PracticeConsultingPower traders.

Power traders.

Utilities firms in rush to start e-procurement exchange.

Two more utilities are to join the consortium planning to launch the first e-procurement internet site for the sector. News of the new additions follows an announcement last week that a second consortium – headed by Achilles Information and including Anglian Water and PowerGen – were planning to beat a Scottish power bid to set up a website. Participants in the sites are convinced it offers massive cost savings and are eagerly working towards a June launch date. Nirmal Kotercha, head of supply chain management at Anglian Water, said: ‘In terms of business drivers the pressure of transaction cost is the key one. ‘Traditionally transaction costs amount to #40-#60. Going through e-commerce will reduce that to pennies.’ Estimates set the cost of transaction at #80 to #100, but is just one among many advantages being touted. Another is the relationship being developed between companies. By co-operating through the procurement site Kotercha says huge economies of scale could also be gained by purchasing together. Commentators have been watching procurement sites very carefully and their application across many other sectors is being monitored. Though the internet as a whole is being viewed favourably it is the business-to-business sites that are emerging as the real winners while business-to-consumer sites lag behind. The Anglian Water group includes South West Water, Yorkshire Water, GPU Distribution and the Environment Agency. Software for the site is to be provided by the German firm SAP and reports say #10m is being sunk into the project. Colin Maund, managing director of Achilles Information, the contract information supplier leading the new site, said: ‘What’s driving this is that organisations have realised working in collaboration is a far more effective way of utilising the internet than setting up on their own.’ He said it was a ‘quick’ way of gaining cost reductions and would also enable companies to more efficiently manage strategic stocks of supplies.

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