Seizing Control

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March 2002

HEAD OFFICE

Get Real Systems Ltd

Holtby Manor

Stamford Bridge Road

DunningtonYork

United Kingdom

Phone: +44 (0)1904 481999

Fax: +44 (0)1904 481666

Email: [email protected]

www.getrealsystems.com

Procurement Cont ro l

S e i z i n g c o n t r o l o f c o r p o r a t e s p e n d

Get Real Systems is a leading provider of Web-delivered procurement control solutions.

Designed to streamline purchasing in large organisations, the company’s PROACTIS

solution delivers vital control over spending, gives instant cost-base information and

radically improves purchasing efficiency for all staff.

Over recent years various electronic procurement models have evolved. Vendors have

either risen from the dot com era or have been established financial software providers

who have added procurement as an afterthought. Get Real Systems is different. A

specialist in procurement control, who has successfully addressed the automation of

purchasing, whilst also delivering essential financial controls and back-office integration.

This document profiles some of the principle ways in which we control spending and

streamline purchasing for large organisations.

Contents

INTRODUCTION.................................................................................................2

THE PURCHASING PROBLEM.........................................................................3

AFTER E-PROCUREMENT................................................................................5

PROACTIS PROCUREMENT CONTROL .........................................................6

CONTROLLING SPENDING AND GAINING FINANCIAL CONTROL........8

BUILDING A BUSINESS CASE FOR PROCUREMENT CONTROL............15

GETTING TO KEY COST-BASE AND PURCHASING DATA .....................17

EMPOWERING STAFF WITH EASY TO USE SOFTWARE TOOLS...........20

PROCUREMENT AS PART OF THE WIDER IT STRATEGY.......................22

A REALISTIC APPROACH TO PROCUREMENT CONTROL......................24

ABOUT GET REAL SYSTEMS........................................................................28



2 Procurement Control

March 2002 © Get Real Systems

Introduction

How many company executives can really say that they’re in control? How many finance

directors can actually control costs, rather than simply count them? And how many

procurement directors can claim to get best value from suppliers, without mountains of

red tape and armies of administrative staff?

Even in today’s world of expensive corporate IT and automation systems, the answer is

very few. Most company directors still occupy a reactive management role, and have no

real means of seizing control of the organisation’s finances to tighten the corporate belt in

tough times, or to exploit new business opportunities when they present themselves.

This is because even in the most modern and innovative organisations, the purchasing

process is still typically managed using paper. This results in enormous inefficiencies. It

prevents any meaningful analysis of spend. But perhaps most seriously, it means that

employees break free from the administrative burden and buy things any which way they

can. A worrying statistic from research undertaken by the Warwick Business School

recently, suggested that as much as 60% of corporate spending in the UK is either

uncontrolled or too process-intensive.

This paper considers the following:

! What are the typical cost control and purchasing-related challenges in a modern

organisation?

! How can we address these with procurement control solutions, using the PROACTIS

software from Get Real Systems to provide practical examples?

! What are the issues and complexities that we need to take into account before

implementing modern procurement control solutions?

Worryingly, 60% of corporate

spend in the UK is uncontrolled,

meaning it is not properly

authorised or it cannot be easily

accounted for.





The Purchasing Problem

In most organisations, purchasing processes remain largely untouched by IT investment.

Despite significant IT investment in other core functions, purchasing and procurement

remain something of an IT backwater. So whilst other processes areas have been

reengineered and automated using modern technology, procurement in most

organisations, has simply evolved into a paper-based mess.

Purchasing-related problems are rife throughout nearly every major organisation and they

affect more than just the purchasing department. They result in excessive costs for the

business as a whole, but equally, they have serious implications for staff across all

departments. Purchasing is often seen as a bureaucracy, riddled with inefficiencies.

So what are the typical problems related to purchasing and cost control, faced in most

large organisations? How many of these issues do you recognise?

! Uncontrolled, or “maverick”, buying. This is where people buy things using

unofficial methods, such as using their personal credit cards and claiming back on

expenses, or quoting unofficial orders numbers. Perhaps people do this more out of

desperation than any kind of fraud or ill-intent, but with around 60% of UK

corporate spend being uncontrolled in this way, the chances are it affects you. Formany company executives this should be a major concern.

