Online procurement is on the decline according to a recent study, but experts don’t believe it’s a trend.
The Conference Board of Canada (CBoC) released the results of the survey at the Purchasing Management Association of Canada‘s (PMAC) annual national conference in Montreal Thursday. According to the CBoC poll of 173 procurement professionals, five per cent of procurement was done online in 2001 versus 7.48 in 2000.
Brain Guthrie, director, innovation and knowledge management at the CBoC , says the decline can be attributed the poor state of the economy, which usually sees cutting-edge projects and new technology projects are the first to get slashed. Also, e-procurement lends itself to indirect purchasing which is more susceptible to market volatility, he said.
Paul Ingram, a director with PricewaterhouseCoopers‘ e-procurement practice in Toronto, says the dip is mostly likely a blip on the radar.
“”Companies who have implemented e-procurement remain committed to its success and we as a firm still see that as the direction that the organizations are heading for the future,”” Ingram says.
The decline aside, survey respondents say they expect 35 per cent of procurement to be done online by 2005. Guthrie grants it’s “”easy to write 35 per cent on paper,”” but adds there is forward momentum in the industry.
“”To get there the organization as a whole has to take the initial leap of faith and invest enough,”” Guthrie says.
“”Even the procurement officers underestimated the resources required to do this right and the resources are not so much the software and hardware and getting a system going, but the whole business processes–getting the entire business online.””
Ingram calls the 35 per cent target aggressive, but reachable under certain conditions. He says the people placing the orders need to see some sort of benefit by ordering online. While people are most often ordering offices supplies and the like by phone, “”using an Internet-based tool no, matter how straightforward, is still going to be perceived as being more work.””
The other group that needs to be on board are the suppliers.
“”Suppliers have been slower in Canada to become e-procurement-ready than we anticipated a couple of years ago, and organizations are struggling to find ways to work with their suppliers to create win-win scenarios,”” Ingram says.