Wood Group whets appetite for electronic procurement

By William Atkinson -- Purchasing, 2/22/2001

As is the case with many organizations, Wood Group Pressure Control, Houston, Texas, has become involved in e-procurement for strategic reasons. "We want to take advantage of a new way of doing business via the Internet," explains Pam Crossan, director of purchasing. "In addition, we are customer driven, and we realize that e-procurement will be the future for all our business."

Currently, the company is in the early stages of e-procurement, using a U.S. market site provided by CommerceOne that provides a cadre of suppliers for MRO items with pre-negotiated discount pricing. "This has been very beneficial because it gives us access to suppliers with whom we are not familiar and allows us to take advantage of better pricing," says Crossan. "We are also able to easily add our own suppliers to the system."

Users pull up e-catalogs on their screens and order directly through the system. "We have dollar limits in place for security purposes," Crossan explains.

Active in the implementation process have been Crossan, Wood Group President Scott Bender, Senior Vice President of Operations Joel Bender, and Vice President of Information Systems Dee Singh.

To date, there have been no major problems or challenges. "At first, there were some occasions where we weren't able to access the system, but these problems have been resolved," Crossan says.

She also cites numerous benefits. "We are seeing MRO transaction cost reductions, because we are moving from a manual process to an automated one," Crossan says. "We are able to take advantage of a streamlined process that eliminates paperwork." Cycle times are also being reduced.

The biggest benefit for purchasing, though, is the time savings. "The system allows us more time to focus on global business and other strategic issues," Crossan emphasizes. "Time is so precious in purchasing. I don't know how you put a dollar figure on that."

The company sees domestic MRO e-procurement as just the tip of the iceberg in e-procurement. "Our vision is to be able to conduct business globally for almost everything-MRO items, inventory parts and other services," Crossan says. "We wanted to start with non-critical MRO items, though, to make sure the system would work and get all the kinks out before we moved forward."

The company envisions integrating its MRP system, which is set up through Symix, into the e-procurement process to begin purchasing inventory parts. "We don't expect this to be difficult at all," Crossan says.

Where challenges may exist, though, are with spec-based parts. Off-the-shelf inventory parts may not be much more difficult than MRO items in terms of challenges for the company and its e-procurement activities, but spec-based parts procurement is more complex and demanding. "For example, we purchase specialty forgings and castings, many of which are spec-driven, based on American Petroleum Institute specs that require special metallurgy and mechanical properties of the material," Crossan explains. "The supplier must provide appropriate documentation that the material has met the testing criteria as set forth in the specification. We also have some proprietary prints, and the security of our designs is of the utmost importance."

The company understands that e-commerce is in its infancy and it expects to broaden its scope of supply to include international and domestic sources that it has not known previously. "However, with this new technology and the ease of access, problems are sure to arise. We are confident that the industry will be able to overcome them," Crossan says,