Getting Strategic About Supply & Demand

For a large financial institution such as BMO Financial Group (formerly Bank of Montreal), getting “within two or three bucks of it” is not only intolerable from an accounting standpoint, it’s also a nonstarter when it comes to purchasing. When you spend $2 billion dollars a year on external goods and services – everything from pencils and pens to office furniture and management consultants – losing two bucks here and three bucks there throughout the sourcing cycle is no laughing matter.

That’s why BMO Financial Group has put in place a Strategic Sourcing department that has taken it from unexceptional in this area to best practice.

Purchasing Power To The Desktop

BMO Financial Group is integrating all of the steps in the procurement chain – including sourcing, enablement, procurement, settlement and analysis – and automating them wherever possible via its desktop purchasing application, BMO Buying Online, which it implemented in 2001.

Based on Oracle’s Desktop Purchasing and Procurement Management System, BMO Buying Online is a Web-based ERP application that enables employees to make purchases from their PC.

“Our supplier deals have now been operationalized into something employees can use at their desktop,” observed Peggy Gilmour, Vice President, Procurement and Strategic Sourcing. “Employees can go to a single place for items and see bank prices; then they simply point and click and make the purchase. There’s an appropriate approval process built in behind each item.”

That’s a big difference from the way things used to be done. Years ago, if an employee wanted something like Post-It notes, she’d have to requisition them; then someone would have to get them from inventory, triggering an internal accounting transaction and a charge against the cost centre. Now there is no inventory to maintain, and there is 24-hour delivery of office supplies anywhere in Canada.

This kind of capability grew out of the bank’s improved supplier relationships. In this case, Grand and Toy’s products are part of the BMO Buying Online electronic catalogue, and the supplier delivers them directly.

“BMO Buying Online has helped us clear up a lot of confusion,” said Steve Par