Innovative Practices in Electronic Procurement Management for Telecom Enterprises: Order Collaboration Management

---BEGIN---
[Communication Industry News] "FiberHome Technology Group has four major business directions, including optical communication, data communication, wireless communication, and intelligent applications. These four business directions are advancing in parallel. HXCT is mainly responsible for the wireless communication sector and currently ranks second within the group. The group requires us to achieve a profit of 7 billion yuan by the end of the 12th Five-Year Plan," said the Vice President of Wuhan HXCT.

For wireless communication equipment providers and service providers, in an environment where technical capabilities and management standards face international competition, the requirements for cost control and refined management are also very high. In 2011, to align with international procurement management trends, HXCT introduced the OneProcurement (EPS) electronic procurement management system and built its own electronic procurement platform (http://eps.hxct.com), aiming to improve procurement management efficiency, establish a transparent procurement system, enhance supplier sourcing and competitiveness, and lay the foundation for further cost reduction and efficiency improvement.

In conjunction with HXCT's current procurement management status, the first phase of the electronic procurement management project focused on the implementation of procurement pricing process management and supplier resource management, including electronic bidding and tendering, inquiry and comparison pricing, competitive bidding, supplier sourcing, registration approval, qualification management, etc. Within less than a year of the electronic procurement platform's construction and operation, HXCT quickly negotiated with OneProcurement and added a new procurement management module: procurement order collaboration management in October 2012.

Before using OneProcurement, HXCT implemented ERP at the beginning of 2011, but the ERP did not achieve electronic transmission and order execution tracking management. The interaction between the procurement party and suppliers was mainly based on manual offline operations: each time an order was placed with a supplier, it needed to be printed, signed, and stamped in the SAP ERP system; then the stamped order was sent to the supplier via email or fax; after receiving the order, the supplier confirmed the order quantity, price, delivery date, etc., signed, stamped, and returned it; upon receiving the supplier's confirmed order, the procurement personnel archived it and scanned it into SAP, using this order as the basis for subsequent delivery, invoicing, and payment. Similarly, the supplier's delivery plan and shipping information were communicated and transmitted through phone calls or emails between procurement personnel and suppliers, which was costly in terms of both operational and communication expenses, and the work efficiency was low.

For communication equipment manufacturing enterprises, the supply chain management system is inherently complex, dealing with a wide variety of materials, a large number of suppliers, and a high volume of data processing tasks. The communication costs and time spent by the procurement department and suppliers on "order transmission, delivery plan submission, and shipping information entry" are quite high. "We are very eager to achieve order collaboration management based on internet interaction, which is a crucial management link in improving procurement management efficiency," said the head of HXCT's procurement center.

After using OneProcurement, HXCT has realized electronic collaboration management of order transmission, delivery plans, shipping information, and progress tracking based on internet interaction, significantly improving the timeliness and accuracy of information exchange between the procurement and supply sides. Now, over 90% of HXCT's procurement materials are managed through order collaboration, with the electronic management process as follows:

1. Supplier receives the order

The supplier logs into the HXCT electronic procurement platform http://eps.hxct.com (i.e., the OneProcurement EPS system) to view the purchase orders issued by the procurement party, confirms the quantity, price, and delivery date, and then accepts the order.

2. Supplier submits the delivery plan

After confirming the order, the supplier needs to submit the delivery plan for the relevant order in the EPS system, which can be done in batches.

3. Procurement party confirms the delivery plan

The procurement party confirms the delivery plan submitted by the supplier. If there are any disputes, they can communicate and ask the supplier to resubmit the plan.

4. Supplier creates a shipping application

Before sending the actual goods, the supplier needs to create a shipping application in the EPS system based on the delivery plan. After the procurement party confirms the shipping, the supplier can proceed with the actual shipment.

5. Shipping information entry

For the shipping orders confirmed by the procurement party, the supplier needs to enter the shipping information, including packaging details, logistics information, and barcode lists, etc.

6. Procurement party receives the goods

After the supplier's goods arrive, the procurement party's receiving personnel verify the system's shipping orders, enter the actual quantity of received goods, and the system will transmit the relevant information to SAP to form the receiving inventory in SAP.

7. Special situation handling

For some special situations in the actual application of HXCT, the EPS system can handle order collaboration for "no delivery plan, no shipping order, and order information modifications at different stages."

Implementing order collaboration management has, on one hand, solved the cumbersome operations and issues of paper procurement orders being easily lost, difficult to archive, and hard to retrieve; on the other hand, it requires suppliers to submit delivery plans in the electronic procurement platform (OneProcurement EPS system), facilitating the supervision of suppliers to deliver on time and enabling procurement personnel to follow up on deliveries, query order progress, etc., thereby comprehensively improving supply management efficiency. For important order information changes and adjustments at different stages, both parties need to communicate and confirm online, ensuring data consistency and providing a solid management foundation for order data verification, progress tracking, and supply risk control.

As of April 2013, HXCT has been fully promoting electronic procurement management and a transparent procurement system for over a year. From the standardization of procurement pricing processes in the first phase, to the standardization of supplier management processes, and then to the standardization of procurement order collaboration processes, HXCT has taken the third step in procurement management innovation and the establishment of a transparent procurement management system.

At the beginning of 2013, during HXCT's management review meeting, President Tong of FiberHome Technology Group emphasized again: "Corporate development is like navigating a fast-flowing river; if you do not move forward, you will fall back. During the difficult period of transformation and development, we must have firm confidence and be willing to take responsibility, fostering a positive and upward work atmosphere within the company; we must learn to calculate with a bottom line and plan with a 'fine line,' comprehensively enhancing management capabilities, ensuring standardized operations, and making power operate under the sun..."