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How to beat the challenges of e-procurement

03-May-2011

Related topics: Ask the Experts, Business, Restaurants, Hotels, Pubs & Bars, Technology, Hospitality Services

E-procurement can be quite daunting for businesses used to traditional telephone ordering. But with an open mind and the right know-how to overcome the challenges, e-procurement can have great benefits for your business. Christian Berthelsen, CTO at Fourth Hospitality shares his top tips on sourcing supplies electronically.

E-procement makes ordering simpler and faster

E-procement makes ordering simpler and faster

Why shouldn’t I just carry on using the phone?

The benefits of e-procurement are many and varied. In the first place you are providing an easy way for managers to go online and shop from an agreed and controlled list of products at the correct price.

This has immediate benefits for all areas of purchasing compliance: accurate product coding on the electronic orders optimises your rebate agreements and you now have your own complete record of orders placed to measure supplier performance from.

Picking up the phone may often seem the quickest and simplest option, but a designated telesales slot might clash with important service time. You also have to duplicate the effort when recording the delivery, which the electronic process disposes of.

Significant bottom line savings also come from the e-procurement process, with some companies having realised a 3 per cent saving on their annual spend.

What about losing the relationship between my chef/sommelier and the supplier?

An e-procurement system should never replace the more personal relationship between you and your suppliers.

Instead, it means that telephone time is spent on more valuable conversation content, perhaps even about the detail of an order or special requests, rather than listing of endless quantities of items.

What’s in it for the supplier?

Sending an electronic order straight into your supplier’s system has the direct effect of reducing the supplier’s cost of trading with you.

Suppliers are also better placed to provide an optimum service, through eliminating the re-keying of orders. This removes the human error involved in miss-keying a quantity or using the wrong item code (back to items not contributing towards the rebate agreement).

What if my suppliers can’t trade electronically?

Some suppliers will not have the technology in place to trade electronically, but even so, clients can still order via the web - their suppliers receive an email order, but both parties will simply manage confirmations and acknowledgements manually.

Invoices can then be processed either manually as well, or by using a third party’s E-Invoicing System.

Green business

E-procurement also reduces the amount of paper used. When this is combined with e-invoicing, this dramatically eliminates paper and tackles the issue of costly storage space for those endless invoices.

Is there risk in getting left behind by not doing it?

Yes! There will come a time when suppliers will force the issue – the phone will be restricted to relationship time and not for taking an order. Even the smaller ones will only want to trade electronically as innovative solutions start to help these suppliers join in with streamlined efficiencies.

Ten things to ask yourself about a potential e-procurement provider:

1) Which suppliers is the provider currently linking to? (and do they actually link?!)

2) How often do I currently negotiate my supplier pricing?

3) What other systems do I have that might need integrating (EPOS / Stock / Accounting...)

4) Who will look after and maintain the supplier catalogues?

5) Do I have PC / web access for my manager?

6) How much time and money could I save by putting e-procurement in place?

7) When do the savings start to take effect?

8) How can I trade with my smaller suppliers?

9) Do I need to put EDI (Electronic Document Interchange) in place?

10) What are the benefits and available functionality for e-invoicing?

Do you have a problem you'd like solving? Need advice on a particular area of your business? Our panel of industry experts are on hand to give you the help you need. Email your problem to news@bighospitality.co.uk with Ask the Experts in the subject line and we'll endeavour to get it answered.

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