Close
  • Latest News
  • Cybersecurity
  • Big Data and Analytics
  • Cloud
  • Mobile
  • Networking
  • Storage
  • Applications
  • IT Management
  • Small Business
  • Development
  • Database
  • Servers
  • Android
  • Apple
  • Innovation
  • Blogs
  • PC Hardware
  • Reviews
  • Search Engines
  • Virtualization
Read Down
Sign in
Close
Welcome!Log into your account
Forgot your password?
Read Down
Password recovery
Recover your password
Close
Search
Menu
Search
  • Latest News
  • Cybersecurity
  • Big Data and Analytics
  • Cloud
  • Mobile
  • Networking
  • Storage
  • Applications
  • IT Management
  • Small Business
  • Development
  • Database
  • Servers
  • Android
  • Apple
  • Innovation
  • Blogs
  • PC Hardware
  • Reviews
  • Search Engines
  • Virtualization
More
    Home IT Management
    • IT Management

    Study: Companies Save Big Bucks by Automating Procurement

    By
    Jacqueline Emigh
    -
    February 9, 2005
    Share
    Facebook
    Twitter
    Linkedin

      Organizations can save a lot of time and money by automating procurement, or the buying and sourcing of goods and services, according to some analysts. In a new report, The Hackett Group is releasing findings that “world-class” procurement executives—those rated as most effective and efficient—invest substantially more money in IT than their peers, while actually spending less overall and operating with a smaller staff.

      World-class procurement organizations are more than twice as likely as other companies to make high use of sophisticated reporting tools for spending analysis, said Christopher Sawchuck, senior business adviser at Hackett, in an interview with eWEEK.com.

      They also use online tools to communicate requests for information, proposals or quotes 78 percent more often than other organizations.

      How did Hackett reach its results? By conducting benchmark studies of Fortune 100-level companies and then analyzing their costs of procurement across 10 business processes. Costs considered included labor, technology, outsourcing and “other,” a category that encompasses facilities and travel costs, for instance. “The procurement people might be spending a lot of time flying around the country, for example,” Sawchuck said.

      Findings showed that the world-class executives—or those deemed by Hackett to be in the top 25 percent, in terms of effectiveness and efficiency—dedicate 19 percent of their total operational spending to technology, as opposed to only 11 percent for other procurement executives.

      Put another way, world-class companies invest 94 percent more on “technology per labor dollar” than their less automated peers.

      Also according to the report, the world-class executives invest 27 percent more money in technology—$1.4 million versus $1.1 million per billion of spending—but use 38 percent fewer employees and spend 27 percent less on total procurement operations.

      But are salaries lower in these world-class procurement organizations, too? “No. Salaries are actually higher,” Sawchuck told eWEEK.com. Generally speaking, the companies spend more of their labor dollars on “highly productive individuals” who perform value-added business processes in decision management and risk management; supplier management and development; sourcing strategy and analysis; compliance management; and product development support.

      /zimages/1/28571.gifMasterCard streamlines its procurement process. Click here to read more.

      On the other hand, the world-classers use technology to automate “operational support” processes traditionally performed by lower-cost personnel. Examples include requisition and PO (purchase order) processing, scheduling, receipt processing, supply data management, and sourcing execution.

      Hacketts benchmarks and analysis focus more on the processes being automated than on how they are being automated. So some of the organizations using online procurement tools might be doing so through business exchanges, while others deploy either on-site or ASP (application service provider) implementations, according to Sawchuck.

      Also, the research doesnt address specific vertical markets. Sawchuck acknowledged that there are some niche players in the procurement space with industry-specific solutions for the services and printing markets, for instance.

      He added that some best-of-breed supply chain vendors such as Ariba Inc. and i2 Technologies Inc., as well as ERP (enterprise resource planning) vendors such as Oracle Corp. and SAP AG, “may have modules that are specific to particular industries.”

      “[But] our preference has been to look at cross-industry trends,” Sawchuck told eWEEK.com. “In procurement, practices are fairly industry-transparent.”

      /zimages/1/28571.gifCheck out eWEEK.coms for the latest news and analysis of enterprise supply chains.

      Avatar
      Jacqueline Emigh

      MOST POPULAR ARTICLES

      Android

      Samsung Galaxy XCover Pro: Durability for Tough...

      Chris Preimesberger - December 5, 2020 0
      Have you ever dropped your phone, winced and felt the pain as it hit the sidewalk? Either the screen splintered like a windshield being...
      Read more
      Cloud

      Why Data Security Will Face Even Harsher...

      Chris Preimesberger - December 1, 2020 0
      Who would know more about details of the hacking process than an actual former career hacker? And who wants to understand all they can...
      Read more
      Cybersecurity

      How Veritas Is Shining a Light Into...

      eWEEK EDITORS - September 25, 2020 0
      Protecting data has always been one of the most important tasks in all of IT, yet as more companies become data companies at the...
      Read more
      Big Data and Analytics

      How NVIDIA A100 Station Brings Data Center...

      Zeus Kerravala - November 18, 2020 0
      There’s little debate that graphics processor unit manufacturer NVIDIA is the de facto standard when it comes to providing silicon to power machine learning...
      Read more
      Apple

      Why iPhone 12 Pro Makes Sense for...

      Wayne Rash - November 26, 2020 0
      If you’ve been watching the Apple commercials for the past three weeks, you already know what the company thinks will happen if you buy...
      Read more
      eWeek


      Contact Us | About | Sitemap

      Facebook
      Linkedin
      RSS
      Twitter
      Youtube

      Property of TechnologyAdvice.
      Terms of Service | Privacy Notice | Advertise | California - Do Not Sell My Information

      © 2021 TechnologyAdvice. All Rights Reserved

      Advertiser Disclosure: Some of the products that appear on this site are from companies from which TechnologyAdvice receives compensation. This compensation may impact how and where products appear on this site including, for example, the order in which they appear. TechnologyAdvice does not include all companies or all types of products available in the marketplace.

      ×