers, both realistic and unrealistic and how that drives up
costs.
Procurement isn’t rocket science.
It’s mostly common sense, which, if applied correctly, can make a big
difference to a company’s profitability.
Miraculum is proud
to welcome new members to the community.
Canon
Contract Stationers
DG Store
First
Data
First
Technology
GPT Cash Systems
Imperial Car Rental
Ince
Introstat
Moduline
Memtek
Nashua
NEC/Packard
Bell
Nedcor
Old Mutual
OSEC
The Internet
Solution
Xerox
DIMENSION DATA has a global strategy to deliver integrated e-business
services. Miraculum fits into this vision and strategic framework because we believe they have the skill to implement an integrated e-solution that
will continue to deliver value to their community over an extended period of time. Miraculum is the prime vendor in this space because their value
proposition is substantially broader than that of any of their competitors. It will be fundamental to the successful delivery of their
clients' e-strategies on a global platform.
Jeremy Ord, Executive Chairman, Dimension Data PLC
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