How to Know if E-Procurement Is Right for You

But even here, e-procurement is beginning to encroach on the buyers' preserve of finding and negotiating with suppliers.

"We certainly engage in a lot of Internet activity to locate and qualify suppliers, although I wouldn't necessarily characterize that as e-procurement," Lawson says. "We might even hold an electronic auction. But after that, the transactions would be releases against a contract."

Some companies go even further toward using e-procurement for everything they buy, although again, the objective is often improved efficiencies, leaving sourcing decisions and price negotiations to the experts. At Image Point, which designs, manufactures and puts up outdoor signs for retailers such as McDonald's, Pizza Hut and Taco Bell, e-procurement already embraces both direct and indirect material spend but not yet services, says Vice President of Information Services Steve Hammond. Aluminum, steel, fasteners, wood, plastic sheets - everything that goes into constructing Image Point's signs has been sourced through software from Supply Works since early 2002.Indirect materials - everything else, in fact - utilized the Web-based buying tools supplied by specialist indirect material suppliers, such as Granger, Insight and Staples. The incentive for moving direct materials onto Supply Works, explains Hammond, was better productivity in the buying department that allowed buyers to do what they ought to do - buy better, not shuffle paper.

Instead of printing purchase orders then faxing or mailing them to suppliers and then finally chasing the suppliers for order confirmations, Image Point's procurement requirements are fed directly from its elderly enterprise system into the Supply Works system.

"The time that our purchasing agents used to spend chasing paper is freed up so that they can now spend more time working and negotiating with existing vendors, and qualifying new ones," says Hammond. "Their jobs used to be transaction-based. Now they are performing a higher value role."