UBS is managing an ever increasing proportion of its procurement transaction through Conextrade market platform. This streamlines the procedures involved, resulting in massive cost savings.
In many large companies there is a lack of transparency concerning the procure-ment of non-production items, as these often go unregistered on the company’s business management IT systems, so that orders have to be placed by hand. Every year the major bank UBS procures goods and services in Switzerland to the value of two billion francs. Up to a few years ago, many of these orders did not go through any kind of centralised sys-tem, which in view of the manual interfaces led to data redundancies, high costs and long processing times.
Rudiguer Marbé, director of UBS’s procurement division, comments: "We had something like 300’000 orders for office materials per year – a high volume of transactions, which tied up considerable personnel resources for the processing of relatively small amounts. So we examined ways to improve our efficiency."
After an initial streamlining phase, UBS resorted to an e-Procurement platform linked to Swisscom’s Conextrade marketplace. This is a tran-saction platform based on the "many-to-one-to-many" principle: many purchasers exchange their data with many suppliers – and vice versa. The results are immediately visible: trimmed down procurement procedures with a defined circle of suppliers, an end to media discontinuity and considerable cost savings. "With the help of the Conextrade marketplace we have reduced the number of our suppliers," says Rudiguer Marbé. "In the logistics area, for example, we used to have 600 different suppliers for small articles like lamps and tools. With Co-nextrade, we just have two. Warehousing and distribution have been outsourced. We don’t need warehouse personnel of our own, and there fewer purchasers.
"Some 4000 UBS employees who are responsible for the procurement of mate-rials access the internal e-Procurement solution "MyShop" by way of the internet. Here, they select the goods and services they need – office materials for example, furniture, smaller components or cleaning services – from a UBS catalogue that lists all the relevant articles, simply putting the selected items in their shopping basket. Ordering, authorisation and accounting processes are all fully automated.
The reduced number of interfaces (just one to the suppliers) and the support provided for the laborious business of content management mean that procurement procedures have been trimmed down considerably. "With the procurement process itself we have reduced our costs by 25 percent; in terms of personnel the sa-ving has been 30 percent," Rudiguer Marbé concludes. "Thanks to electronic support, and the electronic handling of the processes of ordering and payment, 70 staff now succeed in coping with a greater volume of procured goods than did the 190 employees who were previously involved." At the present time, though, UBS’s Swiss Procurement Division is only handling 25 percent of its volume of procured goods (amounting to a value of 500 million francs annually) on an electronic basis. The solution will go on being progressively extended, until the ordering, authorisation and accounting processes for as many non-production items as possible come to be fully automated. This means that when the solution is fully implemented the costs of the procurement process will be lowe-red still further.
A major emphasis is now being placed on increasing the number of the companies connected to the system – above all on the supplier side. The principle that applies to such neutral transaction platforms as the Conextrade marketplace is that the more companies are involved in buying and selling, the greater the liquidity and the benefits for the firms that are linked to it.