e-procurement usage correlates directly with big business best performers

The highest performing big global companies throughout all of industry and commerce are achieving much of their considerable success now on the back of e-procurement. They’re not just more likely to possess it, they are much more likely to have integrated it with their key suppliers’ databases and their ERP and supply chain management systems. These are the fascinating key revelations from a study just completed by market researcher Benchmark on behalf of e-procurement software and infrastructure vendor CommerceOne. Benchmark surveyed 150 of the world’s largest organisations (half 5,000+ and half 10,000+ staff) across the USA, the UK and Germany and found what can only be described as staggering correlation backing the case for modern collaborative web working. Benchmark finds that the world’s most successful companies are purchasing three times as much online as low performers, providing five times as many employees with the ability to request purchases online, and are twice as likely to purchase from their suppliers’ online catalogues. They are also three times as likely to use trading exchanges, nearly four times as likely to buy via online auctions and twice as likely to possess a central database of supplier information that links into their web-based e-procurement systems. Just as tellingly, the winning firms are twice as likely to provide an automated format for internal customers to submit requests for a purchase as the laggards, and eight times as likely to have integrated e-procurement with their ERP and supply chain management systems. As for the business benefits these new IT/process investments have brought, the winning companies are more than twice as likely to have outperformed their competitors in terms of market share than low performers, and three times as likely to have outperformed them in terms of profitability during the past year. From then on the figures rocket. They are 20 times as likely to have cut purchasing costs by 10%-plus in three years, over 14 times as likely to have made 10%-plus administrative cost savings in order processing in that time, and seven times as likely to have seen improvements in supplier reliability. Further, they are six times as likely to have successfully reduced stocks while still meeting internal customer needs and three times as likely to have done so and maintained external customer performance. Beyond that they are 10 times as likely to have been able to reduce prices, and three times as likely to have measured improvement in customer satisfaction. Benchmark’s findings are unequivocal on this. Research manager Paul Watts notes in his report that most companies with more than 5,000 staff have fairly similar purchasing strategies. “It is only by putting processes on the Internet that companies have been able to achieve their step change in business performance. It is this, and this alone, that has fuelled the success of the global high performers… In every area measured by the survey there is a direct correlation between high levels of e-business and e-procurement activity and high business performance.” And for those that need more convincing, lower performing big companies are no less than eight times less likely to have integrated e-procurement solutions with core business systems. For the laggards here the research suggests there are three key and urgent requirements. First they need to introduce e-procurement and e-sourcing systems. Second, they should link via web technologies to their supply chains and get more rich ‘content’ from them. Third, and partly as a driver for the other two, they need to reduce the time spent by procurement staff on tendering and contract negotiation.