U.S. companies spend more than $1.4 trillion on operating resources or nonproduction goods and services each year, according to Purchasing magazine. Representing nearly 20 percent of the U.S. gross domestic product, this spending on operating resources or nonproduction goods includes internal and external services, maintenance supplies, office products, and travel expenses. From computers and spare parts for shop equipment to IT services and maintenance supplies, companies spend a huge amount on operating resources.

Even today, many companies still manage these huge expenditures through manual, paper-based processes. Thus, without an effective means of analyzing and leveraging a company's buying power with its suppliers, many organizations seriously overspend on operating resources and are plagued by internal process inefficiencies that prevent employees from getting the goods and services they need. Furthermore, each transaction costs an estimated $150 to process through the traditional paper-based cycle. Multiply that by the thousands of individual purchases companies make each year and it becomes clear that companies are wasting millions of dollars each year.

Aberdeen Group estimates that a corporation spends 30 to 50 percent of its annual revenues on operating resources, so managing the acquisition of these goods and services can bring huge payoffs. Aberdeen also reports that companies can garner a 5-percent increase in profits simply by using business-to-business e-Commerce systems to bring maverick buying under control.

The driving forces for these incredible savings are many and compelling. Business-to-business e-Commerce solutions for operating resources extend corporate control over maverick purchasing, enable comparative buying practices, support supplier consolidation and the negotiation of leveraged purchasing relationships, reduce the time required to complete transactions, and significantly lower the cost of transactions.

To deliver significant savings, many Global 2000 companies are using business-to-business e-Commerce solutions for operating resources. Companies like Bristol-Myers Squibb, Canadian Imperial Bank of Commerce (CIBC), Cisco Systems, FedEx, Hewlett-Packard Company, Merck, Sonoco, and Visa are streamlining their operations and saving millions of dollars annually by leveraging the power of the Internet.

By leveraging new technologies, business-to-business e-Commerce for operating resources can bring a host of business benefits to organizations. Effective business-to-business e-Commerce systems for operating resources accomplish the following goals:

• Reduce operating resource costs by leveraging economies of scale.
• Improve control and management of operating resources.
• Decrease cycle times.

According to AMR Research, organizations can reduce their operating resource expenses by 13 to 17 percent by using business-to-business e-Commerce systems to channel the majority of purchases to approved or preferred suppliers. In mid-sized and large companies—where buying millions of dollars of goods and services from thousands of suppliers is the norm—this approach can save hundreds of millions of dollars each year. Business-to-business e-Commerce systems reduce operating resource costs and deliver these bottom-line benefits by leveraging economies of scale and by leveraging procurement professionals' time and expertise.

Leveraging economies of scale can provide significant operating resource cost savings for companies of all sizes. By consolidating their spending volume on operating resource goods and services with preferred suppliers, corporations can negotiate deep discounts.

Today, however, most companies lack the information systems needed to negotiate volume discounts with preferred suppliers effectively. Procurement managers often don't have the critical data—such as knowledge of buying volume with specific vendors—needed for negotiating contracts with suppliers. Without an integrated system that monitors purchases, tracks and reports data, provides decision-support tools, and makes these resources available to all decision makers, a company lacks the information required to make appropriate purchasing decisions.

Business-to-business e-Commerce systems for operating resources can help ensure that volume discounts with preferred suppliers are the norm rather than the exception. These solutions provide the decision-support tools necessary to take advantage of economies of scale and deliver significant business benefits. Because business-to-business e-Commerce solutions record all operating resource purchases, they ensure that procurement professionals have access to information about the amounts of different commodities purchased from various suppliers at given prices. They also enable those professionals to use that information to negotiate volume discounts. In a typical company, where millions of dollars in goods and services are purchased each year, leveraging information to achieve volume discounts can result in billions of dollars in savings—dollars that go directly to the bottom line.

Even after a volume contract with a preferred supplier has been negotiated, it often remains difficult to ensure that all appropriate people in the company purchase products and services from that supplier. Business-to-business e-Commerce solutions for operating resources remedy this problem by directing all employees seeking operating resources to the preferred supplier. Because the system acts as a one-stop shop for all operating resource needs, employees are directed automatically to the preferred supplier. By channeling operating resource purchases to preferred suppliers, the system further enhances savings.

In addition to directly reducing costs of operating resources, business-to-business e-Commerce systems leverage procurement professionals' time, thereby making them more effective. Business-to-business e-Commerce systems streamline the processing of requests for operating resources, allowing procurement professionals to shift from tactical transaction processing to strategic value-added activities. With a business-to-business e-Commerce solution, procurement professionals no longer need to be involved in routine transactions. Instead, they can focus on more value-added activities like supply-chain rationalization, supplier relationship management, and contract negotiations.

Business-to-business e-Commerce solutions improve control and management of operating resources by systematically tracking and enforcing the terms and conditions of negotiated supplier relationships. These systems enforce integrity and internal control throughout the entire acquisition process, offering high adaptability to the changing business environment through the easy addition or revision of business processes. Essentially, business-to-business e-Commerce systems improve management control by reducing maverick buying and by securing proper approvals on all requests.

Maverick buying occurs when personnel throughout the company fail to follow the guidelines (assuming they even exist) on which suppliers they should use. Because business-to-business e-Commerce systems present end-users with preferred suppliers for each commodity, maverick buying is immediately reduced. With these systems, end-users can identify the preferred suppliers for each commodity by simply looking in the index of products. In addition, all requests for operating resources from other than preferred suppliers require special approval, which ensures that they receive proper review.

To improve control further, business-to-business e-Commerce systems for operating resources ensure that the right approvers actually approve the right requests, while helping to speed requests through the process. By relying on flexible business rules, these systems streamline operations while maintaining tight control.

A comprehensive business-to-business e-Commerce system for operating resources streamlines and automates the entire acquisition cycle—from request through payment. This results in significantly decreased cycle times. Achieving cycle-time reduction, in turn, assures that end-users receive the operating resources they need to do their jobs at the time the goods or services are needed. Of course, when goods and services are acquired quickly and efficiently, employees are more productive.

To bring about this increase in productivity, these systems automate the typical business processes that end-users must perform. For example, rather than spend time looking for paper catalogs or driving to the store to shop, end-users simply use an Internet browser to review an index of the approved goods and services from preferred suppliers at contract prices. The systems automate approvers as well. Specifically, they notify approvers that requests are awaiting approval through normal, standard e-mail systems, obviating the need for approvers to shuffle paper or continually check a nonintegrated system for items to approve.

Business-to-business e-Commerce systems streamline the approval process, eliminating time-consuming, unnecessary steps. These systems ensure that the correct people are on the approval path of any request, while keeping superfluous people off that path. In this way, requests receive proper consideration from the required approvers, while avoiding the backlog created by having too many people in the approval chain.

Overall, comprehensive business-to-business e-Commerce solutions allow businesses to control their largest category of expenses—those costs necessary for nonproduction goods and services that keep the company going. By reducing operating resource costs, improving management control, and decreasing cycle times, business-to-business e-Commerce solutions result in expense reductions that have a significantly positive effect on profitability. These systems can deliver an extremely high return on investment through cost savings and improved supplier management. Because these benefits drop fully and directly to the bottom line, companies that implement business-to-business e-Commerce solutions see positive business impact immediately.