Strategic e-Sourcing with SAP Ariba
This Document discuss three aspects:
- What is Strategic e-sourcing?
- How it helps Mill Products and Mining Companies?
- How SAP Ariba can enable strategic e-Sourcing?
In current scenario, due to advance in Web based technologies, increasing market volatility etc., ability to collaborate, partner and disengage in a timely manner will emerge as an important competency. eBusiness,is and will continue to drastically change the way in which companies procure, manufacture, sell and distribute products. The ready availability of information provides a great tool to run your business more efficiently and also empower customers as well.
What is Strategic e-sourcing?
Aberdeen group defines strategic e-sourcing as a use of Web based technologies to automate and streamline the identification, evaluation, negotiation and configuration of the optimal mix of suppliers, products and services in the supply chain network that can rapidly repond to changing market demands.
(Note:In this document Strategic e-sourcing is discussed from both buyers and sellers perspective)
Because significant part of cost of product is built in during design and sourcing phase and so greatest impact on cost, quality and assurance of a product or an assembly occurs during initial sourcing cycle. Organizations using Web based sourcing technologies can provide following benefits:
- Identified and negotiate with broad range of qualified supplier
- Reduce process cost for sourcing engagements
- Shorten sourcing cycle by 25% to 30%
- Reduce time to market cycles by 10% to 15%
- Negotiate an average of 5% to 20% in unit price reductions
- Enhance collaboration and knowledge sharing
- Ability to quickly deliver products to its customer with same quality and at low cost.
How it helps Mill Products and Mining companies?
- Optimise Procurement costs and reduce commodity risk: Due to price volatility these companies required to closely collaborate with their suppliers/customers to strike the deal at right time with right price. Further they require to quickly react to the price changes. this will help optimize the procurement cost and reduce commodity risks.
- To decrease production cycle: to provide prompt delivery to customer and to decrease raw material inventory and net working capital tied up in them.
- strategic procurement issues for mining, minerals and metals companies include: services procurement (including contingent workers in mines), labor management, capital equipment procurement, service parts and spares procurement, MRO strategies and fulfillment for mining facilities (for example, safety supplies, mining supplies, etc.).
- Volume of transactions: Since this types of transaction involves lots of paper works and administrative tasks most of which can be automated and reduced to an extent.This will reduce time spent on non value added task when transactions volumes are high.
- Process standardization, streamlined negotiations, and good governance and controls: Currently the transactions are done using mix of Phone calls, Fax, EDI, Mail etc. which makes the process complicated and less integrated with ERP leads to error or duplication of work..Thus it requires a solution which can streamline the whole process into an integrated platform and which simplifies Approval process and enforce control over the it.
- To search for right customer or business partner:Collaboration over web opens the wide arena of opportunities to have low cost, high quality material or service at any time and any place and to have a right price for the products or services.
How Ariba can enable strategic e-sourcing?
Ariba is the world’s largest business network with more than 730,000 companies transacting over $340 billion annually among 5 million users.It offers an open network and Web-based applications to buy, sell and manage cash among B2B buyers and sellers.As part of SAP’s enterprise cloud strategy, Ariba will serve as a new “business network” category, connecting suppliers, customers and partners.( It also includes Quadrem network which was a e-Marketplace to support purchasing process of Mining Industry it was acquired by Ariba in 2011.)
By their nature, Sourcing and contracting are more collaborative process that requires enterprise to extend beyond its four walls. Ariba offers cloud based solution for conducting RFx and contracting negotiations through a secure and accessible platform. This electronic collaboration can speed up procurement process involving lots of paper works and confirmations which was either manual or unstructured.Further it also allows to make spend analysis and Invoice management.
Following image shows the SAP Ariba Roadmap
How Ariba will integrate with SAP?
Ariba offers five pre-built adapters to integrate with SAP:
ECC Financials (Fin) + Materials Management (MM);
ECC Fin only; ECC MM only; ECC + Supplier Relationship Management (SRM); andSRM only.
Also there’s Ariba’s Collaborative Commerce product. According to Ariba, it’s a Net Weaver Compliant Adapter that “connects SAP to the Ariba Commerce Cloud for real-time collaboration with virtually all of your suppliers for B2B commerce, with no need to modify or upgrade your SAP environment.”
Ariba Case study:
- Vale Case study: http://www.ariba.com/assets/uploads/documents/Case%20Studies/Vale_Case_Study.pdf
- Essar Case Study: http://www.ariba.com/assets/uploads/documents/Case%20Studies/Essar-Group.pdf
- Strategic Purchasing Optimization with SAP HANA and Ariba Network: http://www.sap.com/asset/index.epx?id=c2d7890b-871b-48ff-8fd9-9d9da2313743&seekTo=00:00&rm_autoStart=true
3. To know more about Ariba and Quadrem network visit following links:
Note:Although I have tried to verify all the correctness of contents given in this document. Please let me know if there are any errors or misstatements or any exaggeration from my side regarding Ariba or otherwise. Any suggestions on how can i improve this article are warmly welcomed.