As kids, our teachers told us that there’s no such thing as a stupid question. We learned as adults that teacher was lying. However, one of the things you’ll hear often from Internet companies is, “I don’t know. I’ll get back to you on that, ASAP.” And they do. This is a far cry from “no comment” and “go look it up on our Web site.” The lesson to be learned is that it’s finally okay to be clueless, as long as you hop to it and get the answers.
We need information in order to do the hopping. One of the benefits of e-procurement, in combination with internal systems that facilitate communication, is that learning becomes one of a company’s core values. In fact, it’s almost putting the cart before the horse to implement e-procurement so that buyers and suppliers can interact without also enabling buyers to work with each other. Knowledge-management as a business process encourages buyers within their own departments and spread out in far-flung divisions to share experiences, solve problems and propose ideas in an open, less self-conscious environment.
What’s The Big Secret?
Having condemned the entire Fortune 500 through guilt by association, it’s time to concede that they face a real dilemma. Information is the king maker of every organization, but the Internet culture is a voracious spoiler. Once a company reaches past its organizational walls and engages the Web in any fashion the expectation is that it will offer more, not less information about itself, whether it’s requested by a customer, supplier or nosy writer. How does a company do business online and still protect its proprietary information?
In declining a request for an interview, Christine Ervin, director of corporate communications for Kellogg’s, said in an e-mail message, “Much of what you are asking for is considered internal company business/decision making/strategy, and we do not comment for competitive reasons.” That certainly covers about all the ground there is to cover. But, in a previous phone conversation Ervin explained that it’s all so new they don’t know what they might reveal to their competitors by talking publicly, so they choose to say nothing. Fair enough. Business doesn’t like uncertainty, and the Internet has a propensity for regularly dispensing unintended consequences.
Every company views the value of its internal business decisions differently. C. R. Bard manufactures highly engineered medical instruments, and its product specifications are closely held. Lage believes the risk that e-procurement can reveal too much about her company’s products is very real.
“If I put items out to bid, instead of working with two suppliers, I’m working with many. They can’t all keep secrets, and you don’t want people to know what you’re interested in,” Lage says. By this, Lage means that the process of sourcing suppliers has to be done carefully so as not to leave a trail of too many clues that tip-off a company’s competitors to what it’s doing.
The word “many” is important. The “one-to-many” e-procurement concept, about which you’re sure to hear a lot, seeks to put buyers in touch with suppliers they never knew existed. This is fine for some businesses, but as in the case of C. R. Bard, it’s not so hot for others.
This argues in favor of collaborative technology decisions that bring buyers into the process. There’s no such thing as a one-size-fits-all e-procurement solution. Large, complex buying organizations with a variety of purchasing requirements may need customized systems. Other companies may choose a combination of solutions targeted at specific products or functions, or may put only a portion of their buying online and keep certain activities out of sight.
Still, e-procurement software and solution providers have gone far in safe-guarding proprietary information. For example, buyers at Chemdex operate within their own private, password-protected areas within the company’s online marketplace. FreeMarkets works closely with buyers to set up careful rules that pre-qualify suppliers, which enables companies to both limit auction participants to a manageable number and screen out any with whom they don’t want to do business.