! Purchasing is one big paper chase. Typically, nearly everything to do with

purchasing, from catalogues to request forms and every other stage throughout the

purchasing cycle, is managed using pieces of paper. The idea that control is achieved

by putting signatures on pieces of paper is lost, as soon as this paper chase begins to

snowball out of control. The purchasing function becomes bureaucratic and ridden

with red tape, staff will do anything to by-pass ‘the system’ in favour of an easy life.

! Lack of meaningful analysis or information. Because everything is managed on

paper or using fragmented purchase order processing systems, most company

executives do not have access to any useful management information. They simply

cannot explore purchasing patterns of staff, supplier performance or supplier usage

and it is often impossible to easily obtain even the most basic cost base information.

! Poor commitment accounting. Most finance directors are not aware of committed

costs until an invoice arrives on their desk. They have no visibility of the cost

pipeline until it is too late, and so managing company finances becomes like driving

blindfolded. What’s more, few finance directors can enforce effective commitment

For most businesses,

purchasing is an endless paper

chase. It is impossible to

control, or even monitor costs,

in such a confused paper-

intensive environment.

Without up-to-the minute information on costs, company

executives can only manage

reactively. Procurement Control is

about having instant insight into

costs to improve management

capabilities.





checking, to ensure that funds are available in a particular budget before a purchase

is approved.

! Budget mis-management. Most businesses have very clearly defined budgets

allocated to departments, projects, capital expenditure, and so on. However few have

the ability to ensure that those budgets are adhered to. And whilst the idea of

devolving responsibility for managing the detail of budgets is appealing, it is also

frightening in most organisations, where they do not have the tools to control such a

strategy.

! High stock costs. Most businesses hold more stock than they really need to, simply

because they cannot rely on their purchasing cycle to replenish critical goods on

time, or because they cannot see an up-to-date stock situation. They do not have the

stock control process properly integrated with purchasing and their purchasing

processes take too long and are too unreliable anyway.

! Employees become disillusioned with purchasing. When it takes too long to order

things staff become frustrated with the purchasing function. They either start to by-

pass it altogether, or they spend hours chasing orders and phoning around the

approval chain to expedite requests. Staff become unhappy and are not dedicatingtheir time to critical tasks.

! It takes too long to produce management or statutory accounts. The process of

compiling financial accounts often takes too long because the coding of purchases

takes too long, or the accruals process is not fast enough. In today’s increasingly fast-

moving business environment, it is crucial to have this information with the least

possible delay, to improve the decision-making process.

So whilst most of these problems are relating directly to procurement, and the

management of the purchasing function, Procurement Control is critical to all company

executives.

Employees shouldn’t have to

spend lots of time buying things

– it should be simple, fast and

effortless.





After e-Procurement

Over recent years the dawn of the e-Procurement age promised an end to these types of

problems. e-Procurement was heralded as the answer to all our purchasing problems.

Many software vendors clamoured to offer new solutions for streamlining purchasing and

trading over the Internet.

Most of these vendors fit neatly into two categories: 1. The first group of vendors virtually

appeared overnight, funded by millions of pounds of Venture Capital investment and

riding high on the dot com wave. 2. The second group were typically established software

vendors, in fields like ERP, MRP or financial systems, who added e-Procurement to their

product suites as an afterthought.

However uptake of e-Procurement was slow. Vendors blamed each other’s hype and

broken promises, or pointed to the economic caution following September 11th for poor

adoption figures. The reality was that for most businesses, these vendors had failed to

address the problems properly, or even to appreciate the complexities of different types of

procurement.

Get Real Systems is a procurement control specialist, focused entirely on deliveringsolutions for controlling spend and streamlining purchasing. Our PROACTIS solution

aims to help large organisations get their house in order – optimise internal efficiencies,

tighten corporate governance and empower the workforce to work smartly.

Many e-Procurement vendors

have failed to address the

issues, nor do they appreciate

the complexity of corporate

purchasing requirements.





PROACTIS Procurement Control

PROACTIS is enterprise class software that enables large organisations to streamline

purchasing processes, manage procurement and control corporate spend.

In summary, PROACTIS offers:

! Procurement staff a means of controlling and monitoring purchasing performance,

suppliers and contracts.

! Finance staff a means of streamlining cost analysis and controlling spend, as well as

accessing key information on commitments and financial reports.

