12 June 2014 | Will Green
Only 17 per cent of buyers have bought goods for their job online. Will Green asks procurement specialists to understand why.
The benefits of shopping online seem to make perfect sense in the context of home life. No traipsing round shops, easy product and price comparisons, a few clicks and then wait for the postman to arrive. So why aren’t purchasers using this amazing tool professionally?
According to buying organisation YPO, almost nine in 10 public sector buyers shop online at home but just 17 per cent have bought anything via the web as part of their job.
YPO says online transactions are cheaper than phone calls, mail or face-to-face, and it’s possible to buy online while maintaining security and audit protocols.
Simon Hill, managing director at YPO, urges buyers: “Translate your private behaviour into your professional life.”
But he adds: “Remember you would never go for a deal in your private life that you hadn’t convinced yourself was the best deal for you. Exactly the same principle applies in your professional life, as long as you can demonstrate you have done it in a competitive, transparent and auditable way.”
For Catherine Cooper, head of procurement and supply chain management at housing association Thrive Homes, online purchasing raises the spectre of rogue spend. “When you talk about purchasing online I automatically think of ad hoc purchases, and as a procurement person you kind of want to prevent ad hoc purchases to a degree,” she says.
She also says the EU rules they must operate under and the structures of her organisation make online buying “cumbersome”. “This is possibly because of the complexities of the regulations that support us as an organisation, about transparency and visibility and making sure people are approving the right things, and making sure purchases go through to the right budgets,” she says.
However, Ian Robinson, procurement director at Innovia Films, says online buying does have its place. He has used websites such as eBay to “prop up” legacy IT systems until they are replaced, or to add office furniture to a suite that has been discontinued. “If we have an old legacy system that we’re propping up, getting ready to replace it, and one of the file servers goes down, it’s quite possible they no longer exist from the manufacturer and we may source one second-hand to prop up the system for six months or whatever until we get the new piece of kit commissioned and in place.”
Miguel Angel Pescador, purchasing manager for energy at Kimberly-Clark Europe, says only on “very limited occasions” would they buy something outside of standard processes with approved vendors and purchase orders, but the internet was very useful for research. “It helps when searching for suppliers, getting information about markets and suppliers, and learning about good practices and opportunities,” he says. “It’s like having the opportunity of participating in round tables every day, and this is very positive, but you have to be careful and selective.”
But what about the dangers of internet buying, illustrated so clearly by the hacking attack on eBay last month that led to the company’s recommendation that everyone change their passwords?
“There are a number of potential pitfalls,” warns Robinson. “We have an account with eBay; we’ve changed the password.
We only use it for non critical one-off purchases.”
His reservations don’t stop there. “You don’t know who your supplier is if you’re just buying blind off the internet. We may identify a supplier and then we go through the normal procurement route with them but we wouldn’t just do it all online. You can have a very plausible website saying all the right things, but where’s it set up? Are they adopting proper ethical practices?”
This is an important point for Cooper, who says social value and sourcing from local suppliers are key considerations. “Because that is one of our drivers I wouldn’t necessarily encourage people to be going online and ordering from anywhere.
We have a social conscience as well as a commercial requirement,” she says.
Security of supply is another potential bugbear, according to Robinson, but the problems really start with payment terms.
“I have never seen an option to go for 60 days end of month online,” he says. “It’s pay up now with your credit card and we’ll ship it to you. That is definitely going to limit our appetite for buying online simply because of the working capital that gets tied up that way.”
Robinson also worries about the time it can take to buy online. “Sometimes it can be really fast and it’s four clicks and you’re done. Other times I’ve had to stop some of our people when they’ve been on somebody’s website for a couple of hours and they’re still filling in details.”
Perhaps the most important lessons to be learned from online buying lie with the relationship between procurement professionals and internal customers.
Todd Bradley-Cole, procurement planning and support manager at John Lewis Partnership, points out the difference between the experience of online shoppers on his company’s website, and the experience of stakeholders making purchases.
“If you think about how we trade with people in our main way of business, if we did the same inside the business, wouldn’t that make more sense?” he says. “You want to guide people to buy stuff and it needs to be easy, user friendly and it needs to be intuitive.”
Bradley-Cole says customers are expecting things to happen much more quickly than before.
“Procurement isn’t about the fact that you have all the knowledge and all the ideas about how to solve business problems. Sometimes you can be a bit more creative and technology has that opportunity to do that,” he says.
“If someone comes to you saying where do I buy this stuff from, if you haven’t got an answer or don’t get back quickly enough, they’re off somewhere else and they’re doing it themselves. How do you engage with people and respond to their need for speed, but also deliver a quality service with the right kind of protection for the organisation that you would expect to deliver as a professional procurement person?
“It’s difficult because you don’t want to cut corners but you have to deliver a service. We are going to have to be quicker at responding.”