February 01, 2001, 1:53 PM — Eastman Chemical Co., a Kingsport, Tenn.-based manufacturer of chemicals, fibers and plastics, has aggressive goals for procurement of indirect goods and services (those not used in the production supply chain): It wants to cut costs by $30 million worldwide and make the process faster and easier.
Debbie Davis-Waltermire, director of worldwide indirect materials and services at Eastman, says she can achieve those goals using the Webango Network, a procurement system hosted by Webango Inc. in Santa Clara, Calif.
The service's Web-based tools include forms for creating requests for proposals (RFP), a system for routing bid requests to suppliers and analysis tools for reviewing the bids. Vendors reply to requests on the Webango Network, so bids are presented in a consistent format.
According to Davis-Waltermire, Eastman Chemical has completed two contracts using Webango in the three months since it adopted the service, and it expects that 90 percent of its North American contracts for indirect goods will come through the Webango Network by year's end. Using Webango, Eastman can complete the procurement process in half the time it used to take, she says.
Casting a Wider Net
By automating the request-for-information and RFP processes, Webango has allowed Eastman Chemical to broaden the number of suppliers it asks to bid on contracts, says Davis-Waltermire. The company's previous method of handling bids involved shuffling paper bids and typing contract particulars into spreadsheets for analysis. That greatly limited the number of bids Eastman wanted to deal with, she says.
Now, she adds, storing specifications and bids electronically from start to finish reduces paper handling and eases the process of ranking bids. "Webango enables us to assimilate a lot of information from more people than we could do in the past. And far more quickly than we could in the past," Davis-Waltermire says.
Pierre Mitchell, an analyst at Boston-based AMR Research Inc., says Eastman isn't alone in evaluating suppliers and their bids by spreadsheet. Even companies that are savvy about sourcing and understand their business processes end up resorting to typing bid information into spreadsheets to figure out the best offer.
Every company hunts for suppliers, but not all companies will get maximum benefit out of Webango, says Mitchell. The best candidates are large, decentralized organizations with heavy indirect and direct procurement needs.
Webango has places to improve, Mitchell says. For example, he says, it doesn't assist with the identification of potential suppliers, its analysis tools could be extended and it does little to help with contract management once a bid is selected. Moreover, its customer list is small.