! All other staff a quick and easy means of buying and interacting with the purchasing

function. Without the traditional purchasing paper-chase, they are empowered to be

more productive.

As shown in Figure 1, PROACTIS is delivered through a Web browser, via the

organisation’s Intranet. Users log into the system using a unique ID and secure password,

and can perform tasks such as raising requisitions or purchase orders, receiving goods,

approving orders or invoices, producing reports, analysing costs and enquiring on

previous requests or transactions.

Figure 1. PROACTIS Procurement Control screen shot.





Users are given unique or group-based profiles, which govern their capabilities and access

levels within the system. Some users may have access to all functions, whereas other may

just be able to raise a simple requisition, view certain parts of the catalogue, or generate

pre-defined reports. User profiles also dictate tolerances in the system, for issues such as

over deliveries, budget and commitment checking and invoice reconciliation.

The aim of PROACTIS is to get internal purchasing processes under control, and the

system does this with more comprehensive sophistication features and functions than

traditional “e-Procurement” solutions, so it is highly probable that PROACTIS will be

able to handle even very specific or unusual buying requirements. PROACTIS also

automates trading with suppliers over the Internet, using standards like ‘punch-out’ and

BASDA’s eBIS-XML. Suppliers that are not yet ready or willing to adopt e-commerce,

are also fully supported.

Summary o f PROACTIS benefi ts :

! Reduced process costs by automating and streamlining procedures

! Instant access to cost-base and purchasing information

! Better value from suppliers, though spend consolidation

! A productive workforce – less time spent dealing with red tape

!Control over spending – the ability to

control rather than simply

count costs

! Willing compliance to purchasing policy by staff

Why PROACTIS is di f fe rent :

! True back-office financial control over purchasing

! Financial system and financial strategy integration

! Flexibility to handle all types of purchasing requirements

! Streamlines trading with all your suppliers, of all goods and services

! User intuitive and extremely easy to use – virtually no staff training needed

! Powerful cross-application reporting capabilities

The following few chapters look at some of the specific ways in which PROACTIS

streamlines purchasing and controls spending in large organisations.





Controlling spending and gaining financial control

Purchasing spend is a major cost to any organisation. The proportion of spending that is

influenceable by the purchasing department often varies, but if managed properly, this can

have a significant effect on financial performance and profitability.

Tightening order approval procedures

Different types of orders and purchase requests need to be approved by various people.

Requests for operational goods or services, IT equipment, capital expenditure or a

purchase for a particular project, all require approval from different people.

Typically this would result in a “purchasing paper chase”. In most organisations this

either requires request forms to be physically passed around from one person’s in-tray to

the next, or it simply doesn’t happen and orders are not properly approved. Invariably

approval procedures slow down request-to-order time significantly, because they rely on

often busy managers being available to sign pieces of paper, regardless of whether they

have sufficient information upon which to make a decision.

PROACTIS automates the flow of approval requests around the organisation using its

own in-built workflow. Key capabilities include:

! The approval processes needed for a purchase vary greatly depending on the type of

purchase (operational, administrative, project, CAPEX, etc.), who is requesting it,

the value, the urgency and other possible variable. PROACTIS workflow is flexible,

allowing the approval rules to be defined based on a wide array of variables.

! PROACTIS allows for unlimited levels of authorisation, but provides important

features which allow approval to be delegated in somebody’s absence. The system

also handles unexpected absences and allows approver “pools” to be defined, to

make the approval chain efficient and eliminate bottlenecks.

! Requested lines are dealt with as individual items which may need different approval

chains, based upon definable authorisation hierarchy to determine who needs to be

involved in the process.

! PROACTIS workflow integrates with leading e-mail systems too, so you don’t have

to wait for approvers to log in to find out about anything that may require their

attention. Requests for approval may be sent via e-mail, or kept within the system,

depending on individual user preferences.

PROACTIS automates

approval processes to speed

up the purchase cycle,

eliminate red tape and

improve staff productivity.





Whilst handling the supplier’s invoice is an essential part of the purchasing process, and

one that accounts for a large chunk of the time and effort involved in buying things, it is

often overlooked by traditional e-Procurement solutions. PROACTIS automatically

reconciles registered invoices to orders and goods received notes (GRNs) and detects any

discrepancies or unexpected variances.

