Probrand – a dynamic and innovative approach to IT procurement

Back in the late 90s an IT distributor in Birmingham looked at the markets, the slim and shrinking margins, and thought “we’ve got to do something a bit different here”.

That was the start of Probrand developing services based around adding value to the supply chain through clever data management and application of what we might call “dynamic purchasing processes”.

What do they do? Basically, they have developed a platform (www.theITIndex.co.uk) that takes live feeds from thousands of IT equipment (and related products) manufacturers, wholesalers and distributors.  In real time, price changes are incorporated as they happen, and the platform can make price comparisons and offer the “best” deals to Probrand’s customers.  The daily updates cover over 150,000 products and services from over 2,500 manufacturers and distributors, ranked by best price and stock availability.

Customers can therefore get benefits through the competitive dynamics of the process and can see the latest price movements - and bear in mind, in IT, more prices still drop than increase every day as equipment moves through its life-cycle.  This enables the customer to get the best deal within one secure environment and without any ‘punch-out’ to supplier sites.

But then there’s another clever angle. Probrand effectively act as an aggregator for all their customers. Every afternoon, the aggregated daily requirement for each item – already competitively priced – is offered to the all the providers on their system in an auction type manner. Suppliers can bid below their list price for the quantity on offer, enabling further benefits to be passed onto the customer.

We all know how difficult it is getting organisations to collaborate and enter into collaborative buying ventures. What I particularly like about this process is that you don’t need to consciously do anything as a Probrand customer – yet you are automatically getting the benefit of collaboration and aggregation.

Their process offers some further advantages. The level of automation within their process means their own overheads are low, so their mark up is a lot less than that charged by many system integrators for instancewhen they supply equipment.  And the process gives a high degree of audit and transparency around the choice of supplier and the competitiveness of the pricing – something that should be attractive to buyers.

I asked what seemed to be an obvious question - don’t suppliers hate this?  The constant auctioning seems a very tactical procurement route?  Not at all, according to Peter Robbins, the Probrand MD.

“This is a pretty tough business anyway, and our process has the beauty of transparency for the suppliers as well – they can see exactly why they’re not winning business for instance. Once we got through the initial period and they understood how we work, most genuinely appreciate the openness of what we’re doing.”

So is everyone happy? Not quite. Some other ‘middlemen’ aren’t, seeing the IT Index as a real threat.    The growth in outsourcing has left many organisations – public and private – relying on a systems integrator, consulting firm or outsourced service provider to provide IT equipment, usually on a “cost plus” basis.  Do those providers always pass on market price movements and cost reductions in a timely manner? And what is the % mark up in the cost plus arrangement? How does that compare to Probrand’s fully transparent prices and margin?

These are questions that Probrand hope buyers might ask existing providers – and they seem very reasonable questions to be asking. More tomorrow….

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