Strategic sourcing the Portum way
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Strategic sourcing, says Gerald Heydenreich, chief executive of Portum, is about building "a more long-term environment or framework around choosing suppliers and maximizing the work you do with them."
Strategic sourcing, according to Gerald Heydenreich, chief executive of e-procurement specialist Portum, is not simply a matter of buying the right products from the right suppliers at the right time. It is also, he says, about building "a more long-term environment or framework around
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This is where many business-to-business (B2B) software vendors let their customers down, says Heydenreich, and where Portum seeks to differentiate itself - by offering its clients a full range of online applications and associated consulting services that enable them to optimize processes such as supplier selection, negotiation and contracting, as well as ongoing supplier data analysis.
To that end, Frankfurt-based Portum released a new tool, Supplier Management Engine, in August 2002 to enable users of its existing online auction and request for quotation (RFQ) applications to collect and store information about suppliers. By searching this central repository, buyers are able to identify and shortlist suppliers that match a particular purchasing requirement. The primary source of supplier data comes from the buyers themselves, who invite suppliers to complete an online questionnaire and provide feedback on supplier performance themselves. Portum claims this makes its Engine an independent source of information. However, it also puts the onus on buyers to get suppliers to register, and to keep the information held up-to-date, points out Beth Barling, an industry analyst with market research company AMR Research.
Nevertheless, Portum has notched up a commendable track record where many other B2B software companies have failed. Since its first online auction in February 2000, Portum has managed transactions worth over EU2.6 billion, and managed 1,600 auctions involving 120 companies. According to Heydenreich, these participating companies - which include multinational chemicals giants BASF, Bayer and Henkel - have achieved a mean average of 13% savings on their procurement costs. With Portum nearing profitability and fending off offers from US B2B software companies - according to Heydenreich - Portum may have beaten the odds in the treacherous B2B market.
