How e-procurement will affect suppliers and recruitment providers - 11/2001

For many companies e-procurement will become an essential part of their overall purchasing and supply process.

It is near impossible to pick up a newspaper, read a trade magazine or listen to marketing news without hearing about business-to-business electronic commerce (e-commerce). More specifically, most of the news is about electronic procurement (e-procurement) or the ìbuy sideî of e-commerce.

By using evolving Internet technology, customers are able to simplify their procurement process by utilising electronic tools to manage the interface with their suppliers.

E-Procurement systems have a broad appeal because they span all market sectors - From traditional manufacturing through to leading edge biotech firms, all companies perform some sort of purchasing function. The benefits are numerous, allowing the customer greater speed and efficiency; global reach; increased management control; and most importantly, lower total costs.

From electronic requisitioning through to online payment, the advantages to the customer are very significant.

So how can leading recruitment providers help their customers to implement this important strategic objective, and at the same time continue to build a strong long-term relationship?

The most obvious, but perhaps the most important way, is to ask your customers how you can change your own business processes to reduce waste and proactively assist with the implementation process.

Most e-procurement players will usually require you to receive and process purchase orders electronically; for you to be able to offer pre-agreed search & selection fees for a certain period of time; and to invoice and to be paid electronically. More radical requests may include having a fully transparent, online system whereby customers can track and review the whole recruitment process by remotely viewing your management database.

So lets take a look at some of the requirements of an e-procurement strategy in more detail.

The main advantage to e-recruitment providers is that they already utilise electronic commerce processes that adds value for customers. The receipt and processing of electronic data is already an integral part of operational management.

Generally, customers who embark on an e-procurement strategy are seeking a smaller number of providers who can offer a service for all of their divisions/countries where they are situated together with universal search and selection fees. Recruitment providers who are able to offer this capability will be far more attractive than those having a local presence.

Despite the numerous advantages that an e-procurement system offers, there is a huge amount of upfront effort required to build and if necessary, to modify electronic catalogues. These catalogues are an essential part of any e-procurement system in order to give employees the right mix of products and services to choose from and to provide adequate information in order to buy at pre-agreed contracted rates. Proactive suppliers who recognise the amount of time-consuming work involved can only benefit by volunteering to maintain their own catalogues.

Those customers who are implementing e-procurement systems are seeking to simplify the whole purchasing process by eliminating waste, and consequently cost, in the total supply chain. The total supply chain includes how they pay for the products and services. Payment of suppliers by self-billing or purchasing card offer the customer cost benefits and sometimes improved management control. Those suppliers who recognise and can accommodate these payment methods can often establish a preferred status.

By using the Internet to link directly with suppliers, sub-suppliers, distributors and customers, companies can reduce the time of labour intensive tasks, speed up the order and delivery process, and receive instant and visible feedback from an integrated supply chain. Suppliers who proactively assist in the development of this process will undoubtedly become more attractive to customers.

In summary, winning e-recruitment companies will be those who gain a competitive advantage by understanding the changing needs of their customers and being nimble in terms of offering flexible and streamlined solutions to managing customer-supplier partnerships.

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