E-Procurement Evolving in Europe

Turning to the Web for E-Procurement

In 1997 the Internet promised an even better solution to supply chain management. Marino opened Unitec Services and Web in Italy, becoming an Italian Internet service provider (ISP) in the process. Unitec Netsourcing built a program to support e-procurement.
Originally, Unitec's outsourcing efforts separated the "buying" activity from the "supply" function. Unitec's customers had already selected the suppliers they wanted to deal with and had already negotiated the price. All this information was on a database. When the customer decided to outsource the supply function to Unitec, it handed over this database. Unitec then wrote letters to these suppliers informing them they would be receiving all future purchase orders from Unitec.
Unitec took over the supply side by handling the orders for its customers. In Europe, "buying is a core business for customers. Supplying is not. It's an administrative task," he explains.
The outsourcing provider noticed that many of its customers were buying common items. Unitec was able to aggregate these orders, negotiating a better price because of volume discounts. Some clients needed such small amounts they had to buy retail. But with Unitec as their supplier, they had the opportunity to add their orders to the larger ones, qualifying them to purchase wholesale.
In addition, its customers were also able to save money on transportation and billing by cutting out the distributors. Marino estimates Unitec customers today pay at least 50 percent less than the retail cost. The outsourcing provider shares any additional price savings with its customers. And they only receive one bill a month instead of thousands.