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Despite the many obvious business advantages of
e-procurement, there are challenges, according
to Suzan Shirley, assistant director of supply
chain and logistics at the Jumeirah chain of
hotels. Delegates at the inaugural Middle East
e-sourcing and e-procurement conference, were
told of some the challenges she faced in
introducing e-procurement to the group.
Jumeirah, which has landmarks such as the Burj
Al Arab in its chain, adopted e-procurement six
months ago, the conference, organised by CIPS
(Chartered Institute of Purchasing and Supply )
heard. The business had a group procurement
department and five purchasing offices, but last
year the purchasing offices were consolidated
into one.
With a workload of placing an average of 1.37
orders every minute of every day, it became
clear that there must be a way to benefit from
purchasing on such a large scale. Shirley told
delegates: ”We were asking the same questions
you were all asking earlier. Would it work in
this competitive environment?”
Jumeirah initially applied e-procurement to its
purchasing of fruit and vegetables, meat and
poultry, and has now rolled it out to seafood.
Bakery and dairy goods are currently being input
and dry goods will be next.
The biggest challenge has come from the number
of different products Jumeirah purchases, around
65,000 at the last count. Each food item needs
to be identified and its specifications agreed
with chefs before it can be defined on the
system. This led to some confusion when the same
products were being referred to in different
terms: for example, zucchinis and courgettes
were listed separately, even though they are the
same vegetable.
“We didn’t know before we set up this system
where we were spending our money. We were just
spending it,” said Shirley. Now, all of the
business units place orders through one central
system and it is easy to see what was ordered,
by whom, and at what cost. “Wherever I dial in
from anywhere in the world, I can see what’s
happening on our system.” She added. Jumeirah
now intends to roll out e-procurement to the
rest of its products, and to begin using it in
all of its properties worldwide.
In a panel discussion, Ibrahim Yaqob, director
of contracting and purchasing, Dubai
Municipality, said there could be technical
limitations to the use of e-procurement. “The
current bandwidth does not allow us to put
everything online and send attachments,” he
said. “Once we increase the bandwidth, 90 to 95%
of our ordering and tendering will be done
online.”
Security was an issue raised, but the panel
considered this could be easily addressed. Thani
Alzaffin, director of Government Information
Resources Planning Department, H.H. The Ruler’s
Court, told delegates: “It is more secure than
the paper-based system.”
Dubai Municipality’s Yaqob added: “There are
ways to make the system more secure. You can
segregate the servers. You have to ensure you
have a good back end system.” One delegate,
Mahfood Mohamed Abdul Rahman, lead purchasing
officer at the Abu Dhabi Marine Operating
Company (ADMA OPCO) , said that this company had
used Ariba for two reverse auctions, achieving
cost savings of 24% for one of them.
But vendors in the Middle East are definitely
seeing e-procurement take off. Tejari will
shortly establish a presence in Saudi Arabia,
according to Omar Hijazi, CEO. “This is very
exciting because Saudi Arabia is the cornerstone
of the Middle Eastern continent,” he told the
audience. Tejari recently began operations in
Oman, through Omani E-Commerce.
“Saudi Arabia has an advanced
business-to-business payment system which we’re
investigating to facilitate financial settlement
on Tejari. We’ll see some significant advances
in e-procurement in the coming years once the
Saudi office is wrapped up.”
Alongside the longstanding presence of Tejari,
and the newly-arrived Ariba, other e-procurement
vendors are working to establish themselves in
the Middle East. Quadrem, a US company
originally set up by mining concerns, but now
servicing everything from oil and gas to
fast-moving consumer goods, has been in Dubai a
year. “There’s enormous potential in the Middle
East for e-procurement to take off,” said Leo
Van Rensburg, Quadrem general manager Middle
East. “We’re particularly keen to focus on the
oil and gas sector in the region, but all
companies can benefit from an e-procurement
exchange. One of the key points is that, looking
at electronic purchasing and document exchange,
both the buyer and seller benefit – it’s not a
one-way saving.”
Van Rensburg said the main factor in the
region’s readiness for e-procurement has come
out of the Middle East’s high rate of ERP
adoption. By automating and optimising their
internal processes, organisations are then
better able to integrate and automate external
processes, such as purchasing.
One of Quadrem’s key successes has been to
secure OTN as its Omani partner. OTN runs Oman’s
largest document exchange, and counts Petroleum
Development Oman (PDO) among its customers. Van
Rensburg said that following Quadrem’s work with
OTN, he hoped to sign up a number of other
regional partners in the near future.
“OTN is an excellent match for Quadrem’s
products and services. We’re hoping they’ll be
selling our offerings to their customers,” said
Van Rensburg. “We hope to repeat this pattern of
a local partner in countries throughout the
Middle East, although we are looking at regional
partners as well”.
OTN’s chief executive, Hosam Al-Jamali, is
confident Quadrem offerings will enhance OTN’s
value to its customers. However, he emphasised
that although PDO is by far OTN’s biggest
customer, it forms only part of the picture.
“Yes PDO is a large part of our business. They
account for around 30%-35% of the documents
exchanged through our IX2 network. But around
85% of Oman companies are on the exchange now,
so if someone asks who are our largest clients
apart from PDO, I’d have to say almost all of
them. Even companies which started just as
suppliers are now using the exchange to source
their own purchasing requirements.”
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4th June, 2006 : Quadrem, the Global
e-Marketplace, today signed a partnership
agreement with OTN L.L.C. This agreement will
allow OTN to provide Quadrem’s global services
and expertise in e-procurement to the private
and public sectors in the Sultanate of Oman. The
services that will be provided will be Quadrem’s
Oil and Gas specific Service Management
Solutions, the full set of Quadrem Sourcing
Solutions; Content and Cataloguing Services; and
a unique service for the financial supply chain,
QuickPay™, which allows suppliers to take early
settlement on their receivables.
Hosam Al Jamali, CEO of OTN said of this
agreement; “Oman has shown tremendous growth
over the past couple of years in terms of
accepting and utilizing e-procurement and
e-business practices. We have witnessed ground
breaking progress in a very short time-frame. So
it was only natural for us to build on the
success we’ve had by partnering with one of the
global leaders in this industry. With our proven
track record and Quadrem’s impressive suite of
products, OTN believes that we will further
expand our services to Oman by offering a
complete, sustainable, and proven electronic
procurement platform immediately”.
iX2, OTN’s Business Document Exchange, is
considered by many to be the catalyst that
propelled Oman’s corporate world to embrace
e-procurement as a viable way of trading with
their business partners. And now that Oman has
made clear its commitment to e-Government, OTN
aims, through this partnership, to position
itself as a major contributor to this
initiative.
Leo Van Rensburg, Regional Vice President for
Quadrem’s Middle East operations added; “This is
a major breakthrough for us as it allows us
access to OTN’s local expertise and
infrastructure to rapidly enter into the Omani
market. OTN’s track record of enabling all of
the suppliers of PDO make them the ideal
partners to support us in rolling out our
solutions in the Omani market -- a market that
we believe is one of the most advance
e-procurement markets in the Middle East.
Jointly OTN and Quadrem will also support our
Global buyers who are already active on the
marketplace.” |
