ProcureTrade signs agreement with Barloworld

Johannesburg, 07 Nov 2000

ProcureTrade, the e-hub joint venture between McCarthy On-Line and the AST Group, has signed an initial agreement with Barloworld Motor Investments.

In terms of the agreement, ProcureTrade will supply Barloworld Motor Investments with e-procurement solutions and become Barloworld`s e-procurement service provider. Barloworld will use ProcureTrade`s hub to facilitate its future procurement. The pilot phase of the project is already underway.

ProcureTrade`s business model, which relies on InfoBank`s Intrade software, claims to have the ability to reduce material and service costs by 5% to 10% - a saving attributed to a reduction in off-contract buying, the increased use of preferred suppliers and greater leverage of contract negotiations.

The e-hub says its clients can expect a 50% to 70% reduction in the time taken to process a purchase request, with order cycles being reduced from 7.3 to two days. In addition, administrative costs can be lowered 50% to 70%, it offers increased control over off-contract purchases and inventory costs are reduced by 25% to 50%.

The e-hub has signed agreements with Iscor, Engen and McCarthy Motor Holdings. Six successful pilot sites have been completed and roll-outs at Engen and McCarthy Motor Holdings are underway.

The savings benefit to Iscor has been conservatively estimated to be six times the cost of the solution, calculated over a period of five years.

Suppliers currently trading via ProcureTrade include Waltons, Castrol and Mobil. Projects underway include integration into the ABSA procurement card and SAP system.

Theunis de Beer, executive director of the company, says expectations for ProcureTrade are extremely high. "Business-to-business (B2B) e-commerce is growing rapidly in this country. During 1997, some R15 million was spent in SA. In 1998 it rose to R207 million, and last year, an estimated R3.9 billion was spent. It is expected that 80% of e-business revenue will be generated by B2B transactions and solutions. Within ProcureTrade alone, we are forecasting a R4 billion spend per annum," he comments.

"ProcureTrade is now the e-procurement partner of two of the largest players in the local motor industry - McCarthy Motor Holdings and Barloworld Motor Investments. This means that we have achieved the desired critical mass.

"There is no doubt that we are seeing the beginnings of a formation of an automotive vertical hub. The automotive industry is an early adopter of technology - we see great potential within this industry."