Beyond Red & Green Books…..

Europe’s facebook for

Government Procurement By Indrajit Basu

Governments across the world have always known that e-procurement holds enormous po-

tential. Yet with both governments and industry maintaining their own individual standards,

each e-business platform becomes an individual island. While computing technologies have

advanced by leaps and bounds, e-procurement and e-business still function on old-fashioned

Electronic Data Interchange (EDI) that is dominated by IBM mainframes and pre-Internet

protocols. Moreover, businesses still depend on exchanging hardcopies of mostly PDFs,

which are not interoperable, on say, Microsoft, SAP or Oracle systems.

Pan-European e-Procurement

In the EU for instance, a standard for electronic data exchange for e-business/ e-procurement

has been in the making for the past five years. Called Pan-European Public Procurement

Online (PEPPOL) this new standard -- much like the GSM for mobile telephony -- will be a

pan-European pilot solution that, with existing national solutions, will facilitate EU-wide

interoperable public e-procurement.

The vision of the PEPPOL project is to facilitate any company, particularly smaller compa-

nies in the EU, to communicate electronically with any European governmental institution

for the entire procurement process. The final outcome of PEPPOL will be an interpretational

environment build upon national systems and infrastructures supporting the full cycle of e-

procurement activities. However, imagine an e-procurement platform that works like Face-

book or Orkut -- a service where anyone can register and conduct not only e-business for

free, but can even meet virtually to discuss a deal! That, too, is operational in the garb of

Tradeshift. Launched in November 2009 Tradeshift is a Web-based platform that facilitates

electronic exchange of invoices between companies of all sizes. Everyone ranging from

small companies to large global enterprises can use Tradeshift to send, receive and adminis-

ter invoices. “Basically you may say the PEPPOL is the EDI standard and Tradeshift is a

service that uses the PEPPOL standard to offer one standard platform to conduct e-

procurement.” says Christian Lanng, the 31-year old co-founder of this innovative service.

“You may also consider Tradeshift to be the FaceBook of e-business,” adds Lanng. “It is not

as mechanical as last generation e-procurement platforms. What we found is that small busi-

nesses prefer to do business in real life that is meeting in person before a deal. We have fo-

cused on combining traditional e-procurement methods like invoicing with more untradi-

tional applications like social networking and the ability to connect personally with other

vendors and procurers. So we offer far more networking facilities than any e-procurement

solution.”

Vol. VIII August 2011

[Away from AMS, OPs, BPs & NOLs, this is a snippet of procurement happenings around us. An informal medium for procurement colleagues to share news, views and new developments in Procurement]

Survey Shows Procurement

Organizations getting Some

Relief from Deep Cost Cut-

ting Focus to Adding Value- and

Lots of Transformation" in the

Air in Procurement Source: The Supply Chain Digest SDigest &

CPO Agenda (4 August 2011)

The tepid economic recovery has progressed

enough that procurement managers are starting to

get some modest relief from the extreme pressure

to reduce costs, enabling them to get more strate-

gic and focus on adding value, a new survey from

Europe's CPO Agenda finds. Whether that will

withstand the latest economic headwinds that has

many worried about double-dip recession in the

US and Europe remains to be seen. The most re-

cent survey showed, for example, a big decrease

in the number of respondents reporting intensified

pressure to reduce costs: 68% currently compared

with 89% six months ago. The survey also showed

some relaxation in pressure to cut spend in discre-

tionary areas such as travel and use of consultants.

This is leading to a move towards an environment

in which more sustainable approaches to cost

saving is thankfully replacing the more reactive

tactics employed during the downturn.

Happy Birthday !!! SEFTA, Nadjib, 2 Aug

Kumar, Dhirendra, 2 Aug DUTHALURI, Nagaraju, 2 Aug

BARAL, Kiran, 8 Aug AL-QATHAB, Abduljabbar 8 Aug BALAGOPAL, Senapati 18 Aug

SAMARAKOON, Sunethra, 19 Aug Pinu, Zibun Nessa, 25 Aug

Guest Editor of this

issue: Priti Jain Desgin & layout:

Payal M. Madan

Editorial Team:

Senapati Balagopal

Kalesh Kumar

night plans.

11. You think Einstein would have been more effective if he had put his ideas into a "matrix model".

Guest Editor’s Pick :The Seven Rs of Buyer Sup-

plier Communities: A light-hearted look at what matters in buyer/supplier com-

munities: Every Responsible organisation working in increasingly Regulated environments

(and everything seems to be getting more regulated these days) is justly concerned with its

Reputation in competitive markets (because reputation is an important differentiator when

specifications can otherwise appear so similar).

To secure ongoing competitive advantage, they are dependent on Reliable suppliers with

whom they can establish, grow and maintain strong Relationships whilst reducing their cost

base.

The traditional approach to understanding and managing supplier Risk is to establish a pro-

curement team whose job is to assess and re-assess suppliers.

The Repetition involved for every Buyer and every Supplier is hugely costly and time-

consuming; and for smaller suppliers, especially so, which threatens the breadth of the sup-

plier base and stifles innovation.

Communities of buyers and suppliers sharing information can combine and leverage the ex-

perience of multiple Buyers from multiple market sectors into a single environment where all

suppliers are assessed equally, thoroughly and appropriately. Such a community provides a

benchmark for suppliers against which they can assess their own competitiveness and plan

improvements.

…. ..*This Newsletter is a collage of available articles from public domain for limited internal sharing of information. This does not reflect views or positions of World Bank or any of its offices.

For any further information contact pmmadan@worldbank.org*……….

Procurement Humor:

What is Next in Procurement

By Denali Group research

Top 10 Procurement Mistakes from a supplier organisation’s perspective…

Mistake 1: Not understanding the culture, needs and incentives of the procurement organiza-

tion. Price is important, but other factors count too.

Mistake 2: Discussing only price, not value. Contrary to popular opinion, many procurement

organizations are open to a "value" sell.

Mistake 3: Assuming the procurement department knows your value proposition.

Mistake 4: Not recognizing the customer cost of changing to a new supplier. Suppliers often

don't recognize this as an opportunity to justify a price premium of 5% to 10% or more.

Mistake 5: Thinking reverse-auction award decisions are based only on price. If the customer

doesn't publish that the "lowest bidder wins," then, in most cases, factors other than price are

used in decision.

Mistake 6: Not acting quickly to pass on commodity-driven cost increases.

Mistake 7: Not capturing price by using your ability to help manage your customer's risk

through material hedging, managing inventory, exchange currency, etc.

Mistake 8: Taking a misguided view of strategic partnerships. Your partnership is not an enti-

tlement to higher prices.

Mistake 9: Expressing a weak financial (supplier) position to gain price. Procurement depart-

ment will view this as a desperate move.

Mistake 10: Not getting involved in the customer's new product development.