Stats Watch: Who's buying online?

As the government and its various agencies tussle with the challenges of getting electronic procurement right, it's worth taking a cloud-high view to see which industries are leading the e-buying pack.

As the government and its various agencies tussle with the challenges of getting electronic procurement right, it’s worth taking a cloud-high view to see which industries are leading the e-buying pack.

As Stats Watch reported in May, consultancy AT Kearney found that only 8% of 147 businesses worldwide regarded as early adopters in e-procurement had made big savings. They did it by aligning online supply management with e-commerce and procurement objectives.

Government agencies appear among the most active e-procurers here. It’s not hard to see the attraction. David Hosking, a partner at consultancy Accenture, told Computerworld last year that e-procurement has the potential to be the biggest money-saver in the e-government spectrum — cutting perhaps between 3% and 10% of costs. Purchase order processing costs could be reduced by 67% or more, he suggested.

Forrester Research found that business and financial services firms (surveying 331 North American firms) lead in adoption of online purchasing, as they did in CRM as per last week’s Stats Watch. About 90% of services firms use the internet to buy indirect materials, buying on average 13.3% online. The services firms focused primarily on changing buying processes, says Forrester. Raw material producers see lower costs in e-procurement, and use e-marketplaces, private hubs or online auctions more than other industries. Agriculture, forestry and apparel producers bought the least online, a still-impressive 78%, but averaged only 3.2% of total indirect purchases online.

As mentioned, the online buying methods used are instructive. Services firms were

keenest on enterprise-wide procurement tools (41.9%), while energy and raw materials firms prefer auctions (32.7%) or hubs/marketplaces (34%). All sectors of industry use the internet for issuing tender proposals, none dropping below 55%.

Forrester sees variations in emphasis on process yielding different results. Nearly 77% of services firms are satisfied with suppliers as a result of their approach to e-procurement. Some 16% of them had changed their buying procedures, compared to only 2.5% of agriculture, forestry and apparel firms. Figures for decreased costs range from a healthy 25% of firms to a very happy 35% depending on the industry, with energy firms at the top end.

Is changing process or price top of your agenda? Email Broatch.

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