Figure 3. A scanned invoice held in PROACTIS

Invoices may be received on paper, and scanned into the system, or received

electronically using modern open standards, such as XML or e-mail. Document scanning

in PROACTIS relies on standard Windows desktop scanning technology, which is tried

and tested throughout the world with millions of home PCs, rather than on legacy

scanning and archiving technology which now represents a significant investment burden

for many IT departments. Electronic invoices use the industry-standard BASDA eBIS-

XML schema, which is widely used by all leading financial solutions.

Discrepancies can either be handled centrally in an invoice processing department, or

delegated to a specified end user for resolution. You may choose to let the original

requisitioner, one of the approvers or anybody else in the organisation ,solve the problem

– this is determined by fully definable system rules.





Figure 4. The PROACTIS Invoice Troubleshooter

PROACTIS contains a powerful Invoice Troubleshooter which provides fast and efficient

ways to resolve invoice discrepancies, removing a major part of the time and workload

involved in purchasing. The options presented to different users depend on the

permissions and capabilities within their profile.

Automation of nominal coding

Most procurement systems pay little or no attention to how purchases are coded into the

financial accounting system. PROACTIS recognises that this is essential to providing

financial control and, if done properly, it can save a huge amount of time and effort later

on in the purchasing and payment cycle.

! At the point of order, PROACTIS looks up and validates nominal codes by linking

directly with your organisation’s chosen financial system. PROACTIS lets you

define up to eight accounting elements, which means that it can link with any

industry standard financial management system.





Budgets and commitment control

PROACTIS enables you to set up pre-purchase commitment checks on budgets, to ensure

that there is always sufficient budget within the relevant cost centre for a purchase. And

because the nominal coding is automated, commitment levels and budgets are always up-

to-date.

! High-level budget details can be read from 3rd party budgeting systems or entered

directly into PROACTIS. Some organisations might prefer to define high level

budgets within the financial system or a budgeting tool, but give each cost centre

manager the ability to manipulate their own detailed budgets in PROACTIS. This

allows devolved budget administration. Equally, PROACTIS can be set to enforce

detailed budgets or disregard the use of budgets altogether.

! PROACTIS commitment checking gives you the option of warning a user when a

budget is diminishing beyond a set percentage or is about to be exhausted, or simply

preventing the purchase entirely. PROACTIS uses a traffic light system to notify the

outcome of a commitment check. Where a commitment check fails, the user will

receive a detailed report telling them why.

! There is flexibility to define what your considers to be “hard” or “soft”

commitments.

! The format of the Commitment Report is tailored to meet specific company

requirements – every organisation does this in a slightly different way.

! Commitment accounting can also be built into the Workflow approval process to

ensure that all expenditure is tightly contained within budgets.

! Commitment checking is essential to many types of organisations and it is important

to good corporate governance. It gives peace of mind that budgets set at strategic

level will not be mismanaged due to poor systems, but provides the flexibility for

users to adapt to changing budgetary requirements without “system” restrictions.





Figure 6. Commitment report





Building a business case for procurement control

PROACTIS transforms purchasing and procurement from a reactive, process-intensive

function into a proactive strategic function, which drives itself with automated processes

and streamlined procedures. It frees procurement and purchase staff to focus on strategic

issues. And it frees regular staff from purchasing-related bureaucracy.

But in addition to a leaner, fitter and more efficient organisation, e-Procurement has

promised an attractive return on investment (ROI). Many early-adopter organisations

moved quickly to implement e-Procurement, expecting to save anything from 5% to 25%

of their purchase costs each year. Over-hyped promises from vendors have made such

savings seem easy.

Get Real Systems is much more cautious with regards to ROI promises. Undoubtedly

there are savings to be made by controlling spend and streamlining purchasing, and

because PROACTIS goes further towards delivering back-office financial control (with

features like invoice matching and commitment checking and accounting), it is easy to

imagine how PROACTIS can help you save more than traditional e-Procurement

solutions. However it is important to be realistic about savings and ROI.

Implementing any electronic procurement control system will not necessarily reduce an

organisation’s costs alone. Procurement Control is simply a tool to underpin smarter

purchasing procedures and best practice procurement strategy. The system will not save

money – savings will come from one of the following areas, which will be enabled by an

efficient system:

! Higher compliance to purchasing policies

! Reduced process costs

! Consolidation of spend with major suppliers

Estimating exactly how much your organisation can save with procurement control is

difficult. This is because in order to do so, you need to know the starting point for

improvement – i.e. what purchasing costs you today. And without proper systems in place

to analyse and monitor procurement, this is usually impossible.

