Loyalty to suppliers stops food companies adopting e-sourcing

25 October 2012

Want the latest procurement and supply chain news delivered straight to your inbox? Sign up for the Supply Management Daily

25 October 2012 | Adam Leach

Companies in the retail, grocery and restaurant sectors are resisting e-sourcing because they are concerned about how it will impact on their relationships with suppliers, according to a report.

The Sourcing Confidence Bubble, published yesterday by e-sourcing company Intesource, found that of those companies that have not yet adopted an e-sourcing solution, more than 45 per cent are worried about how it would impact on existing supplier relationships. A further 36 per cent said they are sceptical about how successful e-sourcing is.

However, Intesource - a proponent of e-sourcing - argues that companies that don’t engage in e-sourcing are over-confident that they are getting the best price. It said greater levels of competition mean bigger savings are delivered through e-sourcing. The report cites figures from Aberdeen Research that show that companies using e-sourcing get average savings of 16 per cent. Intesource says its own customers get an average of 18 per cent in savings.

Len Kaplan, vice president of sales at Intesource, said: “We found that procurement teams leave significant savings on the table without realising it. Part of the issue revolves around supplier relationships. When a supplier performs as promised, companies rarely question if they’re getting the best possible value and terms.

“A suppliers’ true rock-bottom price is almost always lower than a buyer suspects. And it’s even more likely another qualified source may be hungrier for new business. Buyers just need to know how to shift the tables.”

The report found that the category providing the greatest savings opportunity for companies in the retail, grocery and restaurant sectors using e-sourcing is non-resale goods and services, with 44.1 per cent choosing it. The second most popular was resale goods and services, chosen by 35.3 per cent. Capital expenditures categories were chosen by 20.6 per cent.

Intesource quizzed 38 procurement decision makers at retail, restaurant and grocery companies.

Birmingham, West Midlands
HS2 Ltd
London (Greater)
£50,800 plus up to £10,000 Recruitment Retention Allowance
House of Lords
CIPS Knowledge
Find out more with CIPS Knowledge:
  • best practice insights
  • guidance
  • tools and templates