2. Who are they? Cambridge Consultants is a manufacturer with 300 employees offering technical product design and development services to commerce and industry. Leading technology and innovation company, renowned for its ability to solve technical problems and provide creative, practical solutions to business issues.
3. Who are they? (contd) Fields that are covered by Cambridge Consultants: Defence and Security Transport Wireless Semiconductor Consumer Product Medical Technologies Industrial Products
4. Known Issues Because of its varied and often unique requirements, Cambridge has a supplier base of nearly 4000 companies, with 20 new ones added each month. Some suppliers provides items so specialized that Cambridge purchases from them no more than twice a year. Only 400 preferred suppliers.
5. Current Purchasing Pr Heavy internal cost of raising an order. The whole order processing taken in account : Raising paper requisition Processing by purchasing Invoice matching and clearance Physical cost of a four-part purchase order form
6. Current Purchasing Pr(Contd) The whole process involved between 8-10 peoples, and cost the company anywhere from 60 - 120 depending on the complexity of the order. They started to use RS purchasing card : Engineers no longer needs to raise paper requisition Which results in low value ordering & cost efficient Reduced invoice matching cost since the purchase card statement lists all purchases made each month.
7. Current Purchasing Pr(Contd) Using the purchase cards are improvement nonetheless, butit does not allow costs to be assigned to jobs in the system each day. Purchase cards statement takes a month to arrive Resulting lag in the showing the real costs
8. E-Procurement Pr RS put Cambridges pre-Internet trading records on the web server to enable the company makes online order immediately. Automatically set up: Purchasing agreement & control Correct pricing Special payment terms
9. E-Procurement Pr(Contd) Making purchase orders from the purchase cards from the web server means the complete order was automatically collated with all controls in place. Resulting in : Increased accuracy Increased speed in purchasing process Reduced cost per transaction
10. E-Procurement Pr(Contd) This method enables departments in the company to make their own purchases independently from the web site. In purchasing process, the company no longer needs to spend time passing on orders that they have raised No generation of paper during the process, reducing time and money, thus environmentally friendly
11. Benefits for staff They can add items to the order right up until RSs 8 p.m. deadline without purchasing managers involvement. Purchasing managers maintain control because of the reporting functions on the site. Made it possible for multiple orders to be opened during the day and then put against different cost centers internally.
12. Results The cost to Cambridge of raising a paper-based order was indentified as being 60. Using the new method, this has been reduced to 10 per order. Over a year, this represents a saving of 57.000 to Cambridge. The net effect, is that its purchases from RS components now cost it a mere 5000 a year.
13. Questions Given the scale of the purchasing operation at Cambridge Consultants, what benefits do you think e-procurement has brought? Why are procurements costs currently as high as 60 - 100 per order? How are procurements costs reduced through e-procurement? What staff benefits accrue to Cambridge Consultants as a result of e-procurement?