E-procurement is key to cutting costs

E-procurement will rapidly become a key way for businesses to cut costs, especially in areas such as travel and office supplies, according to Stuart Hamilton, innovations director at Axon.

In an exclusive video interview with Silicon.com, Hamilton said: "It's about procurement managers having an opportunity to decide who they're going to buy from, how they're going to buy, who's going to be able to buy what and under what circumstances. It's about control.

"It's actually about the least-sexy end of the procurement spectrum - about 30 per cent of a company's expenditure (so about 30 per cent of their turnover) is typically on stuff like office supplies, travel, consultancy, security guards. All the things that don't actually make their way into the product that gets sent out to the customer.

He added that these non-product related costs can easily spiral. "That's the place where things are totally out of control and where e-procurement can deliver a huge amount of benefit."

Hamilton also claimed there is we are entering an era of supplier evolution. "Suppliers initially know nothing," he said, "their first reaction is to see it as a threat." But forward-thinking suppliers, he added, could make the most of the opportunity to improve their customer relationships.

Hamilton, also sees e-procurement leading to the emergence of a new breed of intermediaries. "Undoubtedly, one of the biggest challenges associated with implementing an e-procurement solution is connecting the several thousand suppliers to a particular company.

"Companies are emerging - some are existing organisations, others are new - to sit between the suppliers and the buyers and consolidate information about products and product availability, and provide it to individual buyers in the format they particularly want," he said.

The full interview with Stuart Hamilton is available in Silicon's Outsourcing Channel (http://www.silicon.com/a35464 ).