Let your fingers do the shopping -
E-catalogues use growing
by David Pye
Like death and taxes, the shift toward e-business and a global e-marketplace seems inevitable. However, Industry Canada statistics indicate that only 10 percent of Canadian companies conducted business on the Internet in 1999, totalling $4.4 billion in goods and services. But, optimistic experts suggest that online spending in Canada will reach $100 billion by 2004.
While Canada's public sector has been quick to embrace e-business initiatives, the actual transformation of traditional sectors has been relatively slow. In 1999, only 44 percent of public sector institutions used the Internet to buy goods and services and 69 percent had a website. While 15 percent of Canada's $90 billion government procurement market is serviced electronically, the remaining 85 percent of institutions and federal and provincial government branches are trying to get with the program.
An important aspect of e-business in the public sector is an efficient e-procurement system. "One of the biggest steps toward e-procurement is the development of supplier catalogues," says Wendy Yakimishyn, principal consultant with PricewaterhouseCoopers. "The reason it is such a big step is due to the traditionally high volume of suppliers that organizations in the public sector use."
There are endless possibilities for developing e-catalogues, each with its own range of associated costs. E-catalogues can consist simply of an uploaded Excel spreadsheet, or a high-end solution can include customized catalogues built in-house or the use of third party content managers that provide hosting and software packages. "It's a very complicated process," explains Yakimishyn. "A lot of organizations prefer to outsource the work to someone who is very proficient at it."
The benefits of using e-catalogues start with the elimination of paper and end with complete integration of the procurement system. They replace the traditional method of preparing fax orders and add real-time inventory control and billing components to the process.
Dr. Robert Fabian, director of the E-Technology Institute at Seneca College, says, "Using an e-catalogue as a fax replacement is far more convenient. Customers will be online looking at merchandise where they can click and order. In addition to simplifying the process and reducing costs, e-catalogues allow suppliers to be more responsive to spot market fluctuations. In exchange for the seller not having to take risks, the average price for the buyer will go down." E-catalogue purchases have replaced the need to project orders six months in advance, effectively eliminating dusty inventories of "just in case" items.
The public sector can also use e-catalogues to improve upon its service offerings. "Each government department offers a basket of services, whether it be building inspections, fire prevention or licensing," says Fabian. "An e-catalogue can streamline the entire process by replacing traditional brochures and telephone calls." E-catalogues also contribute to today's Request for Proposal (RFP) process, ensuring an equitable process while encouraging businesses to get their goods online. Electronic RFP initiatives in recent years have opened the door to a much broader base of potential suppliers. Some public sector organizations have even made e-catalogues a prerequisite.
"Public sector buyers have to be sure that they're not going to bias purchasing towards large companies," warns Yakimishyn. "Typically, larger suppliers already have e-catalogues developed, while some of the smaller suppliers are not as far down the road." Nevertheless, Yakimishyn believes that the current process is fair.
Purchasing on behalf of the Canadian government is handled through the Public Works and Government Services Canada (PWGSC), which negotiates approximately 75,000 contracts annually. Within PWGSC, the Electronic Supply Chain project is working to develop both ends of the e-catalogue equation. "The mandate of the project is really to enhance the relationship between suppliers and buyers," says Jamie Hillman of the Business Architecture division within PWGSC. "That has traditionally been our role and now we're using electronic catalogues as a tool to enhance that relationship."
The e-catalogue system developed should feature all items available through supplier arrangements, such as Standing Offers and approved supplier catalogues. The project uses in-house expertise supplemented by the services of outside contractors for issues such as policy review, standards identification and interfacing with the enterprise resource systems of government departments. "There are a lot of people involved in this," says Stephen Cooper, acting director of the E-Business Directorate. "The industry is helping us out tremendously."
PWGSC currently offers just 27 e-catalogues of commodity information pertaining mainly to low-dollar, high-transaction goods such as computer and office supplies, copier paper, janitorial supplies and printed forms. The remaining catalogues are still in paper form. "It's been a difficult task to get to where we can actually take a catalogue and start to take out the pieces that we require," says Cooper. "At this stage, we're helping some of our suppliers get up to speed, get their catalogues into electronic format and establish common standards."
The single greatest obstacle to expanding e-catalogue use in all sectors appears to be the quest for elusive common standards. "We're finding that there exists numerous ways to identify the same object," says Cooper. "An identical part can be numbered differently from one supplier to the next, making it very difficult to do a comparative analysis in a web catalogue-type environment." PWGSC is working with suppliers and client departments to adopt a set of common standards that will help move e-business forward. "Our hope is to move to a service offering where items from different suppliers can be easily compared for things ranging from Aboriginal content to green procurement and pricing," says Cooper. "There is movement within the global marketplace to adopt a common standard, but we aren't there yet. We expect to see a lot of effort expended in that area in coming years."
Unfortunately, expended effort converts itself into expended dollars. "The whole e-marketplace is delivering more process and less direct dollar benefits," says Fabian. "It simplifies the process, allows more responsiveness to market conditions and offers a whole batch of internal flow advantages, but it doesn't always deliver the huge dollar benefits that were expected."
Wendy Yakimishyn agrees. "We're beginning to realize the importance of standardizing how these e-catalogues are developed," she says. "As it stands right now, the more suppliers that come on board, the more internal resources are required to maintain each catalogue."
There may be light at the end of tunnel in a current global initiative to adopt the United Nations Standard Product and Services Classification system. Yakimishyn also expects to see the process accelerate as more and more public sector organizations start to share their e-catalogue experiences with others.
Many of PWGSC's provincial and municipal counterparts have expressed interest in the work of the Electronic Supply Chain project. "We know that downstream there is significant interest from provinces to participate - we're planning that for 2002 or 2003 when our project is completed," says Cooper. "It has also been expressed by provinces and municipalities that if we end up with catalogues usable by them, they would rather use it than build one themselves."
In fact, activity in the e-catalogue sector seems to be working its way up from municipalities, academic institutions, social services and hospitals. One well-documented success story involves the District School Board of Niagara (DSBN), where John Bott, the purchasing services administrator, has developed an efficient e-catalogue system. In collaboration with software developer SRB, Bott tied together accounting and procurement components to develop a user-friendly e-catalogue system for DSBN's 5,000 teachers in 140 schools that saved hours.
While the use of e-catalogues as an effective procurement tool is growing, progress is slow. "The move to this sort of initiative is a huge undertaking," says Yakimishyn. "While I think the public sector is deciding that it wants to keep up, Canada's private sector has only been doing this for a couple of years. These are still early days for the public sector."
Quebec government portal looks to bring public sector together
With an annual procurement budget of $15.2 billion, Quebec's public sector is big business. Plans are well underway to launch a public sector Internet portal that will allow online transactions, accelerating the procurement process while creating savings of more than $100 million annually.
The Quebec portal, which will be accessible to all Quebec public sector groups, is an initiative of the Conseil Québécois des Marchés Publics (CQMP), an association formed by the provincial government. The initiative combines emerging e-commerce ideas with traditional co-op advantages, resulting in a one-stop location for public sector services. "This is not just like building a Club Price for the public sector," explains Conrad Harvey, general manager of CQMP. "The portal will also be a well organized location for finding valuable information." The site, offering information on rules and regulations, links to vendor catalogues, access to contracts and electronic payment facilitators that meet government standards, will be launched shortly. The Conseil awarded a contract to Bell Canada, BCE Emergis and CGI, who have announced a $20 million investment over three years to get the site up and running. The portal is expected to be fully functional by early 2002.
David Pye is a freelance writer based in Montreal. His work has been featured in Profit magazine, Montreal Business magazine and Canadian Apparel.