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How Does a Global Electronics Company Get More Value from SRM? The Answer is Simple.

Recognizing the virtues of simplicity is nothing new. Leonardo Da Vinci said, “Simplicity is the ultimate sophistication.”/wp-content/uploads/2014/08/275929_l_srgb_s_gl_518758.jpg

Some 500 years later, that’s a philosophy that Flextronics International still agrees with completely.

Flextronics is a global supply chain solution company based in the Silicon Valley. At this summer’s SAPPHIRE NOW, I had the opportunity to sit down with the company’s Prashant Singhai to talk about high tech, procurement, and the merits of simplicity.

“Flextronics has operations in more than 30 countries,” Singhai told me, “We deliver design, manufacturing, distribution, and aftermarket services to some of the world’s largest original equipment manufacturers.”

And Singhai’s description is far from hyperbole. Flextronics counts companies like Alcatel-Lucent, Intel, Ford Motor Company, and Microsoft among its notable customers.

Creating Value with SRM

Like any large company, Flextronics relies on an extensive network of supplier partners for the materials and services needed to run the business. No surprise then, that Flextronics uses advanced e-procurement and collaboration tools to improve business processes and increase efficiency.

As an IT manager for procurement at Flextronics, Singhai has a unique perspective on these operations.

“The SAP Supplier Relationship Management (SAP SRM) application helps us manage some US$3 billion in indirect spend every year,” Singhai explained, “Ours is a comprehensive system that incorporates both internal and vendor’s punch out catalogs.” These catalogs reflect approved vendors and negotiated pricing.

But to realize the efficiencies and cost savings such a system can provide, Flextronics’ buyers have to use it.

“In the past, just searching for a commodity code could take 3 or 4 clicks,” Singhai said. “That’s too much time. People don’t want to wait.” This often resulted in buyers entering incorrect information on their own – or even worst, engaging in “backdoor spending” by creating purchase orders and submitting invoices outside of the system.

The Road to Simplicity

“These days, our mission is to make our tools simpler for people to use,” said Singhai. As an example, he pointed to the new SAP SRM user interface (UI) – a simple add-on to the solution – which Flextronics rolled out earlier this year.

The new UI is based on HTML5 with features like cross-catalog and fuzzy searches. “It’s much more intuitive to use the catalogs now,” said Singhai, “For example, you can just type an associated word and it gets the commodity for you. So we can be sure we are using the right codes and the right general ledger.”

Singhai told me there are now 16,000 users around the globe live on the system, and Flextronics’ buyers can create a shopping cart in about one-third of the time.

As a result, catalog spend is on the rise. In addition to the gains already noted since the January roll out, Singhai expects to increase catalog spend by 20% in the next two years.

For Singhai, the reason is simple: “Expectations have changed. In today’s world, people are used to a buying experience like Amazon or eBay. In 2014, you need to think simplicity.”

You can learn more about the UI add on for SAP SRM by clicking here.

And follow me on Twitter at @JohnGWard3.

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