On average an organization/enterprise has:
More than 3,000 indirect suppliers
Not more than 250 catalogs available online through procurement application
Not more than 50% of influenceable indirect spend under control.
Electronic catalogs are enhancing 3 major performance areas:
- Compliance: Consolidating purchases to preferred suppliers not only saves money, but increases negotiating power,
- Operation efficiencies : less manual tasks and less sourcing and administrative activities are generating additional cost savings,
- Requestor satisfaction : The end-user shall see real benefits: an easier, faster, better, cheaper solution to buy. Providing User-friendly Amazon-like one-stop-shop, unbeatable PR and quality delivery cycle time will make the users happy and using the right buying channel.
According to the Aberdeen Group, Best-in-Class organisations have:
- Enabled more than 60% of their suppliers,
- 80% of their spend under control,
- more than 70% ($ value) of their buying through an eCatalog, Punch-out or Marketplaces.
In contrast, industry average shows that less than 25% of suppliers are enabled; 15% for the bottom, 30% for Performers.
I usually estimate that for an organization which does not use an eProcurement system with eCatalogs, 25% to 50% of their negotiated savings are leaking through non-compliant processes/prices/suppliers, penalties and missed savings opportunities around invoice reconciliation.
On average the organisation is loosing (25 to 50)% * (Savings in FY). Not neglectable.
Electronic Catalogs are considered as the most efficient buying channel after the ‘hands free’ channel (fully automated).
