Arroyo wants government to take a close look at e-procurement

President Arroyo recently directed the Department of Budget and Management to identify the best practices in procurement through the use of e-commerce, a directive that is expected to set the trend for the use of the e-marketplace by government in its purchasing activities.

This was revealed by BayanTrade chairman Jaime Augusto Zobel de Ayala II during the first anniversary yesterday of the premier e-marketplace’s inception, even as he disclosed that BayanTrade now has the distinction of running the most e-bidding events in the first six months of operation of any business-to-business (B2B) exchange in the world.

Zobel said that BayanTrade has also helped its member-companies – which includes the biggest business conglomerates in the country – realize savings of over P100 million.

He noted that the President’s directive, which was issued during a recent Information Technology and E-Commerce Council (ITECC) meeting which she presided, is indicative of the government’s commitment to introduce efficiency and transparency into its processes.

Zobel pointed out that BayanTrade is already helping government lower costs and increase transparency in a way never seen before. In three recent e-bidding events, the Bureau of Internal Revenue saved P1.5 million.

BayanTrade was founded by six of the country’s largest business organizations, namely Ayala Corp., Benpres Holdings, Philippine Long Distance Telephone Co., JG Summit, Aboitiz Equity Ventures, and United Laboratories.

Initially, only consortium members participated in the online auctions but today its buyer community includes the Philam Group of Companies, Equitable PCI Bank, and Sara Lee, among others, increasing the number of active buyers to 120. Nextel, in fact, is expected to begin e-bidding the construction of its mobile communication cellsites, and Zobel expects that the other major cellular operators will follow suit. To date, more than 150 suppliers have transacted business with BayanTrade.

Yesterday’s event was graced by the biggest names in Philippine business, including Zobel, PLDT president Manuel V. Pangilinan, ABS-CBN president and Benpres Holdings director Eugenio Lopez III, JG Summit executive vice president Lance Gokongwei, Aboitiz Equity chief operating officer Montxu Aboitiz, and Unilab chairman Joselito Campos Jr. each of whom shared their experiences as far as cost savings and better business practices when they started conducting their respective companies procurements through the Internet.

Pangilinan, for his part, noted that PLDT’s procurement, information services, human resources, and finance have joined forces to ensure that PLDT’s e-procurement initiative with BayanTrade will be a success.

PLDT has so far put up for bidding about P500 million worth of contracts through BayanTrade, or more than a third of the aggregate cumulative amounts traded, ranging from janitorial and security services to purchase of batteries, wires, and personal computers.

Pangilinan revealed that through online bidding, PLDT has generated savings of as much as 25 percent for MRO supplies and 14 percent for service requirements. Cycle time for order processing has been reduced by 70 percent.

Meanwhile, Gokongwei related that the different subsidiaries of JG Summit have saved almost P20 million on about P200 million worth of electronic auctions, for everything from Digitel’s drop wire cables to Universal Robina Corp.’s noodle cartons. "In one instance, we were able to save 25 percent from our historical packaging costs," he said.

Lopez, for his part, said there are a lot of opportunities being offered by joining BayanTrade, especially as far as ABS-CBN is concerned. "We can offer our services, such as production and costume design, computer graphics, electronic arts to the market both here and abroad," he said.

Aboitiz emphasized that online procurement has largely benefited their transport group, starting with WG&A. The Aboitiz group is now buying its diesel fuel, lube oil, and tires, among others, through the e-marketplace, resulting in reduced purchasing cycle, lower inventory costs, and lower working capital requirements.

Unilab’s Campos also revealed that their turnover time has been reduced from 14 to six days and that the company has realized savings of up to 15 percent when it bid out P15 million worth of items online.