With eye on savings, CBS deploys internal purchasing network

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Building a purchasing network for a TV network is trickier than picking a winning sitcom. You can't tell the sports department to start buying online the week before the college bowl games begin or demand the news division to get up to speed while it's in the middle of covering the presidential election.

Yet CBS Broadcasting Inc. executives have managed to sell their system to managers across the corporation. So successful is the implementation, based on Elcom Inc.'s Pecos Internet Procurement Manager software, CBS has now been awarded responsibility for bringing parent company Viacom International Inc. into the 21st century of business buying. And in so doing, the TV network illustrates one way managers could go about successfully marketing purchasing systems throughout a complex corporate structure.

Laying the groundwork

To gain support for the system, CBS first contracted with McKinsey & Co. to calculate the company's supply base (10,000 companies), annual spending ($200 million), annual number of purchase orders (250,000) and percentage of purchases being done outside of a buying contract (46%). those data helped to build a strong case for a purchasing network, said Larry Brody, director of corporate sourcing and logistics for CBS.

Using a slogan that played off CBS's eyeball logo, "The eye on the buy," CBS began pilot use of the system in its operations and engineering department in April 1999. The network didn't require department managers to use the system immediately; it instead opted for a phased rollout based on their consent.

"Early on, we realized that we had to market this system through the company," Brody said. "The basic sales pitch was that we could stop processing paper because a lot of our managers spent a lot of time reviewing [forms]. And we made the point that the system couldn't make it any more painful than it was before."

Selling the system to suppliers was equally critical, Brody said. In 1998, before tests had even begun, CBS sent a letter to each of its 10,000 suppliers announcing plans for the system and requesting compliance. This early notice of change afoot allowed suppliers to begin their e-commerce work in advance of CBS's deployment.

Sweet success

CBS's approach has worked so well, parent company Viacom is now planning to deploy Elcom technology in all its businesses. A champion of the project, CBS VP-East Coast Operations Robert Ross, has been charged to apply the system across the giant media organization.

CBS's deployment underscores an overall migration to purchasing systems, no matter the industry. The market for procurement systems and services is expected to grow from $62 million just two years ago into a $900 million market by 2003, according to Forrester Research Inc.

For Elcom, the relationship with CBS is one to leverage, said Greg King, VP-strategic marketing. Already Elcom has entered into an agreement with the North American Broadcasters Association to market its system to other television companies. Elcom plans to feature CBS in an array of marketing materials, King said.

"Ours is an emerging industry," King said. "Customers with successful implementations are your best marketing tools, especially one of the caliber of CBS."

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