epsys E-Procurement

Embrace the Future of Procurement

Ben — Sat, 02 Jun 2012 16:35:39 +0000

We now have a situation where supply chains indulge in lopsided strategies to make themselves more efficient before turning their attention to doing the same for their customers (that’s you, by the way, and you should be doing all you can to get ahead of the game).

The option of ignoring e-procurement/e-trading/P2P (it goes by many names!) is actually not an option. The question you should be asking is “When do I switch to e-procurement?” and not “Should I?” Many businesses fear adopting the role of ‘pioneer’ but in the case of e-procurement fear no more – the pioneer stage has well and truly been and gone!

The options now are centred on whether you want to shape your own system or be presented with a fait accompli by your supply chain. Do you really want to log in ten times a day to place your orders?

The supply chain already knows that there are greater margins to be had through trading electronically. When the volumes are greater than those traded traditionally, those without the ability to move with the times (and move quickly) will end up paying a premium. If you find this hard to understand, try and purchase an airline ticket face to face in a travel agency and then compare the price you’ve paid with what’s available online…

Adopting e-procurement now provides the opportunity to install your own system and have your supply chain linked to that unique system, so that ordering is effortless: you simply remain on one platform for every element of procurement. Waiting means that if you want to avoid paying the premium for trading in the way we now regard as ‘traditional’, you will end up system hopping as you log on to each one of your suppliers’ systems in turn. What’s more, the chance to gather your activity data to help you become a more effective buyer will be lost. And, since your system will be linked to your specific supply base it could also cost recipes and determine margins dynamically in real time, provide up to date stock values and integrate seamlessly into your finance package.

Too good to be true? No, that’s the reality now.

The procurement activity of a 100-bed hotel and conference centre with a 120-cover restaurant was recently recorded and assessed. In one month 350 telephone calls were made between the hotel and its supply chain between 9am and 4pm for the purpose of ordering food. 1750 minutes [30 hours] were involved, and a 20% call failure occurred. 300 pieces of paper were produced which passed through at least four pairs of hands before arriving in Finance, where the detail was diligently transposed by a member of staff, taking 600 minutes [10 hours] to complete. I could almost rest my case…

But there’s more to it. Carrying out a buying exercise and negotiating final arrangements is an essential procurement activity which takes a lot of time and is achieved at considerable cost. It seems, therefore, an act of lunacy that, in my experience, less than 10% of the time taken to arrange the new deal is afforded to policing it and ensuring what has been negotiated is actually being delivered!

Organisations that deploy a proven e-trading system don’t have to employ people to check invoices, check the arithmetic or chase credit notes. They don’t have to do this as the system does it automatically – line by product line. The average value of credits automatically requested by the system equates to just over 1.5% of the invoice values that are raised.

Until you have traded electronically, you won’t appreciate the value of the asset you are giving away after the order has been given and the phone put down. The DNA of your procurement profile, and your ability to determine exactly what it is you want to buy in the future, based on what you’ve bought in the past is the asset involved. Very few organisations record this type of information and instead rely on the supply chain to provide the data – which could have made you, its customer, smarter. You can be the judge of where the vested interest lies.

It’s interesting to note that whilst we strive to know how much we’ve taken during each hour of the day at the front end of the business, we appear happy to find out how much we’ve spent four weeks after we’ve spent it!

E-procurement is not the panacea to every hospitality problem. It still hasn’t learned how to check the goods arriving for quality – and nor should it. There are, however, significant benefits which you could take and ‘bank’, and which will ultimately provide the time you need and the funding required to address the challenges ahead.

E-procurement is here, and it isn’t going to go away. Those who embrace it now and use it to enhance the management of their business will reap the rewards ahead of the day when e-procurement finally becomes the traditional way to trade.

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Footprint Forum Thought Leaders & Innovators Conference 24 May 2012

Ben — Fri, 01 Jun 2012 21:00:50 +0000

Epsys is an e-trading system provider that works with organisations that provide foodservices – every sector – from Hotels to Prisons, Kindergartens to Care Homes…

But how exactly does an e-trading system fit in with sustainability?

If you already know how e-trading works and the depth of information such online systems hold, you may already appreciate how their use (and outputs) are so key to my message today. If you don’t, then I hope all will be revealed!

More of that in a moment….

