Choosing the E-Procurement Meal That Works For You

1 Fast Food: Keeping It Simple.
At Applied Industrial Technologies, price negotiation remains in the hands of the product managers in charge of each category. The focus of the company's e-procurement is on making internal processes more efficient through the paperless processing of orders, receipts and invoices. An internally developed inventory management application gathers requirements from more than 400 Applied service centers across Canada, Mexico, Puerto Rico and the United States, and then sends them to suppliers via EDI.

This isn't rocket science, but it meets the needs of the $1.5 billion distributor of industrial components that stocks 2 million different items, including bearings, motors, pumps, valves, couplings and the other highly substitutable building blocks of manufactured products. And those blocks are provided by suppliers competing in an intensely price-sensitive market. Applied CIO Jim Hopper eschews newer technologies like XML in favor of tried-and-trusted EDI because, as he says, EDI "has been around for 20 years, works and is very cheap for us to administer. There's a ton of people who know EDI intimately but only a handful who know XML that well.

"We'll do EDI with anyone that has the capability," adds Hopper, "and help them to get that capability if they haven't got it."

Similarly, Webasto Roof Systems, a $300 million subsidiary of Germany-based automobile roof and thermo systems manufacturer Webasto AG, has been adopting e-procurement strategies to make its internal process more efficient, while keeping sourcing decisions and price negotiations offline.

CIO Mike Thibideau credits e-procurement with reducing inventories by15 percent, generating $1.5 million of cash flow and reducing annual inventory carrying costs by $180,000. All that, and the system is still only 30 percent implemented.