Technology and the hospitality sector have been reluctant bed partners in comparison to the way the retail sector has embraced the internet to introduce efficiencies and eradicate human error. However the arrival of e-procurement and the ability to utilise the web as a universal communication tool is at least beginning to have an impact on buying practices in our sector.
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!
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. 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. 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 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.
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.