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Better buying

IT SPECIAL: A good online tender management system should not depart from existing processes, but enhance them. Indeco senior consultant James Young explains.

The internet provides a valuable medium for companies to communicate with their supply chain and to purchase contracts for goods and services. But the value is in the way the medium is used.

Most coverage of how the internet is being used concentrates on reverse auctions - where suppliers bid lower to win contracts, offering clients huge savings on the purchase of commodity items.

But a prerequisite for managing auctions is for the purchaser to retain control over the specification of the goods or services being bought. This is not always achievable, or desirable, when purchasing contracts for goods and services, particularly in the construction industry.

So how can companies benefit from using the internet to purchase complex contracts?

The answer is not to depart from existing processes, but to enhance their effectiveness.

The internet provides a perfect medium; it facilitates the rapid exchange of information while, given the appropriate technology, remains as secure as existing paper-based systems.

The key for an online tender management, as with any new system, is to ensure that it improves methods of working, not necessarily change them fundamentally. This reduces the need for training and organisational inertia.

Each module in the system should support and enhance the entire purchasing process, from the use of a detailed supplier database, through to document collaboration and the spreading of knowledge and best practice.

In addition, companies can use these systems to ensure the purchasing process is rigorously applied, can engage a broader number of stakeholders in the purchasing process and, contrary to popular thinking, can foster closer, more collaborative working relationships with their suppliers.

The financial impact depends on the environment in which the systems are installed. However, any purchasing manager would argue that significant savings can be achieved by the rigorous application of the purchasing process alone; the system does not provide these savings directly - it provides the medium for doing so.

A recent contract Indeco was involved in for the maintenance of elevators and escalators for a European bank's offices achieved a saving of 18%. This was achieved through the application of rigorous methodologies combined with collaborative tendering.

INFOPLUS For more on the benefits of e-procurement visit www. nceplus. co. uk/indeco/ index

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