Weetabix head of procurement Anthony Bowdidge believes that e-sourcing can benefit suppliers as well as buying firms, despite the former sometimes seeing auctions as a threat.
The cereal giant's brands include Weetabix, Alpen and Ready Brek. The firm turned over around £449m in 2010, deals with 1,100 suppliers and exports to over 80 countries.
It is set to roll-out a full web3 purchase to pay (P2P) system in November for the procurement of both production inputs and indirect goods and services.
E-procurement specialist Wax Digital is supplying the new system, and Bowdidge told FoodManufacture.co.uk that Weetabix only began using e-sourcing software last year, on a separate platform.
He described e-auctions as an effective tool to negotiate in a competitive marketplace, where managing commodity volatility within a difficult consumer marketplace is the firm’s “biggest single issue at this point in time, as with any other business”.
“Some people see e-auctions as just being a bloodbath. I don’t see it in that way. In an auction you don’t tend to see one supplier ‘buying’ the business,” said Bowdidge.
“At the end of an auction you tend to see a cluster on pricing, which suggests two to three firms in a very close pricing band. The result suggests that’s market pricing.”
Visibility and honesty
The md of a chilled foods firm told FoodManufacture.co.uk in June that he was concerned e-auctions led to short-term relationships , and disregarded strengths such as supply record, technical standards and financial strength.
Far from being unfair on suppliers, Bowdidge said e-auctions simply moved common industry behaviour online. “It’s clearly only what’s been going on for many years [within the industry] in terms of trading suppliers of against one another, either in negotiations or over the telephone,” he said.
E-auctions and tenders also benefited suppliers, Bowdidge said, with the process worthwhile even for those firms aware that they aren’t the cheapest in the market.
“I think it’s very visible and it therefore can give suppliers information as well. That’s very useful for them in terms of market pricing,” he added.
“Some businesses may not want to be the cheapest. Participating in an e-auction, I can say: ‘Price-wise I’m third in my peer group. But I’m happy about that as I believe I have other strengths. If customer wants those other things then, fair enough.’”
Weetabix’s new P2P system from Wax Digital will enable the firm to interact with suppliers at every stage of the procurement process. Bowdidge said it would allow 400 users (engineers and operations staff) to “get on with what they want to do, which is making cereal products!”.
He explained that users will be able to raise requisitions via the system, which then pass an internal approval cycle. Once approved, they are then issued to the supplier.
Bowdidge said: “The supplier can see the order, make an amendment if they can’t make a delivery date, can’t supply a quantity, if there’s a price discrepancy or query.
“They can propose an amendment in the system, and that will come back into Weetabix for the relevant person for approval or further challenge.”
Advantages included 'back end' efficiencies regarding invoice processing as a result of fewer ‘front end’ queries, Bowdidge said, while the system could also issue nominal purchase orders to suppliers requesting them to submit quotes.
Having confirmed the order and delivered the goods, a goods receipt notice (GRN) is then generated within the system, which the supplier can then access and “flip directly into an invoice”, removing the need for paper invoice submissions to Weetabix.
Bowbridge said Weetabix aimed to catalogue over 70% of purchase order via repeat order items, to reduce current purchasing order generation times by over 50%.
Beyond processing efficiency, he said Weetabix's main driver in adopting the Wax system was greater “spend control and spend visibility” within the firm in regard to key suppliers.
“Where we’ve developed preferred supplier relationships, we want to ensure these are being honoured by using the functionality that the system gives us,” he added.
Describing the P2P requisition move was a huge technological leap for Weetabix, Bowdidge said: “We took a few steps internally over the last 18 months to develop inhouse systems. But 18 months ago when I first joined the business we were still raising paper-based orders.”
Wax Digital md Paul Ellis said the Weetabix contract win reinforced his firm's position as a leading source-to-pay company, and showed, "how web3 can be integrated with other common business systems to ensure that our customers get the most value from their current, or planned, IT investments".