Whilst e-Procurement solutions are improving the procurement practices of organisations by eliminating many paper-based and labour-intensive processes, increasing transparency and improving control it cannot deliver the depth of benefits expected by businesses investing in the technology. It must be supported by effective and transparent strategic sourcing.
Wayne van Deventer, National Strategic Sourcing Manager at MWEB CommerceZone, tells Smart Procurement that “when strategic sourcing is enhanced by the power of e-Procurement technology to leverage the aggregated buying power of several organisations, the resultant savings can be significant. ”
“In strategic sourcing exercises conducted by CommerceZone on behalf of its clients, savings ranging between 10% to more than 30% have been achieved on a wide spectrum of products , including indirect and direct commodities.”
“The question that is often asked is why suppliers would be willing to take such a significant knock on their margins,” says van Deventer “It is true that suppliers may have to reduce their margins… But they more than make up for this in terms of volume.”
“Firstly, they effectively acquire several clients without having to negotiate separate contracts with each one. And as a preferred supplier to each of those companies, they are virtually guaranteed a significant slice of those organisations’ spend on their commodity.”
He says: “It’s not only about price. While customers involved in the strategic sourcing exercises are saved the hassle of negotiating price, they know that the suppliers’ commercial and BEE credentials have been authenticated by CommerceZone procurement specialists,” he concludes.