There were several things Finning [Canada] wanted to achieve with e-procurement when it first started to evaluate the technology back in 1998. The used farm equipment dealer wanted to streamline its procurement processes, minimize use of paper, gather and control more of its spending data, and minimize the maverick spending that had run rampant across the company. Finning had these things in mind when it set out to find an e-procurement software provider and its search didn't last long.

With annual revenues of $1.2 billion, Finning [Canada], based in Edmonton, Alberta, represents about half the revenues for Finning worldwide. Gerry Daku, purchasing manager for Finning calls it a centralized/decentralized purchasing operation, which means a very small centralized operation (four people) oversees corporatewide initiatives and works on negotiating long-term companywide contracts.

A 29-step procurement process using handwritten purchase orders was costing Finning up to $4.5 million a year and made the long-term goal of supplier consolidation much more difficult. According to company officials, Finning was processing about 450 invoices a day, 26% of which had purchase orders attached. Automating the labor-intensive process of matching invoices to purchase orders alone would save Finning an estimated $1 million, which was enough to convince the firm's senior management to move to a new system.

"It was difficult to see where we were spending our dollars. We could examine it on the payables side but pricing was all over the map," says Daku. "And our suppliers had a 'divide and conquer' attitude towards us. They knew we were running 30-plus branch operations and had no way of evaluating pricing across the whole network. Even within single branches there didn't seem to be a set standard for what we were being charged."

Finning narrowed its search to six software providers, eliminating both the least and most expensive providers and reevaluating the remaining four based on the following criteria: implementation speed, adoption rate/ease of use, Intranet based, adaptability, support speed, report writing capability, total project cost, and ability to negotiate contracts efficiently. After considering all of these factors, Finning chose Verian Technologies of Charlotte, N.C. the right e-procurement software provider.

"We didn't view [Verian] as having a product that had all the frills, but we're seeing some of the features they are developing based on our recommendations and we're liking it," Daku says. Example: An online bill of materials for the company's engineering group.

In moving suppliers to its new buying system, Finning consolidated its supplier database from 26,000 to roughly 4,000.

While purchasing data is now being collected and housed electronically, there is still a kink that is preventing Finning from using the data optimally. A lack of standardization among suppliers has made it difficult to mine information from the database, so Finning is trying to consolidate its spend with fewer suppliers and standardize on part names or numbers. Parts distributor, Acklands Grainger, is the first supplier to go through this process because of its 2,200 transactions with per year with Finning.

Moving users to the new system has been difficult, according to Daku, and Finning is planning to target users with specific training for the new version of the system being released this year.

"About 20% of our users have caused problems. So we're going to go out and spend some time with them," Daku says. "We'll deal with their problems while we introduce the new version 5.5 and online catalogs. This way we'll have some positive things to show along with the negative things."

Finning is also planning to test its users and give out certificates through a program called ProcureIT University to promote the work being done by suppliers.