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E-procurement: Are you ready yet?

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Consultants Highams Consulting who work within the financial services sector report from survey results that only 15% of companies use e-procurement (buying through internet enabled offerings) for HR goods and services.

The figure is higher for the baniking sector where 25% use e-procurement and hits 45% for the financial broking sector.

Executive Director at Highams Consulting, Clive Williams, said: “There are many inefficiencies in organisations’ internal business processes, particularly in procurement. HR is an area where efficiency can be improved, however there appears to be a lack of knowledge amongst the retail and financial services organisations with regards to the benefits of e-procurement.”

HR Zone comments: There is still uncertainty amongst many people in using techology and software. That is understandable, it is a part of human nature.

However, what drives most businesses, (though not all), is profit. Profits are maximised when costs are optimised. E-procurement is certainly applying cost pressures within the market place. It is an area for reducing business costs. E-procurement take-up will increase across all business sectors in the medium and long term.

For decision makers and budget holders within the HR function there is a clear message. The market will move in this direction. Whether a technophile or techno-luddite, if you ain’t ready for HR e-procurement and the ability to reduce costs, then someone else will be.

4 Responses

  1. Another debate starting?
    Dr Singh is fair in his comments and by and large I would not disagree, maybe my emphasis is slightly different though.

    The case for e-procurement does not rest only on business cost reduction, although it is likely one of the most substantial parts of the debate. There are undoubtedly other factors or variables such as purchase monitoring, post-purchase services etc which could all come into play.

    I was also careful to talk of costs being optimised rather than reduced. There are two points here:

    1. There is currently substantial room for straight forward cost reductions in HR procurement process as markets and businesses stand at present – and the popuarity of e-procurement is likely to grow as this market inefficiancy is highlighted by improving use and application of technology. i.e. In the short/medium term we can expect e-procurement to become popular by being sold with a prime benefit of improving procurement process efficiencies
    2. There is a point, beyond which, cost reductions become less efficient, especially in service related activities. If we go too far in reducing the humanity or “humane-ness” of our services then I agree with Dr Singh, our cost reductions may well be too expensive! We would have passed the “optimum” point but still be reducing costs

    As a final point, my wife thinks that I already have an e-mate as I spend far too much time at the computer!

    Debate on Human-Computer interactions anyone?

    Jon

  2. BOTTOMLINES ARE BOTTOMLESS PITS
    I donot think that case of e procurement rests only on reduction of business costs. Yes, bottomlines are fine, but bottomlines are bottomless pits also.

    I believe there are a whole gamut of other variables which one need to take into account before we declare e procurement an undisputed winner.HR services must meet the requirements of a’humane’process as well.

    I would not like to believe that people would look forward to communicate with a robot; just because it is cost effective. If our concern for cost effectiveness gains insanity, would we prefer an e mate at home !!!

  3. Microsoft an E-Procurement Exemplar
    Can’t remember where I read it, but there was an article about Microsoft reengineering it’s procurement department to two or three people with a dedicated server to do ALL the purchasing for MS internationally. Each purchase order costs something like $6 USD and the bulk of their purchasing is done online from a central location.

    This would have saved them millions, but regrettably is not good for employment.

  4. Control
    The one thing that can be seen in the current market place is the heavy reliance on Recruitment Agencies, instead of taking ownership of the recruitment process.
    It seems to me to be short sighted, and there is certainly a business case to e-procurement.
    Many large organisations are still not fully switched on to the ‘if you are not fast you are last’.

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