'Smart' Purchasing: Fast, Flexible, Efficient

How would you describe smart purchasing?
Smart purchasing involves the segmentation of purchasing requirements and suppliers in order to understand where your purchasing dollars are going, as well as the opportunities and risks. A four-quadrant criticality grid is often used to evaluate purchasing requirements based on expenditures and the number of supplier options available.

For some materials, companies may have numerous options; for others, there may be only a single source – that's where you need to be especially careful. The strategic quadrant offers high perceived value. This is where suppliers develop long-term relationships by offering product development, a range of services, and innovation. In the standard quadrant, criticality is low on both axes. This would be for items like office supplies. It's considered the least risky area because expenditures are low and many suppliers are available.

A fourth area is the market-driven quadrant, where expenditures are high and a variety of suppliers are available. Here, customers are looking to minimize cost. Xiameter, for example, would be a good choice for buyers in the marketdriven quadrant, because it doesn't come with unnecessary technical service or solutions. Customers purchasing in this quadrant don't need product support, innovation, and additional services.

How is purchasing different online?
It's considerably more efficient and faster. If I want to buy equipment for a plant, for example, I can go to dozens of websites to look for the best price and features we need quickly, without having to submit bids and make phone calls. The Internet also provides an easy way to locate hard-to-find materials. If somebody needs dimethyl fluid and doesn't realize it's a silicone, he can search for it online and find all the manufacturers.

Being able to make purchases when it's most convenient is another major benefit of online ordering. We've noticed that some customers place orders at night or early in the morning. After a busy day, they may need the flexibility of being able to order around the clock, from the office or home.

The "do-it-yourself" nature of online purchasing is also a convenience. With Xiameter, once a purchaser places an order, in a matter of seconds, confirmation of price and quantity is provided, along with the ship date, freight terms, and credit terms. There is no reason to call a customer service representative or fax an order and wait for a response. All those steps have been eliminated, which saves time and effort. When it comes to dealing with delivery, invoicing, and certificates of analysis, it's all right there on the Web. The purchaser doesn't have to call his receiving guy or accounts payable group to ask, "Did you get it?" His job is done the moment he pushes the completion button.

In purchasing transactions, you've got a buyer, a receiver, and the payer. They all have to be synchronized, or their internal system crashes. Xiameter allows the buyer to indicate, "When I place this order, I want to see the order acknowledgement. When you ship the order, send the delivery note to my receiving department. When you invoice the order, send it to my accounting department." It's not really different from a traditional paper transaction, but it's automated and done in real time.

When Xiameter sends an invoice, the customer automatically receives an e-mail with either a link or a copy of that document. At the moment we ship the materials, the customer receives the documents that indicate the origin, quantity, and quality of the product. Traditionally, a customer might have to wait until somebody in receiving pulls the documents off the shipment, puts them in an envelope, and sends them to the lab or to the shop floor. All the paperwork has been eliminated and each customer's order history is stored on Xiameter.com.

How does Xiameter enable customers to be smart purchasers?
The smartness comes in the fact that you can make purchases 24/7 in real time, and customers get price protection on their orders, which can be placed up to 90 days in advance. Xiameter's prices are market-driven, so if customers watch market dynamics, they have the potential to lock in prices that may be lower today than tomorrow. If customers can buy silicon-based products in large volumes, don't need technical service, can plan their material needs two to four weeks in advance, and want to purchase materials at market-driven prices, Xiameter may be the right business model for them.

Smart purchasing also requires finding reliable sources, especially for critical materials, and having fallback positions when the unexpected happens. For example, regional or global issues can disrupt supply chains. Xiameter's global reach and ability to source materials from multiple plants have provided critical benefits. Having basic plant and finishing plant production in each region around the world allows us to be flexible in our supply chain and maintain reliable supply for customers.

What do you see for the future?
We're moving toward a time when the computers of business-to-business customers will help manage their inventory. Connectivity devices can recognize when supply of a raw material is low and automatically send a signal to the supplier's system to reorder. Now that's a smart purchase. Once parameters have been established and more companies operate on global IT platforms, they will have the functionality to interface in that way. The signal could come from a radio frequency identification tag, a bar code, or even a supply tank that recognizes when its contents have fallen below the reorder level, triggering the signal to fire off a purchase order. There's even software that can translate one company's system to another, even if it's completely different. We're moving in that direction.

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