IT in Construction
IT in Construction
Improved efficiency through Supplier Portal
Supplier portal can be a very effective tool for addressing the various challenges with regard to relationship with the supplier / sub-contractor ecosystem, writes Satish Pendse
The dependence of fast growing construction industry on it suppliers and sub-contractors is increasing. The efficiency of the supply chain is vital to the overall efficiency of the organisation. Widening the supplier base even by going across the national borders has become an important part of the procurement strategy.
There are various challenges with regard to relationship with the supplier / sub-contractor ecosystem. Getting access to international suppliers and providing a conduit to the domestic as well as international suppliers to approach the organisation is crucial. The communication between suppliers and the organisation are many fold and are two-way in nature. There is also a possibility of loss of communication. Vital supplier data needs to be updated at all times which presents a challenge.
The transaction involves exchange of documents such as RFQ, RFP, Purchase order, work order, delivery challan, Goods Receipt Note, RA Bills, invoice, cheque, receipts, various statutory forms and certificates etc. Managing it manually is inefficient and error-prone resulting into dissatisfaction on either side. For a mature, long-term relationship between organisations and its suppliers / sub-contractors, there is a need for certain degree of transparency.
Addressing the challenges
To address these challenges, a supplier portal can be a very effective tool. It’s a portal that gets accessed by organisation and its current as well as potential suppliers. A supplier portal enables the suppliers, subcontractors & transporters to collaborate by providing customised, partner-specific access to buyer’s content, services, applications through internet.
A supplier portal is a centralised portal which automates the large part of the procurement process. It has several noteworthy features.
Any supplier, who wants to have association with the construction organisation, can provide the basic information about him on the portal. The organisation can then decide to register him based on their parameters for a certain category and the registration can happen on-line. Thereafter further details can be provided by the supplier on the same portal which then gets integrated into construction organisations’ back-end system such as ERP.
Whenever procurement is approved on the ERP system of the organisation, the same will get automatically listed on the supplier portal, along with appropriate RFQ / RFP etc. Suppliers can access the same and submit their bid on-line. E-tendering can also take place using supplier portal.
The finalised details along with prices, terms & conditions get automatically integrated with organisation’s ERP system for generating the purchase order/work order and getting it authorised.
When the supplier is ready to ship the material, he informs the organisation by entering the shipping details on the portal itself. These details are available to relevant persons from the organisation immediately on the portal. When the goods are received, the same details can be used to prepare Goods Receipt Note.
The invoice processing is automated on the same lines. Invoices submitted by supplier on the portal get into the ERP system of the organisation, where they get a three-way match between PO, GRN and the invoice itself. The invoice is processed for payment based on the credit period etc. Payments can be made electronically or through system printed cheque and the information about it will automatically be available on the supplier portal.
The taxation data, the certificates needed also get exchanged electronically. Organisation gets a complete digital record of the history of the supplier, his quality, timeliness and the pricing which can be used for a more scientific vendor evaluation. Various other MIS reports can be made available for the organisation as well as for the suppliers.
Reverse auction engine can also become get seamlessly integrated into the supplier portal. The data on the portal can be kept secured so that a supplier will not know the details of other suppliers. Organisation can decide the levels of access / facilities that they want to provide to each class of supplier. The supplier is only required to have a standard PC with a standard Internet connection is what he is required to have.
Challenges in implementation
Implementation of supplier portal involves the transformation from manual / semi-automated way of working to fully-automated one. This transformation needs to be managed well first in the minds of the buyer’s team and that of the suppliers. One also needs to keep the scope limited to start with. More features may be added gradually.
Four years back, HCC implemented SAP ERP for automating its key business processes. For the past seven months, many of its suppliers are using the supplier portal developed by HCC. HCC and the suppliers have started reaping some of the benefits mentioned above. We are now in a position to implement supplier portal for other organisations.
Satish Pendse works as the chief information officer for Hindustan Construction Company (HCC), which has started offering IT services to the infrastructure industry. This also includes implementation of the tendering & estimation software. Through this column in Construction Week India, the author brings out the increasing significance of Information Technology in the construction industry. He can be reached on firstname.lastname@example.org