Electronic organisers

We’ve been writing about electronic trading for years. But how many firms are actually doing it?

By electronic trading, we mean the electronic exchange of purchase orders, goods received notes, and invoices. Electronic invoices are by far the most common transaction.

The two most established service providers are Causeway Tradex and A-site. Software house COINS, the new kid on the block, is aggressively pursuing market share under the leadership of Matthew Jones. COINS only has 50 contractors and 70 suppliers, but Jones’ tactic has been to sign up the big hitters among the suppliers.

‘I show [the contractors] my list of suppliers who are already signed up and tell them that if they deal with 15 of those we can very quickly give them 45-60% of their invoices electronically,’ says Jones.

That argument won over Beard. Within six months it was trading electronically with six suppliers, equating to 38% of its invoices by value. Beard chose to go with COINS because it already uses the firm for its back office systems.

Beard also receives e-orders from Jewson and Travis Perkins. A site manager calls Jewson, the sales clerk enters it on the system and it arrives in Beard’s system. Other firms such as Laing O’Rourke have bespoke online catalogues from which employees can order. Electronic ordering like this can significantly cut waiting time for materials on site. A-Site – which Laing O’Rourke uses alongside COINS – has offered this service for some time and COINS has just started to.

The saving in time to process paper has also meant that Beard has grown its turnover from £27m last year to £40m this year without any increase in finance or buying staff.

Morgan Est and Morgan Ashurst (formerly Bluestone) use both COINS and Tradex. Group procurement manager Graham Edgell wanted to give its suppliers a choice of which hub to use, since suppliers have to pay to trade through a hub. ‘That gives them some negotiation power rights with the trading hubs,’ says Edgell, who believes Tradex is the best platform for smaller suppliers.

Those contemplating electronic trading need to do some preparation. Paul McCulloch, group supply chain manager for Geoffrey Osborne, which was a development partner with COINS, recommends slimming down your supply chain before you start and then going for those with whom you spend the most.

‘When we first started we thought “let’s get everybody signed up”, but then realised it was not practical,’ says McCulloch.

Both Jones and Edgell emphasise the importance of understanding how your processes work.