You also need to have a clear idea of how you intend to realise process savings. For some

organisations this inevitably means redundancies, as less ‘human effort’ is required to

manage the process. However many organisations choose to utilise the liberated human

time more effectively, redirecting effort towards improving purchasing performance and

building best value. For these organisations, the bottom line savings are obviously less,but improvements in management and operations are significant.

Soon all workers will be

Knowledge Workers,

contributing at a strategic level

whilst computers take care of

even complex processes and

deliver information for decision-

support.

Bill Gates

Business @ the Speed of Thought





In summary, there is a compelling business case for implementing procurement control

software like PROACTIS. However this business case does not always revolve around

cost savings. Other compelling reasons for this type of implementation to appeal to

procurement, finance and IT staff include:

! Water-tight control over spending and costs

! Better management and decision-making

! Access to critical information





Getting to key cost-base and purchasing data

80% of finance directors believe that they do not have sufficient information about the

costs in their organisation. This is not surprising, given the lack of purchasing systems

installed in most businesses and the high levels of uncontrolled, or maverick, buying.

A similarly high percentage of purchasing managers / directors feel that a lack of reliable

information hinders them when trying to achieve best practice in procurement. Without

critical information on suppliers, spend, contracts and so on, it is impossible to make

informed decisions or see where processes can be improved.

Whilst PROACTIS can be linked seamlessly to specialist 3rd party business intelligence

and reporting tools, like Business Objects, Cognos or Crystal Reports, it also offers its

own powerful report writing suite called PROACTIS REPORTER. PROACTIS also

contains lots of powerful on-screen enquiries positioned throughout the purchasing

process, delivering information to the user wherever it is needed.

PROACTIS REPORTER

PROACTIS REPORTER is available as an option in the main PROACTIS procurement

application and can be configured to provide users with powerful management

intelligence, drawn from multiple data sources. It gives users the ability to manipulate and

format data, as well as create and output reports using a variety of methods.

Figure 7. PROACTIS REPORTER suite





Figure 8 shows how PROACTIS REPORTER doesn’t only report on PROACTIS data but

also combines data from other critical applications, like financial or ERP systems.

Figure 8. PROACTIS REPORTER architecture

Reporting output is user-definable, with a simple drag-and-drop Layout Manager to

configure hard-copy reports and drill-down, together with interrogation capabilities for

on-screen enquiries. Figure 9 shows PROACTIS REPORTER making use of pivot tables,

similar to those in Microsoft Excel, to enables easy (but extremely powerful and flexible)

analysis of key data.

Figure 9. PROACTIS REPORTER – Spend by Supplier





PROACTIS REPORTER is totally integrated with the main PROACTIS application. An

example of where this comes in useful, is if you want exception reports triggered by

events in PROACTIS to be e-mailed or routed via workflow to particular users.

On-screen Enquiries and Look-ups

In addition to the powerful reporting capabilities provided by PROACTIS REPORTER,

the system contains many other on-screen enquiries and look-ups that are designed to

deliver essential decision-support information to the desktop.

Users can quickly access information on anything from supplier performance to stock

holdings at different locations to progress reports on previous requests, to name but a few

examples.

Figure 10 shows one such example, the Supplier Dashboard combines information from

PROACTIS and your financial application. It provides instant reports on your own

defined KPIs, supplier spend and also contains a diary facility, for storing and sharing

qualitative information about a supplier’s track record.

Figure 10. Supplier Dashboard in PROACTIS





Empowering staff with easy to use software tools

Procurement Control solutions like PROACTIS are all about empowering staff to help

themselves, making it easy for them to adhere to purchasing policy. People can work

smarter, free from the purchasing-related administrative burden. But all systems like this

rely on staff to actually use them, because if they choose not to, the full benefits are not

realised.

Some organisations take the “big stick” approach to optimising staff adoption of new

systems. Instead, with PROACTIS Get Real Systems encourages the “carrot” approach –

if you make it easy enough, staff will want to use new software. You will not have to

force them to ‘comply’, and the new software becomes valued by everyone.

