More than just cutting costs

The past few years have seen many of my family members and friends striving to be thinner – and healthier. With the aid of countless "scientific" diet programs, one can lose weight and stay healthy at the same time. I don’t have to tell you what the loss of 10 stubborn pounds can do to one’s physical appearance. In addition to this, there are other hidden rewards: cleaner internal systems, improved psychological well-being, boost in self-confidence, and generally, better health.

It is the same for business.

Philippine business has come a long way in the short period since E-Commerce descended on the IT scene. It was shortly after that another buzzword was introduced – E-Procurement. It is very encouraging to see how many Philippine companies have taken advantage of this "new" system, and as a result, transformed their businesses by increasing efficiency and boosting profitability.

E-Procurement has been adopted by a good number of Philippine firms. In 2000, when we introduced our e-marketplace SourcePilipinas.com, customers were skeptical and wary. As with all new processes, weaning them from the old manual system into cyberspace was difficult. To sign up members then, we had to highlight the most obvious and quantifiable benefit – lower purchase costs.

Then, it was difficult to appreciate the intangibles – simply, a more efficient business.

As awareness grew, our business expanded alongside. Nowadays, our customers ask, "How can you help us improve our business processes?" not just "How much can we save?" Though tangible benefits like lower costs are a boon to our trading partners, intangibles like increasing efficiency and streamlining negotiation processes have been the new focus of top management.

Efficiency. Transacting online eliminates redundant and often time-consuming tasks, and allows companies to access relevant, accurate information faster. And that makes for a more efficient procurement system.

The traditional manual buying process, which takes anywhere from five days to two weeks, can now be done in one day. The elimination of paperwork and improved communication brought about by the use of the Internet are the major drivers in cutting processing time by 70 percent. When buying through an e-marketplace, information such as item catalogues and price quotations are available online.

Suppliers, meanwhile, reduce internal costs as a result of the shorter negotiation process and lower marketing costs by joining an e-marketplace.

Profitability. Aside from lower purchase costs, buyers require less time and resources – including paper and personnel – in completing a purchase. The more efficient system translates to a more efficient manpower complement and lower overhead costs.

Suppliers, on the other hand, reduce the overhead cost of acquiring and maintaining a customer. An e-marketplace has a built-in network that continuously grows, expanding client reach almost immediately for suppliers. Through economies of scale, a limited number of sales personnel are needed to manage an ever-growing client pool. Communication is enhanced with the use of the Internet and customers are serviced quickly.

Efficiency and profitability are great foundations toward a healthier business. And these are promises delivered through E-Procurement. But sustaining a healthy business means adapting to changing customer demands.

Dr. Leonardo R. Garcia Jr. elaborates on the new IT trend in his recently released E-Marketing, where he kindly featured SourcePilipinas.com. "The new E-business philosophy is a shift from product centeredness (E-Commerce) to customer centricity (E-Marketing)."

And therein lies the answer to sustaining business health. Membership in an e-marketplace can be a critical component in an e-marketing strategy. Companies are able to derive important client information such as buying patterns and preferences, which goes a long way toward understanding customers and developing a long-term loyal relationship. In addition, e-marketplaces have evolved to incorporate vertical industries, making target marketing easier.

As improvements and innovations in technology come about, the functionalities offered by e-marketplaces will increase and its value to any business enhanced. E-Procurement offers companies a way to stay "healthy" during these lean times.

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Christine Yap-Tan is the COO of SourcePilipinas.com Inc., the e-marketplace under Yapster e-Conglomerate Inc. You may e-mail her at [email protected].