Suppliers welcome IBM's tough love

Suppliers who have heeded IBM's tough-love policy on online billing, which ends its 'freebie' period next month, say the paperless service works well.

Suppliers who have heeded IBM's tough-love policy on online billing, which ends its "freebie" period next month, say the paperless service works well.

But several major suppliers such as office supplies company OTC, have not yet signed up to the service, which IBM has strongly urged its suppliers join if they want to continue doing business.

OTC e-commerce manager Greg Stone says it "is actually a bone of contention" because IBM is using a competitor to its JD Edwards-based system. "We would love to use it, but at the moment we are not," he says.

Auckland-based cafeteria food and coffee distributor Caf‚ Express has been using one of the two IBM initiatives, an electronic document interchange (EDI)-based system, since June for invoicing and ordering.

IBM is one of its biggest clients. Customer services manager Deirdre Claxton says she uses the system once a week to finalise invoicing, replacing the mail or fax.

"It's really efficient," she says.

IBM refuses to say how many of its hundreds of suppliers have begun using the online service, designed to entirely replace paper trails.

But in June it sent a strongly worded letter urging its suppliers to take up electronic invoicing. It said this would be a "primary consideration in determining which suppliers IBM will continue to conduct business with", and would be a prerequisite for new suppliers.

The two systems to allow this would be free of charge until December, IBM said.

"At that time we will re-evaluate the programme and notify you of any changes," the letter read.

IBM says its tough line is meant to help push-start businesses into e-commerce.

IBM officials in Australia and New Zealand won't say if all of IBM's suppliers have indicated whether they will join or not within the tight timeframes set down.

But staff publications show the company's original strategy was to have 95% of IBM Australia and New Zealand's spend taking place electronically by the end of 2000.

The publications also show IBM expects 1000 suppliers to be signed up to Fox-EDI, a worldwide system which communicates purchase order details to suppliers electronically by email, by the end of the year. IBM expects a monthly spend through this system of more than $A34 million.

"This is expected to grow to $A75 million per month by year end," the statements say.

IBM notes the system may not be best for its larger suppliers and says a traditional EDI solution may be implemented instead - such as that used by Caf‚ Express. IBM is also working on an online purchase requisition process, which allows users to view and track orders.

The Australia/New Zealand project is part of a worldwide programme.

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