For regular staff throughout an organisation, PROACTIS is very simple. Its design makes

full use of Microsoft’s new ‘Inductive User Interface Guidelines’ for application software,

which drives the user through a system using the principle; “what do you want to do?”

rather than the traditional approach of “where do you want to click?”.

Such simplicity cuts staff training time and costs. Some PROACTIS sites have several

thousand users. They can be up and running quickly without any help, and simple onlinetutorials are available for staff who want to learn more than just the basics.

Figure 11. Editing the Items on a PROACTIS Purchasing Order

LEFT: Clever use of graphics

makes it easy for users to

follow a logical path through

the system. Figure 11 shows

the ‘middle’ section of a

physical purchase order

document – which is where

you would expect to find the

items.





Figure 12 shows the logical layout of most PROACTIS screens, which display different

levels and types of information depending on the user and the user’s privileges.

Figure 12. PROACTIS Screen Design, based on Microsoft’s Inductive User Interface guidelines

The right hand part of

the screen shows

workflow information

and user-specific

comments, alerts or

instructions.

Shortcuts to user-specific

‘Favourites’. For instance

if the user regularly

places the same order,

then a link to a pre-

defined template could be

held here.

User log-on information

Access to the various parts of the system is driven both by

menu and tabs, and is governed by what the user has been

given permission to view and use.

The bar along the top contains a logo and branding, which can

be altered to reflect any corporate style or to blend in with any

existing Intranet systems.





Procurement as part of the wider IT strategy

Purchasing, as a function, is inextricably linked to every other part of the business.

Purchasing data needs to feed into financial data and purchasing requirements often need

to be driven from other business functions, such as sales, manufacturing, maintenance, IT

or admin.

It makes sense therefore that any procurement software needs to be properly embedded in

the heart of the organisation’s wider IT infrastructure. It should be capable of being

implemented as a stand-alone system, or as part of a much wider fully integrated solution.

But most procurement software providers have failed to embrace the issues of software

integration. Most sweep such issues under the carpet, passing it off as something that 3rd

party systems integrators can handle or something that can be discussed after the main

implementation is out of the way. At Get Real Systems, we recognise that integration and

connectivity is integral to every project. Both the PROACTIS application, and its

implementation methodology PRIME, have been designed with this in mind.

Stock Control

PROACTIS contains its own fully integrated Stock Control module as an option. This

provides multi-location stock management that is truly integrated with procurement

control to automate replenishment and manage the costs associated with stock.

Features of the PROACTIS stock control option include:

! Serial number & batch tracking

! Multiple locations & sub-locations

! Stock usage analysis

! Cyclical stock taking

! Stock valuation

! Automated stock replenishment

! Stock Issues

! Updates from GRNs

! ABC stock classification

! FIFO

! Internal & external transfers

PROACTIS is also capable of linking with 3rd party stock systems, such as those

belonging to ERP, MRP, warehousing or works management solutions.





Integration With 3rd

Party Systems

PROACTIS LINK is a combination of software integration components, within

Microsoft’s Data Transformation Services, and services delivered by the Get Real

Systems Professional Services Division. It enables quick and easy integration to virtually

any 3rd party application or database to enables PROACTIS to sit neatly as part of a wider

IT infrastructure and strategy.

Figure 13 shows how the desired dataflow can be easily mapped using drag and drop

components, and the special PROACTIS LINK components can be used to define the

integration rules.

Figure 13. PROACTIS LINK





A realistic approach to Procurement Control

Many so called e-Procurement solutions are great in theory but fail in practice, simply

because they fail to take into account some basic practical issues. The PROACTIS

procurement control system represents a realistic approach that works first time.

Whereas “e-Procurement” offers to fully automate the way you trade with a handful of

big-contract suppliers, PROACTIS will streamline the way you work with all your

suppliers. PROACTIS works for all goods and services and it too provides full Web-based

automation with your major contract suppliers.

The former approach requires considerable buy-in from suppliers which is rarely

forthcoming, and it ties the organisation into suppliers to an often unacceptable degree. It

often relies on 3rd party trading exchanges – Internet middlemen – who take their cut

without ever really understanding the demands of your supply chain.

The latter approach means that you are never restricted and you don’t have to wait for

suppliers to adopt your chosen technology – it means that you can get on with the

implementation and your suppliers can get on board to whatever degree suits them. Your

e-commerce destiny is in your own hands, not those of your suppliers or a middleman.