A few weeks ago I attended the Sustainable Purchasing and Supply Summit. And I suspect many of you may have been there too, so, if you’ve heard Andrew Croucher’s words of wisdom before – sorry, but they are worth repeating… Andrew’s “Director – Business Solutions” at The Chartered Institute of Purchasing and Supply and he came up with some frightening numbers and observations. He said,
“The world’s natural resources are depleting before our very eyes. It’s incredible to think that if everybody on the planet consumed like an average European, we would already be in a position where the equivalent of three earths would be needed to enable us to live. Now, I hope we don’t have anyone from the US here – because – if everybody lived like an average North American, five earths would be needed……”
He went on:
“The world’s population will increase from the current seven billion up to almost 15 billion by 2100, putting ever more pressure on the Earth’s finite resources. People involved with procurement and supply professionals have a huge role to play in supporting sustainability through the adoption of responsible purchasing practices.”

My bit today seeks to explain how technology, and specifically e-trading technology, can help foodservice organisations do their bit!

You know, we didn’t set out to develop an e-trading platform with waste and sustainability issues in mind. But over the past few years, and with the sustainability agenda gathering real pace, we found ourselves in a position where our clients were all adopting sustainable policies – to widely varying degrees. It’s not our place to determine what a responsible approach to food and associated procurement is …. since each organisation we work with has very different drivers and goals. Their interpretation of the core sustainable metrics – and how each aspect of what we call the “the sustainability mix” fits with their particular policy …- is for them to decide…. not us. Let’s be clear here – we are dealing with a bit of string and we’ve no idea how long it is! Things change we are alaways working at the “possible” becoming a “reality”. Take the old chestnut of “Food Miles” (the distance products travel to your kitchen door). But is that from the wholesales or the grower!

What about “Local Sourcing of Fresh Produce” – where organisations want to support local growers and suppliers – But again what is “Local???” …. 5 miles? 10 miles? Somewhere in the UK? Everyone’s policy is different. And then there’s “Environmental impact” – which we define as “Optimising the use of people and natural resources …” Which tomato is best? The one grown under natural conditions in Tenerife (but flown over) or the one grown in a heated greenhouse in Kent during November and December?

Our sustainability mix list goes on including:
• “Use of Seasonal Produce” • “Using Renewable Sources of Product” (an easy reference is Marine Stewardship Council) • “Supporting local and Global Communities” (reference Fairtrade/Rainforest Alliance) • “Animal welfare issues” come into the mix for many clients (i.e. Free Range/Freedom Food )

Even “Food Culture” (i.e. Kosher and Halal) what’s the requirement for these specialist supply chains?

And then Packaging…

“Packaging Waste reduction” the WRAP Imitative refers (reference operators’ engagement with Product decanting/minimal packaging/use of biodegradable or compostable packaging products)

And lastly…

“Food Waste” (the issues surrounding of over-production/ ethical waste disposal and recycling and even doggie bags!) It’s all in the sustainability mix..

It’s very unlikely any organisation would (or could) embrace all the aspects I’ve just set out…. And there are lots more besides… But most organisations now have a real desire to support their procurement and supply functions – both at centre and out in the field, to enable teams and individuals to improve sustainable practice in their uniquw supply chains.

I’m sure that procurement activity targets, focusing on defined categories or choosing products that achieve a particular level of social or environmental performance will become the norm in the not too distant future.

Anyhow – back to technology… How can it help organisations realise their responsible buying activity targets – whatever they may be? It’s all about data and information.

Consider what’s involved in deploying and maintaining a true e-trading platform in the food service sector. Very simply put…
• You start by defining your centrally negotiated and approved product category lists and prices. • You present that information to users online via a single secure portal, uniquely created for each client organisation • Operators construct their orders… • The orders are sent electronically to suppliers • The supplier delivers • The operator approves the delivery for condition, quality and number • The invoice is raised and sent electronically – then automatically checked, line by line, against the order …for price and volume discrepancies • The invoice file (and accrual file) is imported into the finance system for payment.

Essentially, …That’s the procure to pay cycle..

Now, setting aside the obvious economies linked to the “stopping waste before it happens” argument – …which is a “given” as far as e-trading is concerned in respect of paper trail, postage and man hours – what else can be achieved? The answer’s “plenty”.

I’m going to give you a range of examples – some are real and available now (and relatively easy to achieve), others rely on suppliers to provide quite detailed information (which is not always readily available right now) ….others will be possible in the not too distant future. Generically, e-trading systems were designed to trade more effectively with multiple suppliers and provide the means to seamlessly link such transactional activity to finance and management systems through electronic means. But, … and here’s the thing, in the context of foodservice and sustainability, as well as providing metrics and dashboards that facilitate closer management of the financial and commercial aspects of food service delivery in real time, added value outputs can also be made available.

