Thomson (Easysource) : Development of an E-Procurement System

What business is the organization in? Thomson is a French company, created in 1883, whose headquarters are in Issy les Moulineaux, near Paris. It is specialized in the conception and the manufacturing of digital images and videos systems. The company developed itself in the world to be present in different countries, such as Italy, India, China, Spain, USA, Belgium and UK. It has about 73 000 employees dispatched over 230 sites, including more than 60 factories. Its sites are distributed around 10 countries but the company sells its goods and services to 100 countries.We can also notice that Thomson is a real leader in the innovation system, as it owns 35 000 patents worldwide representing around 6 000 inventions. The group sells its products and services through 4 major brands which are Thomson, RCA, Grass Valley and Technicolor. The 2 last brands allowed the company to take advantage of the digital technology’s global transition In the late 80s and the early 90s, Thomson was dedicated to Electronic oriented activities for both everyone and activities oriented to professional.After different plans of restructuration and reorganization, in 1997, Thomson decided to focus on the production of key components and electronic products (representing about 98% of its turnover). Since 2000, the company opens to the Medias and entertainment industry focusing on creation, management and content distribution. Thomson’s aim is about becoming a leading worldwide group of integrated solutions for media and entertainment industries. In order to gather this goal, Thomson decided to turn to e-procurement in 2001. What products are bought via e-procurement?In order to well understand the company we are going to develop the main purchases operated by the group. We have the production purchases (such as the electronic components, material and so one), that represents 70% of the total purchases. Then, we have the non-production purchases (maintenance, transportation an d so one). Thomson developed its e-procurement system, with EasySource, around this second kind of purchases. Indeed, non- production purchases are divided as follow: oNon-production purchases outside EasySource: Licenses, Guarantees, Customer Marketing, Other. Non-production purchases inside EasySource: oTransport, oEnergy, oSoftware, oIT and Telecoms, oProperty and tenant services, oExternal services, oMarketing, communication and advertising, oManufacturing supply, oInvestment, oTravel oOther So, those non-production purchases are items that are difficult to manage for companies as they are really diversified and need to be well analyzed. As a consequence they are very costly as they need competent people to deal with them and quite a lot of people due to their diversification. That is why Thomson has recourse to e-procurement with EasySource for such purchasesWhat savings were realized? The following shows that the solution at its completion should bring 150 million of euros: Ea sySource allows Thomson to save around 80 million per year. First, we can look at the following table showing us a few results from before and after the use of EasySource by Thomson: â€Å" Before EasySourceAfter EasySource Active suppliers per buyer10050 Percentage of active suppliers approved by the State10,0%100,0% Percentage of purchases generated with small suppliers40,0%10,0% Percentage of transactions via e-commerce3,0%60,0% Percentage of purchases under agreements50,0%95,0%Number of suppliers for indirect purchases360007000 % of indirect suppliers which represent 90% of the total amount of purchases30,0%10,0% † Such data easily show us the great impact that Easysource had on the company. For example the number of active supplier per buyer was divided by 2. Moreover, Transactions via e-commerce went up from 3% to 60%. E-commerce is much more profitable to company as it cost much less than traditional commerce. How were those savings realized? By implementing EasySource , Thomson developed a unique centralized tool for every user that brings important savings for the company.There are 3 main points that explain how those saving were realized. The first one is the control of the purchase condition. Indeed, it is easier to explain et order exactly what you want, avoiding mistakes. You can also negotiate ask to different suppliers and see which one offer you the best program. Then, you have a global improvement of the running. As everything is taking place on a unique platform, it is easier to make sure for example that you can have what needed or to compare the products through different suppliers.Finally, last but not least, the system allows the improvement of the productivity such as the reduction of the number of suppliers. And it make it easier to change of suppliers when findings others more profitable. EasySource was first develop in 2001 and followed 3 steps. The â€Å"Pilot phase† was quick as it wanted to show that the concept was re alistic and would bring many advantages to the company. It was also to see and learn how he system worked. So, Thomson developed the process on 3 key areas (Asia, Europe and America) and enrolled the 10 major suppliers of each of those areas.The second phase was the â€Å"large-scale deployment phase† aiming to develop the solution worldwide. It lead 3 stages at the same time : implementing he concept on 110 sites, massive enrollment of the suppliers while rationalizing and focusing on ad hoc purchasing rather than catalogue purchasing. Finally, the last step was â€Å"the capitalization and user adoption phase† that allow EasySource to become today the common and unique solution for non-production purchases. For this final stage the main point was to convince everyone to use EasySource for their transactions and to improve the use rate per family of product.To conclude all those points allow a better understanding and following of the purchases. In other words, it mea ns a gain about money through the reduction of management costs and the negotiation and validation processes What problems occurred during the implementation process? The major problem faced by the company, while implementing the process, was to catalogue all the suppliers. Indeed, the suppliers for non-production purchases are numerous and complex due to the large panel of family products.Then another problem that occurred was the access to the networks and to Internet. It might was already present on some areas, but it was also needed all over the world where the company is present. So, Thomson had to modernize its network infrastructures, as it was the first trial of some intranet database for the group. Thomson also add to inform both its workforce, suppliers and buyer to its new system. This problem was easily compensated thanks to a strong communication strategy and a real effort to get the portal o be easily used and understood by its users.