E-Procurement Evolving in Europe

Cutting Warehousing Costs Up to 80%

Marino estimates companies can cut their capital costs in warehousing up to 80 percent. Information drives decisions, cutting actual transport. For example, a shoe retailer may have 90 pairs of Manolo Blanik shoes in stock in the warehouse. One hundred pairs is the minimum it must keep in stock. But if the retailer knows there are another 10 pairs available in the virtual warehouse, he won't immediately buy those 10 pairs. He'll just buy them from the virtual warehouse stock when he needs them.
Outsourcing the procurement process makes sense for customers in seasonal industries. They only have to pay procurement costs when they incur them. Marino says not having a fixed cost on the balance sheet is a business advantage.
Currently all of Unitec's customers are in Europe. Marino says in general Europeans are afraid of outsourcing. But they are researching the possibilities because "they know it's not a fad."
Marino adds that some Europeans are not as computer literate as people are in other regions. To them a computer is "a complicated piece of machinery." However, the CEO says the folks with this ostrich mentality do realize they are taking a risk if they ignore the possibilities of the Internet. The University of Rome has noticed Unitec's Internet initiative. Next year the university is offering a master's degree in the new economy with Unitec as the paradigm.

Lessons from the Outsourcing Primer: