Fast Tracking

Aug. 8, 2001
The truth about B2B purchasing

I consider myself a person who generally says what's on her mind.

As my husband would point out, this is not always a good thing. Nonetheless, I enjoy talking with people who appear to entertain the same level of assertiveness. Such would seem to be the character of Dan Smith, CEO, of Sebastopol, CA-based Omware Inc. (

"The web is yet to become the communications tool that it will be in the next three to five years. We saw a lot of start-up dotcom companies come out trying to build web hubs for contractor communications and material purchasing. Almost all of them are dead now or dying," says Smith (pictured). "I think that what happened there was that the people who started the web hubs didn't really understand the dynamics of the industry well enough and also didn't understand the need to connect the desktop applications that contractors use."

Recognizing the relationship between the contractor and the supplier, coupled with streamlining the purchase order and invoicing processes, offers savings to everyone involved. Ultimately for the building owner, it saves time and money.

The mistake that the online purchasing start-ups made was misunderstanding with whom contractors do business. "There is typically a select group of suppliers that a contractor works with. They're not just interested in price; they're interested in service, availability of materials, timely deliveries, and credit - things like that, which they aren't going to get from just anybody on the web," says Smith.

He believes that contractors want to use the web as a private exchange - a vehicle for sharing information across the network. His predictions for the next three to five years include the following:

  • Contractors will use estimating systems that have supplier databases included in them. As a contractor assembles a materials list from a set of plans, an RFQ or purchase order is issued in the form of an XML document and then sent electronically to a supplier, complete with that supplier's part numbers and descriptions. The supplier then integrates that information into its back-end system without re-keying any information.
  • XML purchase orders will include all the necessary information to file the mandatory pre-lien notice: materials ordered, the owner, the project lender, the contractor and/or subcontractor ordering the materials, and more.
  • Suppliers will electronically bill the contractor. Enormous amounts of time and paperwork will be eliminated. This type of smart document transfer will incorporate itself directly into the contractor's accounting system.
    Materials purchases will be paid electronically.

Smith explains how each of these steps will expedite the purchasing, delivery, billing, and payment processes - offering substantial time and money savings in the form of increased cash flow.

"I absolutely believe that in five years we're all going to be doing it. If you look at the exorbitant amount of money and time that is being spent just in coordinating orders and payments against each other for both the supplier and the contractor, it's a tremendous cost," says Smith.

Smith also envisions things like project management documents, RFIs, RFQs, and daily field reports being communicated over the web via smart e-mail.

He predicts that in the not-so-distant future, through the use of XML documents, architects will download information into an RFI file, attach a set of plan drawings, and send it back to the contractor electronically. That information would be integrated automatically back into the contractor's database system. Smith believes that this type of transaction will become as commonplace as standard e-mail is today.

My prediction is that Smith is right on target with his assessment. I'll be keeping close tabs on Smith. If everything turns out the way he predicts, Smith and I will be discussing lottery numbers in the not-so-distant future as well.

Clara M.W. Vangen ([email protected]) is technologies editor at Buildings magazine.

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