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Middle East buys into e-procurement at CIPS

The inaugural Charted Institute of Purchasing Supply (CIPS) conference in the Middle East, currently being held in Dubai, has highlighted the growing adoption of e-sourcing and e-procurement in the region.

The inaugural Charted Institute of Purchasing Supply (CIPS) conference in the Middle East, currently being held in Dubai, has highlighted the growing adoption of e-sourcing and e-procurement in the region.

Delegates from across the Middle East and Africa gathered to hear advice on implementation and discuss the benefits to their businesses, with e-procurement service providers Tejari, Ariba, Quadrem and EOS Technologies also in attendance.

Omar Hijazi, CEO of Tejari, addressing the audience, said: “Market forces are changing to make this an ideal time for adoption of e-procurement.”

Hijazi went on to say that one of the main advantages of e-procurement is its ability to facilitate good governance through greater efficiency and transparency, but added that such advantages needed to be made clearer if take-up in the region was to increase.

“There is a lot of mistrust of the internet, mistrust of technology in the region,” he said. “We have to emphasise that this platform will save you money, save you time, and allow you to move on to more important strategic tasks.”

Stephen Pink, general manager, IT & indirect procurement, British Airways, told delegates that BA was able to increase its sourcing savings from US$81.5m to US$142.6m in the year it implemented e-procurement.

Pink said: “In 10 years’ time, there will be very few organisations that don’t do e-procurement.”

Antony Faughnan, head of procurement at E. C. Harris, the British construction firm, said that adopting e-procurement would allow companies to conduct their supply chain more efficiently.

He said: “Without e-procurement, there’s a lack of transparency, you don’t know who’s doing what, and there’s a lot of re-work.”

Faughnan added that users of e-procurement systems could add weightings to favour existing suppliers if they provided a satisfactory service. For example, the system could be configured so that a rival supplier would have to offer terms five percent cheaper than the incumbent, in order to cover the cost of changing suppliers.

One delegate, Mahfood Mohamed Abdul Rahman, lead purchasing officer at the Abu Dhabi Marine Operating Company (ADMA), reported that his company had used Ariba for two reverse auctions, achieving cost savings of 24% for one of them.

Of all ADMA's suppliers, only one refused to use an online system, in accordance with its own corporate policy. ADMA has used Ariba for several pilot reverse auction events and has not undertaken a full-scale adoption of the product.

While ADMA has no specific plans to adopt a new electronic purchasing system, it has said it may conduct further pilot trials with Ariba or other vendors.

It appeared that the message was getting through; in the panel discussion afterwards, experts from Emirates, Zadco and the public sector, emphasised the benefits they had seen from e-procurement and e-sourcing, and reiterated their commitment to the process.

Thani Alzaffin, director of the Government Information Resources Planning Department at H.H. The Ruler’s Court, Dubai, said: “Once we increase the bandwidth, 90 to 95% of our ordering and tendering should be online.”

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