In a country where a good deal of procurement is still done by fax, telephone and paper, Samsung estimates that the auto industry could improve net profit by 13 per cent through cutting operating costs by only 1 per cent. But the sheer geographical and economic diversity of the region means progress is likely to be more patchy than in the US or Europe. The real advantages will come when e-procurement transcends national as well as corporate boundaries. If anyone can help the AngloDutch oil, gas and chemicals giant locate this sumestimated at 18bn a year for Shell equity operations and a further 11bn for joint venturesit will doubtless be grateful. Otherwise, it is pinning its hopes on Trade-Ranger, a pilot internet procurement service launched last July.
Procurement is an obvious first step in e-commerce.
In the oil sector, it could have profound implications for trading, distribution, supply chains and corporate governance. BP Amoco, Statoil, the Norwegian oil producer, and Chevron, the US oil company, are among those companies embarked on major internet initiatives. Whether employees find themselves on drilling rigs in the North Sea or one of hundreds of distribution depots worldwide, they will be able to access a new web portal from a computer. As purchasing requests come in they are automatically aggregated and directed towards appropriate suppliers with which Shell has pre-negotiated discounts and service contracts. As the practice matures, companies will become endorsed suppliers.