10 June 2004

Implementing e-sourcing improved communication company Telewest's purchasing processes within months. The results have already caught the chief executive's attention, as Liam O'Brien reports

Telewest Broadband's chief executive does not often take time out to visit the purchasing team. But Charles Burdick had come to the offices on the fourteenth floor of Export House, Woking, to see for himself how the team was delivering large cost savings from Telewest's annual procurement spend.

"It is not a regular occurrence that a senior board-level executive visits the purchasing department to find out what we have been doing," admits Simon Jones, head of group purchasing at the broadband communications and media group. "I believe it was a reflection of just how highly purchasing is viewed at board level."

Why Burdick should take such a keen interest in the department is understandable when you consider the difference purchasing is making to Telewest, partly through the introduction of its new e-sourcing system.

It chose the Frictionless Commerce system towards the end of last year because it was one of a limited number of products that provided the full e-sourcing capabilities that Telewest wanted. The system went live at the beginning of 2004, since when the buying team has been using the system to automate tendering, standardise buying practices and put in place online collaboration between internal customers and suppliers.

Martyn Parsley, purchasing manager for corporate services at Telewest, worked alongside Alison Webb, a Telewest buyer, on the implementation.

He says: "The e-sourcing platform enables us to significantly improve the way we source products and services through standardisation, electronic processes, cycle time reduction, and management information reporting."

Frictionless, which has been in place for five months, will help the company to "revolutionise" purchasing, he adds.

It has enabled the purchasing team to leverage spending across such diverse commodities as remote controls, closed circuit television, vehicles and cabling, and make big savings. The time between creating a specification and choosing a supplier has been cut by weeks.

But the team regards the reduced administration as one of the most significant gains. Paper-based tenders and other buying documents have been replaced by Internet-based tools that can be remotely accessed.

In the past, individual tenders were stored separately under a manual system and not necessarily cross-referenced with contracts or other documents. When a contract went out to tender, each bidder would respond with a thick bundle of tender documents, all of which had to be waded through and evaluated against the competition. Numerous copies of these papers might also have been circulating the company at any one time.

With the e-sourcing system, bidders submit their responses electronically, which enables Telewest staff to compare bids easily and leaves a clear audit trail.

The time savings have been massive, says Alison Webb. "Under the old system, we might have put something out to tender to say five, 10 or even more suppliers, with each sending us back a thick pile of documentation, all of which had to be checked. The system has effectively ended the manual handling of paperwork."

She adds: "The system has disciplined the buying process by standardising our request procedures." Frictionless requires, for example, that the full criteria for evaluating bids are determined before tenders are requested, whereas before criteria could be finalised after bids had come in.

Another benefit has been earlier involvement in the business, says Webb. "The process enables us to to work with internal customers from the outset of the process, whereas previously we were often engaged at a later stage."

Online collaboration between Telewest's buying team, its internal customers and its suppliers removes the need for paper-based communications and complicated e-mail chains. The number of time-consuming meetings required with internal clients and suppliers has gone down, partly because requirements can be assembled online. In addition, "silent users", such as senior managers who are not involved with day-to-day decisions, can access management information online.

Best practice

Despite these successes, the team admits that it has some way to go before the system is used throughout Telewest to discourage maverick buying and instil best practice.

Getting the buy-in of internal customers has been essential. The team knew the success of the system would be its best sales asset, so it decided to impress a number of key internal customers who would then be encouraged to recommend the e-sourcing package to colleagues within their departments. So far, the system has been used for 23 sourcing events.

"Our deployment method has been to ensure the purchasing team is completely comfortable with the system and to use the early adopters as advocates," says Parsley. "Now that it is established, we can begin the process of introducing the product into new category areas."

As well as moving incrementally into new areas, the system is also adding new functions. Telewest is already using e-auctions and ran the first live event in May to buy electrical equipment for its network. Five suppliers took part in a request for proposal, from which four were shortlisted to bid. The winning bid saved 59 per cent against previous prices paid and 24 per cent against the successful supplier's RFP bid.

The next step is contract management, which the team is in the process of implementing. The system will initially be used as a database to enable management of contracts and renewals. The electronic contract management system will also automatically send an e-mail to the relevant buyer when a contract is nearing its time for renewal, whereas under the old system, they have to manually pore over the contract papers to check renewal dates.

The system also allows users to keep together all of the relevant documents associated with a contract, such as schedules and service-level agreements (SLAs). This will be followed later this year with online creation and drafting of contracts in collaboration with the legal team.

Telewest is also looking forward to implementing vendor performance management, to measure the quality of the goods or services supplied against SLAs.

The company has only been using Frictionless for months but, says Simon Jones: "We expect a lot more benefits to feed through. As it is rolled out across Telewest it will allow us to further consolidate expenditure across the group and give us, for the first time, full visibility."



Liam O'Brien is a freelance business journalist

SMjun2004