Based on information from the Aberdeen Group special report, "Best Practices in e-Procurement."
Tempe, AZ January 3, 2002 Countrywide Home Loans had a problem with its purchasing.
"Everything was manual," says Jeff Gray, senior vice president of procurement at Countrywide. As a result, Gray says that procurement at this $4 billion lender was laborious and the attendant administrative tasks were time consuming.
To gain more control and compliance in purchasing, Countrywide assembled a cross-functional team from finance and purchasing, along with employee buyers, to find an e-procurement solution that provided both front-office and back-office support. First and foremost, the system would need to interface with the company's existing human resource (HR), accounts payable (AP) and e-mail systems.
Countrywide also wanted a system capable of managing the entire procurement process, including a key step in the firm's procurement policy: automatically checking requisitions for capital items against budget to make sure monies had been planned for such purchases. Countrywide also required approval routing for both budgeted and non-budgeted items to be integrated with the corporate e-mail system, Lotus Notes. Finally, on the payment end, Countrywide wanted support for invoice reconciliation and integration with their accounts payable system from Infinium.
After an analysis of leading e-procurement solutions, Countrywide selected PurchasingNet-SQL from Red Bank, NJ-based PurchasingNet because the application had the ability to interface with the company's HR, AP and e-mail systems. It was also Web-based, eliminating the need to distribute software to all users¹ desktops. The team also found the solution to be very user friendly; ease-of-use was key to getting the system adopted by Countrywide's large and widespread employee base.
Initially, PurchasingNet implemented its solution in each of Countrywide's eight corporate offices, running the software from the Countrywide Simi Valley facility. Within a year, PurchasingNet-SQL was fully deployed at all Countrywide corporate offices and 500+ branch locations.
To date, the system has been rolled out to 16,000 employees who have the ability to request items. Within each department, requests are routed to two or three people who do the ordering for their group. As a result, the PurchasingNet system has about 2,000 to 2,500 users on the system at one time.
Nearly 98 percent of Countrywide's spend is going through the PurchasingNet system, including, all capital and expense commodities such as office supplies, PC's, printers, copiers and furniture. The company processes an average of 3,400 purchase orders (POs) a month through the system. A few purchasing situations that are difficult to automate, such as marketing department expenditures on television advertisement production, make up the remaining 2 percent of spend.
Countrywide says it saw a full return on investment (ROI) on its PurchasingNet system in less than 18 months. The total savings exceed $1 million to date, including the elimination of employee hours and price reductions from improved contract compliance and vendor relationships.
In terms of process improvements, Countrywide's purchasing department has calculated it has saved 3,760 hours per year managing the incoming requisition process and 12,800 hours per year in total PO processing. For example, the firm has cut the time it takes to create a receipt from a requisition form from two-and-a-half hours to only half an hour.
Countrywide also reports that it has also seen an improvement in morale in the purchasing department. The volume of calls from employees checking on their orders has dropped dramatically and clerical errors have been virtually eliminated. The procurement department is now focused on more strategic functions, such as negotiating contracts with suppliers.
Boston-based technology consulting firm Aberdeen Group recently profiled PurchasingNet's implementation for Countrywide in a special report entitled "Best Practices in e-Procurement," which profiled deployments at 18 companies in the areas of indirect and direct procurement, as well as sourcing.
Aberdeen's special report credits PurchasingNet-SQL's ease-of-use as the main reason Countrywide was able to roll out the system to 16,000 employees in less than one year and to get nearly 100 percent of its spend moving through the system. "Considering that our research shows spend throughput in e-procurement implementations averages just 18 percent, PurchasingNet's penetration is extraordinary, and is directly responsible for a quick ROI," Aberdeen reported.