Figure 14. Supplier Trading model





Trading with everyone

Investing in a new procurement system that only lets you trade with a handful of lucky e-

enabled suppliers is a backward step. The chances are you have built up solid

relationships with trusted suppliers over time, and it is unreasonable to remove them

simply because they cannot, or will not, adopt your e-commerce strategy.

PROACTIS lets you trade with everyone, from the biggest organisation to the local

window cleaners or landscape gardeners – everything that is purchased by the

organisation can be tracked, analysed and controlled.

For the most basic suppliers, or even for suppliers with whom trading is infrequent,

PROACTIS stores catalogues of the goods and services they offer itself. Your staff can

request items from those catalogues, and the exchange of documents can take place using

printed paper, fax or e-mail. Within your business, everything is still automated, it is only

the supplier who has to deal with the non-automated side of the transaction.

Common (and realistic) e-Procurement

PROACTIS users can take advantage of certain key features that allow them to streamline

even further the way they work with certain suppliers. The first is XML messaging

standards, which is a way of exchanging electronic ‘paperwork’ with suppliers via e-mailand the Web.

PROACTIS despatches a purchase order using a pre-defined XML schema, and if the

supplier has a modern business management system at the other end he can receive that

order directly into his system. If not, it is simply displayed in human-readable format in a

standard Web browser. Equally, goods received notes and supplier invoices can be

received into PROACTIS in the same way, as well as a range of other documents.

Suppliers can be given the task of keeping their own catalogues up-to-date. They can

maintain catalogues in a spreadsheet or with secure Internet access, but the key point here

is that every change is monitored and approved by you, so terms and conditions cannot

change without your approval.

Full e-commerce

Every organisation has a handful of major contract suppliers, and these are typically the

suppliers with whom full blown e-commerce is achievable. Whereas many traditional e-

commerce suppliers rely on subscriptions (from both you and your suppliers) to some

kind of Internet trading exchange or transactions fees, we feel that this is still unrealistic

for mid size organisations who don’t have the necessary spending power to strong-armtheir suppliers.





Trading exchanges introduce an unnecessary middleman that ties buyer and supplier

together unnecessarily – a trading relationship should be cemented by favourable terms

and trust, rather than technical capacity.

PROACTIS uses an open standards method that has recently become known as “punch-

out”. This model lets you use PROACTIS to connect to your suppliers own Web sites,

search for the products you want to buy, and then bring all the relevant information

(specifications, prices terms and conditions, etc.) back into the safety and controls of

PROACTIS for processing, using all pre-defined authorisation and commitment rules.

This lets you keep full control of commitment tracking and the approval process, but puts

the onus of maintaining catalogues on the supplier, removing an administrative overhead.

Punching out to supplier’s web sites actually “logs you in” to their site, so your staff only

see your specific prices and terms. PROACTIS comes with several punch-out links as

standard, to commonly requested suppliers like RS Components, Dell Computers, Fisher

Scientific, and Guilbert, and we can build additional links very quickly, with only

minimal assistance from the supplier itself.

Figure 15. Punch-out to the Dell Computers web site





Special Procurement Requirements

Every organisation has peculiar purchasing requirements that are unlikely to be met in an

off-the-shelf procurement system. PROACTIS offers the ability to include rapidly

developed plug-in components to cope with such requirements, which are also compatible

with future releases of the standard software.

Some examples from other customer projects include:

1. A special fuel-buying front-end for a fuel distribution company

2. Vehicle servicing procurement for a car-hire company

3. Uniform procurement (size/colour matrix) for emergency services purchasing

4. Travel and accommodation booking sub-systems

The key point is that with PROACTIS you never have to compromise on the desired

business process. The system is sufficiently flexible to cope with any demands.




About Get Real Systems

Get Real Systems Ltd is a leading provider of Web-delivered procurement control

solutions, which help large organisations streamline purchasing and take control of

spending and costs.

Established in 1996, the company’s diverse customer base includes large organisations

like the NSPCC, Cornhill Insurance PLC, Polestar PLC, Caerphilly Council and the

University of Birmingham.

For further information, visit us at http://www.getrealsystems.com or contact:

Robert Hornshaw

Business Development Manager

Telephone 01904 481999

E-mail [email protected]

http://www.getrealsystems.com/


mailto:[email protected]




Seizing Control

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