21 September 2000 | David Arminas
Supermarket Tesco has begun a six-week web-based e-procurement pilot for stationery and consumables, including plastic and paper bags, for its bakery and meat departments.
The pilot, at its Baldock, Hertfordshire store, comes after a successful two-month trial for stationery at Tesco headquarters. The company, which spends around £50,000 a month on stationery for its 640 UK stores, worked with its supplier Guilbert using Marrakech, a global transaction company that officially launched this month.
If the Baldock trial is successful, Tesco, which already widely uses electronic data interchange (EDI), but no web-based system, will extend the pilot to 30 stores and include all non-saleable items, said Jerry Lawson, e-commerce business-to-buisiness project manager at Tesco.
No up-front software purchases are required by client and supplier, as all the IT is designed, customised and maintained by Marrakech and remains on its system. Suppliers pay for the service with a small percentage on each transaction.
Facilities such as billing and payment are included. "This is fundamental to everybody," said Lawson. "We might have to re-negotiate terms with suppliers, but ultimately if it means the supplier is paid earlier and if they are paying only 1.5 per cent [for the service], it will make the process simple and beneficial."
While Tesco is the UK leader in selling to customers on the Internet, it has held back on e-procurement for non-saleable items because these products are "not fundamental to our business", said Lawson.
If there is no transaction, then there are no fees to be paid by suppliers. "We're a high-volume, low-value transaction business, so anything that smooths the transaction process, reduces overheads and returns and gets us paid quicker means that we need fewer customer service staff, and that is very good for our industry," said Jerry Green, head of e-commerce at Guilbert.
"Marrakech's Global Commerce Network doesn't replace negotiations and strategic sourcing," said Marrakech chief executive Kelly Murphy. "It only makes the processes easier. We are not a marketplace and business will remain about relationships."
Around 30 companies are using Marrakech's GCN package. Kelly aims to launch products specifically aimed at small and medium-sized enterprises by the middle of next year.