A business that operates in silos is like a car engine not firing on all cylinders. It takes a lot more time, and effort, to get where you’re going.
In the case of the integrated oil and gas company Suncor Energy, the lack of alignment among the supply chain, procurement, and accounts payable functions contributed to inconsistencies in procurement and payment processes. In a session at Sapphire 2014, Terri MacLeod, Suncor senior director of supply chain, explained that problems were manifest in several areas: contract leakage, poor on-time payment performance, and a lack of real-time management of its supply chain.
To move toward an integrated, end-to-end process, Suncor implemented multiple modules of SAP as a foundation. Soon after, it began the process of moving away from operational silos. A major step in that direction occurred when the accounts payable group was moved under the supply chain organization alongside procurement. That allowed Suncor to standardize processes, and monitor them against key performance indicators (KPIs).
The last step was to extend Suncor’s end-to-end processes to its supply base. For Suncor, that involved connecting its SAP system to the Ariba Network for PO and invoice automation. Getting internal support for this initiative was one thing, but what about the likelihood of getting buy-in from suppliers?
“The reaction has been great,” explained MacLeod. “Over 50 percent of our suppliers are already on the Ariba Network, and I believe the benefits are just as great, if not greater, for them.”
The benefits to suppliers include:
– Real-time access into invoice and payment status from a supplier portal
– Improvements in on-time payments
– Streamlined transactions, increasing chances for more business with Suncor
– New business opportunities with other oil and gas companies on the Network
Through collaboration over the Ariba Network, Suncor also gets delivery dates from suppliers in real time. Previously, the process was, you might say, cumbersome: a planner would call a scheduler- who would call into procurement- who would call the supplier. With the improved process, supplier enters information into Ariba and it is automatically populated into SAP. “This enables us to make better decisions in the planning phase, enhance our productivity, and keep our trucks running 24 x 7 with minimal downtime,” said MacLeod.
According to MacLeod, the best approach from a business case perspective is to maximize early payment discount capture from an improved procure-to-pay process. “We chose to bundle invoicing and procurement with discounting… to actually fund the implementation of Ariba,” she said.
Future plans include the ability to prevent contract leakage, improve spend analytics, and deploy mobile applications for field personnel. “All this is leading to the fact that we want to be strategically close to our suppliers, so we can predict shortages before they occur,” said MacLeod, adding that this also helps Suncor’s competitive position as it maximizes oil production.
Suncor’s story is a great example of improving collaboration internally and externally for business advantage. You can hear the replay of the complete session at this link.
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