The total procurement cost is made up of two components:

The product cost  - the actual price of the product - easily defined, transparent cost.

The process cost - the actual cost to the organisation to order, receive, pay, store and account for the purchase - not so easily defined, hidden costs and by virtue harder to manage.

The Gartner Group quotes that on average the product cost only represents 40 per cent of your total procurement cost. The other 60 per cent comes down to how you procure product in the first place - your methods of ordering, the way in which you hold stock, your inventory levels, your accounting systems and more.

One way to reduce complexity is to manage the ordering process via an internet ordering platform such as NetXpress. For example, at Corporate Express our entire catalogue of over 10,000 products is available online via NetXpress. Product details, images, stock availability and pricing are all online. Monthly reports capture spend levels by cost centre or department, tracking your budget against actual spend.

We know from tracking our results closely for our clients over many years that our electronic ordering and our electronic consolidated invoice system has been capable of delivering savings of around 20 per cent on process costs.