B2B e-Commerce or e-Procurement is here to stay. Vendors and buyers alike who leverage the power of e-Procurement receive numerous benefits including, among others:

• The elimination of manual processing and B2B processing cycles
• Elimination of Dual-Data Entry (DDE)
• Improved data quality and movement, data mining, and real-time reporting
• Improved demand and supply forecasting
• Management of complex logistics operations
• Improved cash flow
• Better management of contracts
• Improved communications between business partners

Acknowledging that B2B e-Procurement is the wave of today’s procurement practices, I’d like to revisit a topic mentioned in an earlier blog, the Patronizing Partnership, the best way to leverage B2B e-Procurement. The ideal relationship between vendor and buyer is a partnership that is mutually beneficial. In this kind of a relationship, both parties work to ensure that each financially benefits; the vendor makes money and the buyer saves money. In a Patronizing Partnership, buyers and vendors tie their procurement goals together based on economic outcome, coordination improvement, and process collaboration. These goals have energized the B2B eProcurement wave.

A key component of B2B eProcurement is information sharing in which both buyers and vendors alike can readily share information about the entire transaction process from the time the PO is created on line, the order is approved, placed, received, and acknowledged to the time when the item is shipped, received, invoiced, entered into the GL, and paid. During this process, feedback about product quality, contract consistency, and delivery, among others go both ways. In the book, The One-Minute Manager, Ken Blanchard writes that feedback is the breakfast of champions. By sharing information, vendors improve customer service and both parties improve the quality of their relationship and cooperation. Both are winners. Information sharing also champions a high level of trust and performance expectations, because it makes the entire procurement process transparent. 

Leveraging the power of information sharing through B2B e-Commerce, vendors and buyers are able effectively to create and strengthen a Patronizing Partnership which is financially mutually beneficial. 

How has B2B e-Commerce benefitted your company?

Procurement specialists have long been recognized as strategically key players in business, but their roles, like most others in the company, are changing with the advance of technology.

Where once procurement services were seen solely in terms of their role in controlling costs, managing inventory, and coordinating vendor services, a recent survey of financial officers has shown that procurement experts are in a position now to contribute to a company on many new fronts.

“Procurement has traditionally been recognized and rewarded solely on the basis of its cost-cutting ability. But through the productive use of automated systems, the function has been able to move beyond simply meeting savings targets to help address larger, more-complex issues such as managing cash and capital, managing risks to business performance, and expanding into new markets or business lines.” said Sam Knox, senior vice president and Director of Research at CFO Publishing, in a statement announcing the release of the latest survey.

The study attributes this new role for procurement to developing technology and envisions even greater roles for procurement experts if they continue developing their supplier networks, bring additional automation to their processes, and increase efficiencies.

Procurement experts have long served business interests in some very essential ways. Their impact on business can be even more significant.

Have you studied your procurement practices lately? Could your procurement operations do more for your business? If you’d like to find out more, Contact Us.

With prices rising, it may be time to take a closer look at procurement. For many businesses, the procurement process represents a valuable opportunity to save money and reallocate resources. In a recentBain & Company executive survey, more than half of the respondents said cost pressures constrain their ability to make strategic investments. Considering that procured costs can represent 25 to 60 percent of a company’s total costs, it’s well worth examining how this process could be managed more effectively.

Despite procurement’s significance and cost-saving potential, there is plenty of evidence to suggest that for many companies, this is an area with lots of room for improvement. When Bain & Company surveyed executives about their experience with past procurement management initiatives, 72 percent of the respondents felt that they do better and save substantially more than they have in the past. This belief was expressed just as often by the heads of procurement as it was by CEOs and CFOs.

While most executives realize they could reduce their procurement costs, actually making it happen is no easy task. Without a predefined, systematic plan for reducing costs, most organizations never fully reach the potential savings. But again, it’s not easy to create and implement such a plan. For example, 77 percent of the executives surveyed noted that their companies’ procurement efforts are especially weak when decisions are fragmented across many buyers. 

This study demonstrates the need for better integration of the procurement process. In fact, research indicates that by implementing the right tools and processes in a number of key places, you can cut procurement costs by 10 percent. Procurement Partners offers a wide variety of automation and cost containment processes to help you save that 10 percent, or even more. Contact us to learn more.

Happy New Year!

Regardless of how you fare with New Year’s resolutions in general, now is a great time to resolve to squeeze every penny you can out of your procurement dollar. Looking back on our blogs from 2011, you’ll discover some great tips to help you realize savings by updating your organization’s procurement process. For your convenience, I am summarizing some of the high-profile tasks you should take on immediately.

Task #1 - Make procurement a priority in 2012.

Task #2 – Commit to forming a mutually-beneficial relationship with your vendor partners

Task #3 – Commit to exploring and leveraging eProcurement

Task #4 – Create and implement an effective plan