B2B Purchasing Comes Into Its Own

While there has been much ado about how e-commerce is re-shaping the lives of consumers, the advent of business-to-business purchasing has been largely overlooked.

With new software, technology and online site operators, there is great potential for small companies to expedite their small purchases and compete with the big players.

The Lear Corporation, a leading global automotive supplier, recently signed Datastream’s iProcure as its industrial trading exchange. iProcure automates electronic commerce for industrial incidentals such as gloves, tools, and general industrial supplies that are referred to as maintenance repair and operating (MRO) supplies.

“Many companies are already using e-commerce for front office procurement, but that is only half of a solution,” said John Sterling, vice president, electronic commerce for Datastream. “Since MRO purchases are always within the top three highest expenses in a company’s budget, it makes sense to bring e-commerce from the front office onto the shop floor.”

The Right Tools

More sites are popping up online to provide purchasing managers with the tools to expedite purchases, and none too soon. In fact, according to the Aberdeen Group, the average company spends $107 (US$) to manually process a $27 purchase order, and employees must often wait one to two weeks for their purchase requests to be processed.

Companies such as Works.com, a business purchasing service that enables companies to purchase recurring industrial items, help companies to dramatically reduce processing time and expense by automating their purchasing online. Companies can set purchase policies that automatically filter, route and manage purchase requests, track requests and orders, and control and monitor spending.

Ultimately, Forrester Research predicts that business-to-business sites will save the average company 18 to 45 percent through quicker ordering, speedier delivery, fewer errors, better information and more opportunities to find the lowest-priced products and services.

Streamlining The Process

Baan E-Procurement, an Intranet-based self-service requisitioning software package, streamlines procurement for companies that are encumbered with complex, hard-to-control, costly procurement procedures. The technology enables customers to delegate routine purchases to individual requisitioners within their company, thereby freeing procurement professionals to focus on more strategic activities such as supplier selection and negotiations.

“Our research indicates that enterprise-wide electronic procurement automation can help buying organizations reduce prices paid for material and services, shorten order and fulfillment cycles, lower administrative costs, enhance inventory management, increase control over purchases, and improve leverage with suppliers,” said Tim Minahan, research director of e-business for Aberdeen.