Making E-Procurement E-ZBy Lacy E. Anderson | June 2, 2015 << Back to Articles
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Many jansan distributors and contract cleaners have likely heard the term e-procurement, and some might be using some form of this technology right now. However, with large online retailers viewing the business-to-business (B2B) world—and specifically the professional cleaning products and equipment market—as their next gold mine, distributors owe it to themselves, their customers, and the future of their companies to learn more about e-procurement and how it can help them and their customers.
So let’s begin with the basics. In the simplest of terms, e-procurement allows product purchasers to connect electronically via the Internet or a software service to select, evaluate, compare, and order products. The process makes product discovery and reordering much easier for both the client and distributor. Often, an e-procurement system will generate a purchase-order confirmation, tracking links, and advanced shipping notices, making it a fairly comprehensive and seamless order-management system.
E-procurement software systems are typically referred to as Software as a Service—or SaaS. Electronic data interchange systems and analytical tool processes also fall into this category. While the ultimate winner of an effective e-procurement system is the customer, the benefits are many for both the product purchaser and the distributor.
So What Are the Benefits?
An effective e-procurement system helps distributors and their customers evaluate different products, compare these products, and then select the one that will best meet their facility’s needs. But the bigger picture is very simply this: It helps distributors and their customers know what products are available for what purposes.
Typically, customers rely on their distributor to suggest and recommend products. But with nearly 1,200 manufacturers making products for the professional cleaning industry, along with scores of products that can be used for the same or similar purposes, it has become nearly impossible for a jansan distributor to distinguish all of the products available, their costs, how they perform, where they perform best, and most importantly, if they will prove effective for their customer. An effective e-procurement system puts that information at the distributor’s fingertips.
In addition, many dashboards or e-procurement systems can be used to:
- Inventory current supplies to determine what products are being purchased, which are being used, which are not being used, where overstock exists, and where there are product shortages. (this is often referred to as the discovery phase)
- Consolidate purchases, which can lead to discounts for the customer and result in cost savings
- Reduce administrative time and eliminate paperwork for both the customer and the distributor by streamlining the ordering process
- Increase ordering accuracy and minimize or eliminate wrong goods delivered
- Provide customers and distributors the ability to verify and track orders
- Improve the customer/distributor relationship; distributors are now in partnership with their clients, positively impacting their facilities’ operations.
An effective e-procurement process also takes a lot of the risk out of purchasing. Decisions are made based on data, such as product and cost comparisons and whether they meet customers’ environmental requirements. For customers specifically, an effective procurement process helps them understand where their dollars are being spent and what supplies are being purchased so they can make long-term cost projections more confidently.
Who Needs Spend Visibility?
Business-management guru Peter Drucker is credited with coining the expression, “You can only manage what you can measure.” This principle can apply to purchasing as it relates to “spend visibility”—or the ability to see where you are spending your money.
Purchasers, especially those who work in larger facilities or facilities with multiple locations, may have difficulty keeping track of their product spending. In the most extreme cases, this could mean they essentially do not know where their money is going and for what. Although that may sound far-fetched, it is not that uncommon, according to Vicki Blankenship, a purchasing agent with Allergen, Inc., a major U.S. pharmaceutical company.
“Sadly, these procurement people have no idea what is being purchased. This often causes purchasers to make buying decisions ‘retroactively,’” Blankenship says. When purchases are made reactively instead of proactively, costly mistakes often result. Many of these mistakes can be avoided by using a e-procurement system.
Blankenship claims that her company was able to save approximately US$2 million during an eight-month period by making purchases through an e-procurement process.
If what we have discussed in this article sounds similar to the e-commerce, online shopping systems developed by mega-retailers, that’s because it is. As we mentioned earlier, online shopping has begun to enter the B2B world. Traditional methods of buying and selling no longer satisfy many customer needs. In particular, millennials, who are now taking purchasing management positions, have come to expect the ease of product discovery and fulfillment that goes along with e-procurement. With stricter budgets and greater interest in product comparison, customers expect their distributors to provide these time- and cost-saving solutions.
About the Author.
Lacy E. Anderson is the marketing and communications manager for Afflink. Afflink is a sales and marketing organization and developer of eLev8®, a Web-based technology designed to give distributors the ability to evaluate product purchasing decisions across their customer base. Anderson can be contacted via Afflink’s Web site at www.afflink.com.