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27% of Australia & New Zealand corps using E-procurement

Sydney, Jan 31 (Asia Pulse) - Internet-based supply chain technologies aredelivering three-fold return on investment in the first two or three years,according to a new global survey. The study by Deloitte Consulting found that 27 per cent of Australian and NewZealand corporations are already using the new technologies, close behind theglobal take-up rate of 30 per cent.

Sydney, Jan 31 (Asia Pulse) - Internet-based supply chain technologies are delivering three-fold return on investment in the first two or three years, according to a new global survey.

The study by Deloitte Consulting found that 27 per cent of Australian and New Zealand corporations are already using the new technologies, close behind the global take-up rate of 30 per cent.

The survey found that globally, the "e-Procurement" systems are bringing a 300 per cent return on investment and an annual supply-side saving of close to nine per cent, based on implementation costs of between $US2-4 million ($A3.17-6.1 million). However, executives in Australia and New Zealand reported a 200 per cent return. Duncan MacCallum, a principal with Deloitte Consulting, said the difference was attributable to the sheer volume of transactions conducted in countries like the United States. But he said 300 per cent was a reasonable target for local companies to aim for. "Those sorts of figures we're seeing, in dealing with providers of these solutions in the Australian and New Zealand marketplace, as being sort of reasonable in-the-ball-park sort of ROIs (returns on income)," Mr MacCallum said.

The e-Procurement technologies allow not only the Internet-based, real-time ordering, but also for the sharing of a range of information. One example is the posting of forecasting material by the buyer, allowing suppliers to anticipate their clients' needs and avoid overstocking, which in turn can reduce product costs. The report titled e-Business Marketplace - Business-to-Business e-Procurement trends, Opportunities and Challenges, was conducted in Australia and leading e-Business regions in North America and Europe.

The Australia/New Zealand research, incorporating 55 of the total 200 respondents, found that most firms were satisfied with the new technology. Those that had implemented said the technology was particularly effective at cutting the cost of office supplies (69 per cent of respondents), office equipment (56 per cent), computer hardware (51), travel (51) and computer software (45).

Out of the 73 per cent who had not already implemented the new technology, when the survey was taken in late 1999, 62 per cent were considering or planning to implement in the next two years. Mr MacCallum said more than half of Australian respondents saw supply-side e-Procurement as equally important to, if not more important than, demand-side selling.

"E-Procurement is poised to become a key enabler which seamlessly integrates supply chains between different buyers and sellers and makes the company's supply chain a key competitive advantage ...," Mr MacCallum said. "We predict that the traditional purchasing department that we know today, will cease to exist by the year 2002." He said e-Procurement not only reduced costs, but gave companies new potential to generate significant new revenue possibilities. He said that in the manufacturing industry, some organisations were looking to become one-stop shops for their industry base by vertically expanding their product line.