New B2B model sets benchmark for e-procurement services
5 September 2000
A Heads of Agreement to set up an online procurement buying hub has been signed by five major Australasian companies creating a new company, Cyberlynx Procurement Services Pty Ltd (Cyberlynx).
Cyberlynx is the vision of the Commonwealth Bank Group, Woolworths Limited, Lion Nathan, EDS Australia and the Telecom New Zealand Group, which includes TCNZ Australia and AAPT.
The key principles of the partners for the procurement company are:
- Culturally compatible companies
- Attracting best practice knowledge
- Re-engineering processes and costs
- Working closely with suppliers
By moving procurement online the participating companies will reap the benefits of rapidly deploying best practice procurement capabilities as well as achieving significant cost savings.
Mr Barry Scott, acting Chief Executive Officer of Cyberlynx said, "The exciting thing about Cyberlynx is that these online benefits will not be confined to the founding companies. Cyberlynx will be open to the corporate market.
"Its facilities and services will enable Australian businesses to participate in leading edge internet-based procurement with cost and speed-to-market efficiencies. It is proposed to offer cross-market Internet purchasing opportunities", he said.
Cyberlynx will focus on indirect products and has already commenced sourcing several supplies and services categories.
The model offers the ability to scale fast as well as expand domestically and offshore. It is structured around:
well aligned strategic partners with similar e-procurement goals and proven working relationships
flexibility to tailor strategies to meet individual company requirements
suppliers engaged early in the process to ensure a speedy sustainable supply chain
a flexible Information Technology (IT) platform that can scale fast
an experienced hub operator with proven tools and skills to develop robust sourcing strategies and supply arrangements.
"This procurement partnership, with strategic partners enjoying proven working relationships, utilising contemporary online technology, will leverage our already existing good procurement management on a significant scale," Roger Corbett, the Chief Executive Officer of Woolworths Limited stated.
Russell Scrimshaw, Head of Technology, Operations, Property for the Commonwealth Bank Group said, "It is anticipated that this exciting B2B initiative may save the Commonwealth Bank Group more than $250 million over the next five years. This far outweighs the benefits we would be able to achieve independently."
The Commonwealth Bank Group is the first of the founding companies to initiate the online trading model. Participating employees are already experiencing efficient and easy-to-use ordering and purchasing services. Over time it is planned that employees in each participating company will benefit from the competitive supplier arrangements negotiated by Cyberlynx.
For suppliers, Cyberlynx will enhance suppliers' ability to transact with customers online, increasing their customer base and reducing their channel costs. Suppliers will also be able to purchase their own supplies using the cost efficient market interface.
By combining the significant customer base and the broad reach of the Commonwealth Bank Group, Woolworths, Lion Nathan, EDS Australia and the Telecom New Zealand Group, Cyberlynx has the potential to deliver flexible procurement services to a broader customer base like the SME market.
Says Mr Gordon Cairns, Chief Executive Officer of Lion Nathan, "eCommerce has opened up a wide range of transformational new opportunities for business. This model for aggregating purchasing is an important initiative which will enhance the international competitiveness of Australian companies."
The EDS and A.T.Kearney group of companies provides services to e-marketplaces around the world, bringing to Cyberlynx e-Sourcing tools and services including eRFI (electronic Requests for Information), eRFP (electronic Requests for Proposals) and the reverse Internet auctions of eBreviate, an EDS company.
Karyn Devonshire, Group General Manager, TCNZ Corporate Australia, says, "This is an exciting opportunity for the TCNZ Group. We have already achieved significant internal benefits from our online e-procurement solutions provided by our existing eSolutions alliance. We look forward to extending those benefits through Cyberlynx."
Jim Duffey, Managing Director EDS Australia said, "The world has moved to a digital economy. The Cyberlynx e-procurement model has been fast tracked using worldwide expertise and experience. At EDS we are excited to be part of this new venture. It will deliver us quantifiable savings from year one, as well as position EDS as a leader in e-procurement. We will benefit from being one of the first in the market to realise the future benefits from aggregated online purchasing."