The decidedly unglamorous world of e-procurement is emerging as a bright star in the exploding universe that is B2B e-commerce. Automating the purchase of indirect (or MRO) goods and services is a natural, and it's all the buzz in the inner reaches of offices across the U.S.
Businesses are seeing savings in money and time, but it's not a simple Webifying of the old requisition and purchase-order process. As with many things that get an e- tacked on the front, to realize the full benefits everyone expects of e-procurement you have to start from the ground up, with the right approach and the right software.
"Great news! We figured out how to pay a lot less for pencils and light bulbs! And it's faster, too!"
Not exactly one of the battle cries people associate with the successes of the new economy. In all the excitement of companies seeing marked growth thanks to a jump to the Net, it's easy to overlook the more mundane advances that can nevertheless improve the bottom line. People are thrilled over sales tripling thanks to the Web site, or new product lines being added as the result of a strategic electronic partnership. These kinds of gains are far more visible and, admittedly, more important to a business's over all viability. But there is mounting evidence that e-procurement is a juicy low-hanging fruit in the e-world, and many businesses are reaching out to grab it.
Generally speaking, a business purchases two types of goods and services: direct, which are eventually incorporated into an end product for sale to other businesses or to consumers, and indirect (or MRO, for maintenance, repair, and operation), which are not. For an automobile manufacturer, for example, all of the parts that get built into actual vehicles are direct goods, whereas office supplies and furniture and items used on the manufacturing floor -- including machinery, goggles, grease, and brooms -- are all indirect goods.
So, what makes a business decide to over haul its indirect procurement? Usually the decision follows a periodic assessment of spending. But businesses no longer have to be content with just consolidating suppliers or simplifying the requisition process. Now, there are thousands or even millions of dollars to be saved in the process.