So, as well as improving business process in the widest sense, systems can be configured to provide organisations with outputs which may be used to capture and measure aspects of their sustainability performance and thus provide a basis for onward management and improvement.

Let’s look at a couple of examples and go back to:

Food miles
There’s no doubt that improvement here is about optimising the use of logistics – and thereby reducing the carbon footprint associated with the delivery of goods. Scenario! An outlet has 15 deliveries a week from 8 Suppliers the distances from the suppliers’ depots are known. Easy! The system calculates the food miles and thus provides a visible measurement that can be reduced through improved ordering and storage …And by the way….. why does frozen food really need to be delivered frequently? At the correct temperature, Frozen food can be held safely for months – but in our experience it is regularly ordered multiple times per week. There are, of course, local storage issues to take into consideration but most operations could lose at least one delivery a week.

Inbound food waste
This is about “Stopping waste before it happens”Accurate prediction of your supply requirements is obviously key to eliminating inbound waste. ….and Technology can help operators confidently place an appropriate order. If a system enables menu and recipe driven ordering and links to stock records then this enables accurate predictions of product requirements and eliminates all the “guess work” leading to over-ordering , over-production and therefore less waste – that is all waste, both food waste and packaging waste…. Not only good for the planet but absolutely key to achieving the best commercial outcomes.

Local sourcing
The measurement of what is considered “Local” comes from understanding a product’s provenance and attributes and then being able to profie the goods purchased by an outlet. The resultant profile can then be measured against a set criteria. (and As I’ve said the criteria will change from client to client). Most Suppliers are very good at providing traceability/provenance information and systems can be set up to identify to the user what are considered to be “locally sourced products” within the electronic catalogues presented on screen. It’s then easy to calculate the extent to which “locally sourced products” are actually featuring within the purchasing profile of an outlet. The reports can be made available centrally, regionally and/or locally to measure the delivery of a particular policy within an individual outlet or an estate of outlets…. Now the BIG one…

Product attributes! At a central level many organisations already support a range of product based sustainability initiatives in a genuine effort to “do their bit” and to meet the challenges that a good progressive Sustainability Policy creates. Using supplier provided data flags – which could include accreditation flags like Marine Stewardship Council, Red Tractor, Soil Association, Fairtrade, Rainforest Alliance, etc…) systems can identify aligned products so that operators can make informed choices in line with the policy of their company. The overall effect, can be controlled by product blocking ( which means making non approved products invisible to the user) and measured through reporting out of the system.

It can get complicated though.

Some larger organisations may have a different stance on sustainability for each sector of their business, and controlling product ranges by business sector, supplier and product commodity within a business which may have many customer vfacing guises is a big challenge. The best technology now provides the means to manage range, pricing and product accreditation flags from a single supplier catalogue. Through the clever management and central manipulation of this single catalogue, Procurement teams can present unique prices files and ranges to individual outlets which reflect both the sustainable and commercial objectives for that particular outlet. So – one base file and the potential for 100s of different approved profiles (and prices) all aligned with any central corporate objective, presented at outlet level.

Powerful stuff!

Packaging waste
At the moment we are working with wholesalers and manufacturers to add packaging detail to products within a supplier’s catalogue. As this initiative gathers momentum, it will allow accurate reporting of packaging consumption, by outlet and across an organisation. Obviously when this information comes on stream it will allow buyers to work more closely with their supply chain to reduce input packaging and therefore output packaging waste in a focused manner with the system accurately measuring what is taking place. Which bring me to my last point…

Outbound waste streams
We are making available the ability to record waste management route detail. Where does the waste produced by an outlet end up (?) and what is the volume or weight of waste produced? The collection advice provided by the Waste Contractor should provides this detail either at the point of collection or via a retrospective report. This allows Clients to identify, by outlet, the impact of their waste policies and construct the most effective disposal routes, which can then be subsequently maintained and monitored.

So, to conclude, technology, and specifically a well-developed e-trading platform, can positively contribute to making an organisation’s sustainable objectives a reality.

Wherever the “good words” are – corporate governance statements, …. business principles,…. or existing sustainable procurement policies – for us it’s about collaborating closely with our clients, and critically their supply chains, to bring about the necessary changes to their business processes that will facilitate their achieving their unique sustainable visions.

