By Mike Malley - H&MM Editor
As might be expected, companies of differing sizes and to a lesser extent, companies in different industries, handle maintenance, repair and operating supply purchasing in different ways.
According to a national survey of corporate purchasing decision makers, 25 percent of respondents plan to initiate or increase use of the Internet for MRO (maintenance, repair and operating) supplies during the next one to two years. Results suggest that interest in purchasing via the Internet might be even higher if buyers better understood the advantage of Internet commerce. The survey of 600 purchasing decision makers from U.S. firms of all sizes and industries was commissioned by Chicago-based W.W. Grainger.
Among the industry groups included in the survey, companies in lodging, education and health care were significantly more likely than others to have formal purchasing departments to handle MRO purchases. This same group also responded that their company's MRO supply system is highly effective.
According to Barbara Chilson, vice president and general manager of Internet commerce for Grainger, the advent of purchasing supplies electronically, increasingly referred to as paperless purchasing, can be attributed to a variety of factors and emerging technologies.
"Presently the Internet, electronic data interchange and electronic funds technology are technologies which enable you to reduce paper," Chilson said. "Credit cards also eliminate lots and lots of single invoices that have to be paid singularly in your accounts payable process."
In determining what constitutes a paperless purchase, however, Chilson
said the technologies that are available are only part of the equation.
It's important to understand what those technologies are enabling companies
to do, she said. "
|Transportation, Communication & Utilities
|Hotels/Lodging & Education
|24 hours a day, 7 days a week ordering||1.2%||11%||12%||15%||7%||15%||16%||9%|
|Ease of checking product price and availability||6%||6%||5%||12%||6%||3%||7%||9%|
|Easier to find products vs. print catalog||4%||3%||8%||11%||8%||4%||3%||3%|
|Access to widest variety of products||7%||6%||7%||12%||10%||1%||7%||10%|
The point of being paperless is not just to save trees - though that is pretty neat - it is actually to enable hotels and motels to simplify their purchasing process," Chilson said.
The various technologies available today can reduce the number of steps in the purchasing process. Whether it's identifying a need, determining sources, finding the product, or doing a competitive analysis and paying for it when it's delivered, the process can be shortened. The point, according to Chilson, is that overall time is saved.
"The end result - as you eliminate steps and simplify [and] shorten them - you are basically saving time, which is process money and labor," Chilson said.
Smaller firms appear to gravitate toward Internet-based technologies more readily than larger companies, according to the survey. The newness of the Internet and its relative inexpensiveness are very appealing to smaller firms, Chilson said. "
All you need to do is have a PC, a modem and an Internet service provider if you are a smaller company," she said. "Larger companies, on the other hand, have some interest in Internet commerce but they are more apt to be the companies for the last four of 10 years [which] have invested quite a bit of money and time into [electronic data interface]."
Even for the bigger companies that may be reluctant to give up their investments in EDI, there are other immediate advantages to electronic purchasing-namely that entire catalogs can be electronic. Paper catalogs are not being replaced, as much as they are complemented, by electronic versions and CD-ROMs.
"We are seeing a whole array of catalogs in different media," Chilson said. "Over time, we are anxious to find out which cataloging methods are most cost - effective."
Perhaps most appealing to Chilson is the potential of the Internet. It provides real-time access and current product availability which a company can't get in a paper catalog, but going on the Web with catalogs has to be much more than that. "Use of Internet technology should focus on improving service and responsiveness for customers," Chilson said.