OBI system enhances card program benefits
At Lexmark, Claire Warford, Internet purchasing administrator, (left) and Gina Knight, indirect materials & capital equipment purchasing manager, have put in place an online purchasing system that complies to the new OBI standard.
By Susan Avery -- Purchasing, 12/10/1998
Two years ago, American Express helped set up the Internet Purchasing Roundtable, a group of purchasing managers, suppliers, and technology providers who worked together to develop an open, scaleable, and secure standard for online transactions.Since introducing the Open Buying on the Internet (OBI) standard in 1997, the Roundtable has evolved into a users group called the OBI consortium. Its charter is to provide ongoing support of the standard. Membership is open to buyers, suppliers, technology companies, financial institutions, and other interested parties for an annual fee.
Now, the consortium, which is managed by CommerceNet, is publicly demonstrating online buying systems that use the standard. In fact, some member companies were recently at the Internet Commerce Expo in Los Angeles doing just that. Also on the consortium's current agenda: Adding related transactions to compliant buying systems, determining potential impact of other technologies, and globalizing the current standard.
"Purchasing operations are beginning to roll out systems that are OBI-compliant," says Patrick Gannon, executive director of the consortium and a vice president at CommerceNet, a firm that conducts research on electronic commerce. One company that is rolling out such a system is Lexmark International, Lexington, Ky.
In the month since implementing the new system, the 15 requisitioners involved in the pilot at Lexmark have placed orders for more than $75,000 in office supplies, pagers, and lab supplies--and paid for them with the American Express purchasing card.
Use of the system helps reduce cycle time and improve process efficiency, says Gina Knight, indirect materials & capital equipment purchasing manager. It eliminates many of the manual processes which surround the purchasing of indirect materials. For instance, requisitioners no longer have to use the telephone to place orders, nor do they have to flip through paper catalogs to locate the items they want to buy.
While it's too early to determine cost savings from implementing the new system, Knight estimates that use of the card program alone helps to reduce processing costs by $75 per transaction.
Another benefit is control of "maverick," or off-contract, buying, says Knight. This helps to foster improvements in service and delivery and enhance the company's leverage with suppliers.
Lexmark has been a member of the consortium for two years, and in fact, had been an original member of the Internet Purchasing Roundtable. Knight became involved in the effort in June, 1998.
The consortium holds meetings quarterly. Knight has served on several work groups within the consortium including a "features" team which looks at Internet procurement. Other teams she has served on include implementation, marketing, and certification and compliance.
In keeping with the consortium's charter, members "ensure that online buying systems incorporate proper business processes and include built-in security features," says Knight.
Piloting the program
The OBI standard includes precise technical specs for the security, transport, and contents of order requests and orders. OBI uses the SSL (secure sockets layer) protocol to secure communications on the Internet. Digital certificates are used for authentication of requisitioners as well as servers.
What Knight likes about the OBI-compliant system is its interoperability, meaning that two or more disparate systems can communicate with each other. She also touts the system's scalability, meaning that it can be used either in a small company or plant location as well as a larger corporation with several sites. "An OBI-compliant system only needs to be implemented once, and it can be used over and over again," says Lexmark.
Working with personnel from SupplyWorks, a provider of online buying systems, and Lexmark's purchasing-card company, American Express, Knight helped put the pilot in place in September 1998. Also on the implementation team is Claire Warford, Internet purchasing administrator. For indirect materials purchases not conducted on the Internet, Lexmark has in place a process that uses Lotus Notes and software from J.D. Edwards.
The Lotus Notes system automated the purchasing process and was a step in the right direction, says Knight. It does, however, have limitations: It's a standalone system (not Web-enabled), has no catalog interface, and is not user friendly.
As provider of the online purchasing system, SupplyWorks maintains profiles of Lexmark requisitioners as well as the company's business rules. This database holds such information on requisitioners as spending limits and approval routings. SupplyWorks also maintains links to each of Lexmark's preferred suppliers in the system: Boise Cascade Office Products and V.W. Scientific, also members of the OBI consortium.
Using the system, requisitioners may order solely from the company's preferred suppliers, and do so from up to 100 individual locations. Upon viewing the custom supplier catalogs loaded into the system, requisitioners place orders with SupplyWorks for the products that they require. After receiving necessary approvals, SupplyWorks transmits the order directly to the supplier. Requisitioners pay for their orders with their AmEx purchasing cards. Delivery is next day.
Previously, requisitioners used the telephone to place orders for indirect materials with Lexmark preferred suppliers. Because the new system uses a simple point-and-click interface, there are fewer errors. What's more, by using the online catalog, requisitioners can view items they are ordering.
Knight plans to expand the system so that requisitioners may order cellular phones, temporary-help services, and MRO supplies online as well. Eventually, "everything we procure that's indirect" will be purchased online. At the same time, she expects to include additional cardholders. Currently, Lexmark has 550 cardholders in its three-year-old program.
Talkback
Related Content
Related Content
Sponsored Links
View All Blogs
Now Playing:
