Supplier management

Activities in this area are often referred to as supply chain management (SCM) or e-procurement, and sometimes enterprise resource planning (ERP). These terms should not obscure the fairly fundamental and often simple operations involved in sourcing supplies and services.

Elements of supplier management

Finding products and suppliers
The Web presents a global, if very hard to navigate, catalogue of products and services. Some order has been imposed with online directories, some of which are general, such as Yahoo!, and others industry-specific. As well as identifying products and services you might source, you should be able to get information from supplier websites on product specification or terms of service. Basic price comparison may be possible, and you should also be able to find impartial information about suppliers in online trade publications and industry-specific discussions. Using the Web in this way can save you time, help you find better products, and possibly save you money. But it will require a lot of time on the Web, and this will be much easier and quicker with broadband.

Efficient procurement
Raising and processing supplier orders is time-consuming, as orders raised have to be approved, printed and sent, and incoming invoices and other documents have to be identified and routed, approved, entered into an accounting system and filed (and often retrieved again). The costs to business, including errors in the process, are considerable.

Procurement is moving from paper-pushing and fax-sending to electronic ordering, with the possibility of increases in speed and accuracy, and a reduction in the need for human intervention. Such systems used to be the domain of large businesses, when the process was referred to as Electronic Data Interchange (EDI). Today it is a feature of many products available to smaller businesses.

These systems (often Web-based) can potentially allow you to find out if your supplier has a particular product in stock, how long it would take to ship, or when it will next be in stock. If the supplier supports live enquiries you could ask questions online, or schedule a call back. Once the order has been placed you may be able to track it in production or picking, and while it is being shipped. These processes will save you time on the phone or waiting for printed reports. All these activities will involve a lot of internet use, and while the amount of data involved will be small, you will need the always-on aspect of broadband.

Putting out tenders
The Web makes it much easier for companies to put out calls for tender and for suppliers to find them and respond to them. A number of marketplaces have grown up around products and services in particular industry areas. Tendering can help you find better suppliers, clarify the best approach for a project, and lower costs. Putting together a call for tender online can be time-consuming and will be quicker with broadband. It will also help you to quickly review the websites of any responding suppliers and evaluate their suitability.

Efficient payments
When invoices for goods and services ordered come due, it is also possible with some business management and accounting systems to make payments electronically via online banking, with a remittance advice generated for the suppliers. Even if this process cannot be automated most banks allow for payees’ bank details to be stored, saving time when making payments. These processes can save a lot of administration time, and also reduce errors. In either situation you will need broadband so you can send or make payments at any time.

Remote interaction
Whether or not any business management system you have can integrate with electronic data interchange, it may still be possible to login to it over the internet. This would allow appropriate staff at any other sites to access information without needing to ring up a colleague, and managers to review activity and expenditure on the road or from home. If the system does use elements of EDI the information in it will also be more up-to-date, and more useful as a result. Getting a broad overview of how you company is working helps with decision-making and developing company strategy. However such a system is accessed, you will need broadband for always-on access and in some cases you may also need its large-bandwidth.

Online auctions
For some businesses another source of suppliers might be online auctions, which represent one of the genuinely new models of commerce made possible by the internet. Although the image of services such as Ebay is often an online garage sale, the reality is that many smaller suppliers use it as their storefront for business goods. In auctions you can find a wider variety of product than are available elsewhere, and often get better prices on them. Bidding on items in an online auction may involve a lot of visits to the auction site, and there are a number of tools that help monitor auctions. However you do it, broadband will help keep you up-to-date with the progress of your auction.

Tools and services

Finding products and suppliers

Yell
Based on the Yellow Pages. Links to suppliers’ websites are provided where available.
www.yell.com

NetImperative
Focused on suppliers in the digital and telecommunications industries.
www.netimperative.com/cmn/mktplc/dir

Ordering and payment

Sage
Supports email communication with suppliers.
Platform: Windows
Cost: depends on product. Contact reseller for prices.
www.sage.co.uk

Microsoft Commerce Server
Supports standards-based product and order exchange with suppliers.
Platform: Windows. Requires Windows 2000 Server and SQL Server.
Cost: licensing per processing. £10,000s and upward (including other required tools).
www.microsoft.com/CommerceServer

Logistics and delivery
Most logistics companies offer online tracking of orders, usually based on the waybill number of the package. The tracking feature is usually accessed from a prominent link on their website home page, but it may be accessible from an order status page on the supplier’s website, or possibly integrated into your business management software, with data accessed in realtime over the internet.

Procurement

Kelkoo
Comparison shopping for electronics, computers and telecommunications equipment.
www.kelkoo.co.uk

Pricerunner.com
Similar to Kelkoo. Both suitable for smaller operations.
uk.pricerunner.com

LetsBuyIt.com
Uses group buying power to get lower prices on computer equipment, kitchen appliances, software, and telecommunications equipment.
www.letsbuyit.co.uk

Ebay
The largest auction service in the US, with an active UK service.
www.ebay.com/uk

Putting out tenders

smarterwork.com
A business-to-business marketplace. Requests for quotations are posted and suppliers respond.
www.smarterwork.com

eLance
Similar to smarterwork.com. Also offers supply chain management, and a professional services marketplace for small businesses.
www.elance.com

What you need
You will need a broadband connection to allow your business management and accounting software to transact with suppliers, as well as to facilitate Web use for research and placing orders with suppliers that do not yet support EDI.

Next steps

Where to go
For specific advice on which applications discussed might fit your business needs, or on finding and evaluating suppliers and products, you can contact your local, government-funded, Business Link service (www.businesslink.org). You might also review the UK Online for Business website (www.ukonlineforbusiness.gov.uk).

Chartered Institute of Purchasing and Supply
www.cips.org

Institute of Logistics and Transport
www.iolt.org.uk

Institute of Operations Management
www.iomnet.org.uk

Learn on
Business Link has a section on information on purchasing in the ‘E-Commerce & IT > Practical Benefits’ section of its site (www.businesslink.org).

UK Online for Business also has useful and more in depth material in the ‘Technology - the lowdown’ section of its site (www.ukonlineforbusiness.gov.uk), including information on electronic payments and EDI.

Watch out for...

False economies
Sometimes purchases made online are not the bargain you expected. You may fail to take into account taxes applicable on purchases from abroad, or shipping and other ancillary costs. In some cases you will be able to get better prices from offline suppliers. And of course price is not the only reason you choose a supplier, though the convenience of online ordering is becoming a significant advantage for suppliers that support it.

Establishing trust
When purchasing online, particularly if you are making payments, the server you are connecting should ideally use secure protocols. (If it is a Web server the site address will begin ‘https’ rather than ‘http’.) Of course security cannot be guaranteed by technology, but this element is easier to determine than other security issues.

Credit card chaos
If you make purchases from suppliers online and pay directly with a credit card, you will need to ensure that this expenditure can be identified on your credit card statement, tied to an invoice, and accounted for in your system.

Staying private in public
For reasons of security not all EDI-type systems use the internet for communication, and may instead require a dial-up or dedicated connection to the supplier. However, using the internet is desirable as it is cheaper and easier to access. Where security is an issue Virtual Private Networks (VPNs) are increasingly used for transactions that travel over the internet.