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Moving Towards B2B Food Service E-Procurement Solutions

Ben — Thu, 31 May 2012 01:28:46 +0000

With food outlets seeing their sales improve by 0.7% compared with February and non-store sales up 0.6% also, the outlook for the UK economy appears more positive. Especially, for those enterprises operating within key food service sectors with intentions to move from an inefficient, manual paper requisition and workflow ordering process to a fully customised food service e-procurement system.

Fully implemented eProcurement solutions can significantly reduce costly human resource time, invoicing processing delay and error and promote purchasing from approved suppliers at pre-negotiated prices, only after sending transactions through approval workflows.

There has been an increasing shift towards recognising the need to migrate key components of B2C online transactions across to a B2B ecommerce methodology, achievable by implementing a hotel e-procurement, restaurant e-procurement or catering e-procurement solution. Consequently, areas such as key aspect search, features and product suggestions are becoming increasingly important alongside product evaluation or review.

While it has always been a standard demand for purchasing managers to seek increased transparency when analysing supplier prices, product lines and staff ordering habits, electronic procurement will direct to the correct suppliers, provide prompts for critical data, and deliver support to category-specific ordering, delivery, and invoice-matching processes.

Key e-procurement benefits are, undoubtedly, as a result of involving the use of electronic methods at every step taken in a purchasing process, however many enterprises and organisations approach implementation of e-procurement in gradual phases, beginning with the automation of selected high-transaction, volume activities such as supplier registration or tender submissions.

A further key factor to eprocurement adoption is creating easy-to-use requisition and the ability to source within internal catalogues or at an approved supplier website with minimum additional data necessary. Often the urgent need for goods or services can lead to system bypassing in the absence of issuing prompt purchase order documentation.

System noncompliance can be sufficiently remedied by preset, automated procedures which can, for example, delay supplier payment if valid purchase order numbers are not entered, thereby, deterring unapproved telephone orders.

Defining a specific e-procurement system is dependent on formulating an e-procurement strategy after closely analysing the intrinsic nature of the intended items to be sourced and their pricing policy. Ultimately, obtainable benefits will be tied to concepts of technology, organisation and processes of the proposed solution, but essential elements pivot upon lower transaction costs, shorter order cycles, higher compliance, reduced listings and lower prices.

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Online Success of e-Procurement

Ben — Mon, 28 May 2012 14:50:05 +0000

The harnessing of instant, online processing and linked up transference capability means the functions of operating the complex transactional aspects of requisition, authorisation, ordering, receipting and payment processes are correctly harmonised, tracked and immediately available, and referenced on demand.

Essentially, e-procurement can be implemented and fine-tuned to control both key and related detailing from order to sale, invoice to payment, deployed across an entire enterprise infrastructure.

Subsequently, deployment of an e-procurement system has proven to be a vital and indispensable management tool enabling 360 degree service interoperability to drive competitive cost efficiency. According to the Aberdeen Group, business research analysts, migrating the entire process online can yield tangible e-procurement benefits of an estimated 60 percent reduction per order transaction.

Correctly specified e-procurement software is crucial to providing an incisive, organisational instrument which specifically interacts with key suppliers. Built-in monitoring tools will control costs and ensure maximum supplier performance by steaming realtime data and maintaining an open line of communication with potential suppliers throughout an entire process.

A properly implemented system can connect companies and their business processes directly with suppliers while managing all interactions between them. This includes management of correspondence, bids, questions and answers, previous pricing, and multiple emails sent to multiple participants, critical to previous agreement leveraging and competitive quotations.

Promoting competitive bidding, and by automating procurement orders ensures that orders are placed in time to align with the recommended production schedules of ERP applications and crucially, drives down materials expenditure.

Undoubtedly, the successful growth seen by b2b ecommerce sites has accelerated the requirement for sourcing eprocurement solutions – also known as Supplier Relationship Management. Ever increasing quantities of data can be easily handled to ultimately, streamline complex workflows between multiple resources and destinations, by keeping relevant information precisely organised and time-stamped.

A template-driven process enables all transactions to be standardised and trackable to leverage knowledge and obtain better pricing, thus allowing enterprises to focus on key trading partners and contracts. Administering a well-managed e-procurement process helps reduce inventory levels. In addition, visibility of product numbers, bid prices and contact points speeds up business transactions and retains competitive edge by constant access to relevant data.

Organisation of administrative users by roles, groups, or tasks are standardised and easy to learn, liberating critical management time and resources towards developing enhanced customer service needs and consequently, protecting optimal revenues.

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