29 November 2001 | David Arminas
E-procurement development must not outpace strategic change in other corporate areas, a senior executive of a leading global technology company has warned.
Xerox could have progressed faster with e-procurement implementation, but it was not the highest priority, said Lord James Lawler, head of procurement in the company's Europe, Middle East and Africa division.
"It is only fifth or sixth highest priority, but it facilitates the first and second priorities," said Lawler, Xerox's executive director and chief financial information management and procure- ment officer.
In a presentation to CIPS Central London branch earlier this month, Lawler explained that since implementation two and a half years ago, £425 million-worth of business has been transacted and half of Xerox's annual £1.7 billion spend is now going through their business-to-business solution, called ePoch. By the end of 2002, the target is for ePoch to handle 80 per cent of the spend.
Xerox has consistently reduced its cost base by 20 per cent each year, partly through e-procurement, but also through careful management, he said.
However, for companies about to launch e-procurement, Lawler cautioned that it is not "a shrink-wrapped software, but a knowledge management tool for turning information into action". This is where its true value lies, as the supplier will get closer to Xerox because of the information sharing.
The greatest challenge for the company has been supplier management, added Lawler. Choosing a supplier is now less about getting the lowest price and more about the ability to manage the relationship.
"What we didn't focus on was the change in that relationship electronic procurement would bring," Lawler told SM. "We actually thought, perhaps naively, that everybody was ready to move with us. Probably nine months into the project, we realised we were not getting the right degree of supplier engagement."