Rex Hardaway never expected ProcureNet, a New York-based provider of end-to-end e-procurement solutions, to turn water into wine. Rather, the director of procurement and material services at Emory University simply requested the creation of a system that would transfer the power of the institution's central purchasing office into the hands of its employees.
Recalls Hardaway: The original plan for ProcureNet was to apply Web-based requisitioning as a tool on the desktops [of employees] for the purpose of making procurement easier and streamlining the process of identifying needs and reducing cycle time.
But what began as a modest proposal in 1995 soon blossomed into an undertaking of epic proportions. The result is a state-of-the-art e-procurement system that, according to Hardaway, is expected to generate a $10 million ROI over the course of five years.
To date, the system has performed technological miracles single-handedly expediting approval scenarios, spawning a sophisticated tracking system and revolutionizing the requisitioning process.
That's not to suggest, however, that ProcureNet didn't face its fair share of challenges while customizing an e-procurement system for Emory University. Situated in Atlanta, Ga., Emory University is home to nine major academic divisions, numerous centers for advanced study and a host of affiliated institutions including three hospitals. Items ranging from radioactive isotopes, microscopes and CAT scanners to plumbing fixtures, pipes and valves are procured from thousands of suppliers on a daily basis. And purchases must be approved by countless internal and external entities, from academic department heads to the Environmental Health and Safety Office.
It's precisely these complexities that prompted Hardaway to call upon the services of ProcureNet, whose OneSource end-to-end e-procurement solution promised to shepherd the university into the next century a task that was accompanied by a $500,000 price tag.
Pulling the Cork
Says Gina Catania, ProcureNet's director of implementation services: [Emory University] was shoveling a ton of paper, and the turnaround time with their transactions was horrendous. We were perfect for them because we could get rid of the paper, we could streamline their business flow, we could automate their approval process and we could turn around their transaction time into almost a day.
So how exactly did ProcureNet transform Emory University from a paper-driven monolith into a paradigm of e-procurement excellence?
For starters, ProcureNet created an approval processing system that routes requisition forms simultaneously to the appropriate parties. Long gone are the days when an order request would have to wind its way through countless fax machines, ink-stained fingers and dog-eared file folders before receiving approval. Instead, Emory University's requisition forms are routed electronically both vertically to applicable department heads, and horizontally to regulatory bodies such as the Environmental Health and Safety Office. Furthermore, this customized system includes built-in matrices to accommodate each authority's imposed budgetary and commodity restrictions without stalling the approval process.
At the same time budget approval is being handled internally, these other [approval scenarios] are happening simultaneously. But the requisition will not become elevated to the status where it can leave the campus en route to a supplier until all of those approvals are completed, says Hardaway.
The streamlining of such a process would hold little significance, however, if Emory University's Web-based system didn't also allow for the online ordering of both cataloged and non-stock items. After all, with its renowned research facilities and medical centers, the university's staff could hardly expect to find many of the rare materials they need to procure on suppliers' inventory lists.
It's for this reason that the system enables employees to partake in non-stock requisitioning by entering descriptions, rather than simply catalog numbers, of items in demand.
Says Hardaway: Most of the e-commerce models you deal with today make the faulty assumption that there is a catalog and it is on the Web. When you're dealing with cutting-edge research items and you're building the first-ever of something, it is not in the catalog. It's never going to be.
Emory University's e-procurement system allows employees to monitor the activity of their transactions and to track the progress of a particular requisition form. But while all parties involved are immediately notified of requests for approval via e-mail, the university has no immediate plans to extend this split-second notification system to employees' cell phones and pager networks.
Certainly, issues of inbox overload might arise, but, according to Hardaway, the benefits of online notification far outweigh the occasional complaint of e-mail glut: With the system, [users] can go in and see if there's a hold-up on somebody's approval, they can see where the approval breakdown is, and who has not approved it. All of that is useful feedback.
Technological marvels aside, there's no discounting the fallibility of human beings. While Emory University's e-procurement system has successfully streamlined disparate departments, cut costs and improved cycle times, the progress a requisition form makes in reaching its final destination still hinges on an employee's willingness to grant approval in a timely fashion. If all parties follow proper procedure, however, the cost and time savings can be astronomical.
According to Catania of ProcureNet, the average purchasing manager must endure a two- to three-week turnaround period for a transaction to travel from a simple requisition to an official purchase order. However, the full-scale implementation of a ProcureNet system and other systems out there can reduce this time period to as little as an hour.
What's more, ProcureNet technology has allowed Emory University to integrate a number of requisitions into a single purchase order. All this points to an impressive ROI given the fact that the completion of a solitary purchase order can amount to a whopping $300.
Says Catania: A lot of [clients] are seeing a ROI simultaneously, especially if they're in a production environment, because our system allows you to combine numerous requisitions into one purchase order.
Emory University has had to make its own share of investments in its state-of-the-art e-procurement system. In addition to receiving assistance from ProcureNet's onsite consultants, the institution opted to hire a group facilitator to provide employees with the training necessary to operate a Web-based requisitioning system. Two-hour training sessions took place over a three-month period, and facilitator costs amounted to $65 per hour.
And the psychological shift involved in placing key information, typically reserved for qualified purchasing managers, at the fingertips of everyday employees, has also required a certain amount of adjustment.
When we first started this [project], recalls Hardaway, the idea that we would ultimately then be able to take our catalogs and link them to the front-end of the [procurement] process was not even in the realm of possibility.
Of course, that was five years ago. Today, ProcureNet clients can expect to be provided with the tools necessary to import existing data into newly created systems, user-friendly interfaces requiring minimal training, negligible maintenance costs and online customer support.
As for Emory University, the price of being an e-procurement pioneer has, in the end, amounted to enormous savings.