Procurement study urges buyers to reap online rewards - Mobile World Live

Procurement study urges buyers to reap online rewards

25 JAN 2016

A new report from the GSMA’s Marketplace team claims to highlight the potential for growth in the online procurement sector, given that a majority 61 per cent of companies surveyed conduct less than 10 per cent of their procurement on the web (classified as distributor websites, B2B retail websites, marketplaces, eSourcing and other online tools).

The study, claiming to be the “first ever research report focusing solely on procurement”, surveyed a total of 125 mobile industry procurement professionals, working at companies with 10,000 or more employees (32 per cent) to companies with less than 100 employees (24 per cent).

Conducted by Marketplace, an online portal designed to improve procurement in the industry, the study highlighted its surprise that very little procurement in mobile and telecoms is conducted online, despite being an industry that is highly technology advanced.

The report findings question whether these companies are therefore relying too heavily on personal and existing relationships, “at the detriment of finding new suppliers that could offer better pricing or innovation”.

“The online world offers access to a massive collection of new purchasing options and we need to leverage this channel,” urged the report.

The survey found the majority of respondents (53 per cent) expect to increase online spend in future, with only 2 per cent predicting a decrease. However, potentially throwing a spanner in the works of the report’s aims is the fact that a significant number (45 per cent) expect no change in online activity.

Of those expecting growth, the vast majority (76 per cent) expect to grow online spend by 25 per cent or less.

44% hitting $100M+ spend
In the total annual procurement spend metric, the study found that almost half (44 per cent) of responding companies are hitting an annual spend of $100 million or more, while only 17 per cent of responding companies are spending less than $100,000. 38 per cent spend between $1 million and $100 million.

The report noted that while there were clearly larger companies from the mobile ecosystem represented in the survey (given the headline 44 per cent figure) “in our experience working with buyers, company size is not necessarily directly related to the sophistication or efficiency of a company’s procurement function”.

“It’s clear that companies of all sizes have the ability to improve their sourcing practises,” added the report.

Other highlights showed that a high majority of respondents (71 per cent) looked at multi-vendor sourcing when looking to minimising the risk of a potential new vendor. Colleagues and industry contact recommendations also ranked the highest (50 per cent) in ways to vet a potential new vendor.

Over the past few months, GSMA Marketplace said there had been more than 80 active RFX on the platform, representing an estimated $96 million in value.

There are currently a total of 500 buyers and more than 2,220 sellers on the portal.

Author

Kavit Majithia

Kavit joined Mobile World Live in May 2015 as Content Editor. He started his journalism career at the Press Association before joining Euromoney’s graduate scheme in April 2010. Read More >>

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