Consignia delivers online purchasing

Postal services provider Consignia goes live next week with the first phase of its multimillion pound finance and online purchasing initiative.

Post Office Counters (POC) will be the first Consignia unit to start using its new SAP system, with the majority of the company set to follow in October. The project is part of a massive programme to prepare Consignia for deregulation in 2003.

The company is working towards standardising on XML in the long term for supplier communications. But in the first stage of the project, some 90 per cent of POC's purchasing spend will be placed through SAP.

When the whole system is operational, more than £500m of indirect goods and services will be procured electronically each year.

Peter Stevens, Consignia's supplier development director, expects the project to pay for itself quickly, but thinks many software suppliers' claims for potential savings are unrealistic. "If we cut purchasing costs by one or two per cent it will save big numbers," he said.

Consignia has adopted a common supplier catalogue based on content management software from Requisite Technology. Stevens explained that suppliers won't have to conform to the catalogue, but that it will be in their interests to do so.

Stevens believes that the biggest problems in e-procurement are managing content and persuading suppliers to participate.

"We are saying that this is the way we are going, and we want you to come with us. But we have to be more hard nosed than in the past. It is more expensive to do business with companies that don't integrate with our systems," he said.

Consignia will eventually use XML documents for all communication with suppliers. XML is emerging as the web-based information exchange standard.

"People ready to do XML are much thinner on the ground, but we want to get them on board and then it will take off. Ultimately everything will be XML-based," said Stevens.