eProcurement & Retail Type Items
PurchTips edition #60
By Charles Dominick, SPSM, SPSM2, SPSM3
Do You Know This Hidden eProcurement Challenge?
If your organization didn't implement an eProcurement system in the technology bonanza of the late 1990's, don't be surprised if introducing eProcurement to your organization is a goal of yours in the next year.
IT spending is picking up. And eProcurement's value proposition of saving money has stood the test of time.
eProcurement involves many challenging decisions - some apparent, some not.
One example of a non-apparent challenge is choosing the type of supplier of retail-type items for your eProcurement system. Retail-type items are items that can be purchased at a store (e.g., office supplies, computer supplies, etc.). These items can be bought from suppliers with storefronts (Retailers) or suppliers who deal strictly with businesses (B2B Sellers).
When enabling a supplier of retail-type items on your eProcurement system, you may have four choices:
- Load a static catalog of a Retailer
- Integrate a Retailer's Web site with the eProcurement system
- Load a static catalog of a B2B Seller
- Integrate a B2B Seller's Web site with the eProcurement system
Less internal friction occurs when option #2 is chosen. Why? Retailers often run sales with attractive discounts to drive in consumer business. Their Web sites have updated prices weekly. No other option makes these special discounts available to you as seamlessly.
If a B2B Seller is enabled on your eProcurement system and a competing Retailer runs a sale, your users may be able to get a better deal individually than your organization gets as a whole. So your users will run to the store instead of using eProcurement. This undermines the buy-in critical to eProcurement success.
Should you only enable Retailers on your eProcurement system for retail-type items? Not necessarily. But require any B2B Sellers to propose a reliable solution to this potential dilemma before enabling them instead.
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Need Better Performance From Your Procurement Team?
Are you a procurement leader whose team isn't achieving the results you know are possible? Maybe it's not enough cost savings. Or frustrating performance from the supply base. Or dissatisfied internal customers.
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