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E-procurement can help you get a better grip on MRO purchases

Aug. 15, 2002
David Berger, P.Eng., contributing editor, says e-procurement can help you streamline maintenance operations.

Even though technology stocks are in the doldrums, don't underestimate the power of e-procurement. When used in conjunction with a computerized maintenance management system (CMMS), it can help you get a better grip on MRO purchases.

An e-catalog lists approved vendors and products. In some cases, a link is made to the supplier's Web site, which allows direct online purchases and requests for information. In most cases, the e-catalog issues a purchase requisition, which must be approved by appropriate line and purchasing personnel.

In cases where products aren't listed in the catalog, e-quotations can be issued on the company's Web site, or sent to an OEM or distributor or to an e-marketplace.

E-marketplaces offer equipment, spare parts and maintenance services. They allow users to exchange goods or services using e-trading (e.g., straight buy and sell or barter) or by e-auction (e.g., using bids or reverse bids.)

However, while e-marketplaces provide access to a large number of potential suppliers from around the world, it's often difficult to analyze the quality of products and services being offered.

Some CMMS packages allow e-purchasing. With one keystroke, the CMMS issues an electronic purchase order, which is sent to via the Internet to the appropriate supplier.

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For users that have a strong relationship with a few suppliers, the most productive e-procurement approach is to establish a long-term contract of at least one year duration. An e-release provides both parties with an estimate of total goods and services to be purchased over the life of the contract, as well as quality, delivery and service-level expectations.

E-tracking providers users with information on the status of a given release or purchase order, including production and shipping schedules.

Most CMMS packages provide e-receiving, which gives users the ability to key in receipts against purchase orders or releases. This eliminates the time-consuming chore of matching invoices with purchase orders. Some CMMS packages allow users to build a supplier history and performance profile. This can be compared to service-level agreements to determine if action is required.

E-payment, also known as electronic funds transfer (EFT), is the last step in e-procurement process.

David Berger is a principal with Western Management Consultants in Toronto, Canada. He is a certified Management Consultant and a registered Professional Engineer. He is Founding President of the Plant Engineering & Maintenance Association of Canada, past President of the Toronto Chapter of the Canadian Society for Industrial Engineering, and a past Vice President of the Institute of Industrial Engineers. He can be reached via email at [email protected]

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