Biggest online savings from sourcing, not transactions

16 October 2002
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17 October 2002 | David Arminas

Purchasers are missing the point of e-procurement if they think the biggest savings come from more efficient transactional processes, said Ninian Wilson, senior vice-president, global procurement, at Cable & Wireless (C&W).

He urged purchasers to focus on e-procurement that forces people to use approved contracts and gives buyers access to supplier information as the major contributors to savings.

C&W's e-sourcing tool has allowed all purchasing staff in the US, Japan and Europe to operate together, with immediate access to the same information.

"The biggest win for us has been a repository of processes where I can manage 12 vendors globally," Wilson told delegates to the "update on e" seminar.

"It also gives us intelligence on suppliers and competitors, which is invaluable because you should know what your competitors are doing," he said.

C&W started its five-year e-procurement programme in late 2001 and has beaten its first-year savings target of £3.1 million to reach £3.5 million.

"However, next year will be the big year," Wilson said. "I've targeted £29 million of savings."

The system, built for only £15 million of the budgeted £25 million, has been used for £400 million of goods and services, and compliance has risen from 60 per cent to 90 per cent.

"Part of increasing compliance is to make it easier to raise orders and I have a compliance target of 95 per cent," he said.

He was convinced that e-catalogues work but said there was still a big question over whether suppliers or the client should control it and how many suppliers should be in a catalogue.

"We have 140 suppliers on ours, which is really too many. We could have got away with around 80."

Wilson said that as controversial as e-auctions are, they are here to stay.

He also rejected the argument that e-auctions damage supplier relations and pointed to savings that have been as high as 50 per cent on some IT equipment.

SMoct2002

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