Why would a company's separate business units buy goods and services independently if centralizing procurement can produce volume savings that go directly to the bottom line? Why would a company route paper requisitions for approvals when they can be automatically distributed over the Internet in seconds? Why would a company keep service contracts in file cabinets across the organization when they can be archived electronically with a complete history of all the negotiations that took place? And, what insurance executive wouldn't want to know more details about the company's spending activities?Volume discounts. Shorter procurement cycle times. Less paper. More informed purchasing decisions. These are the main reasons electronic procurement and sourcing have gained popularity in the past few years across many industries, including insurance (see "Procurement And Sourcing Software Gains Popularity," page 30).
Insurers such as AEGON, John Hancock, Fireman's Fund, Allstate, Cigna, MetLife, and Prudential have implemented e-procurement and e-sourcing technologies. And large companies that use these technologies typically save millions-even hundreds of millions-of dollars per year, according to Marc Osofsky, vice president of marketing and business development at Frictionless Commerce Inc., a Cambridge, Mass.-based enterprise sourcing software firm.
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