A Smart Case for Smarter Procurement
It’s all well and good to say that business networks enable companies to engage and collaborate more efficiently with trading partners, but examples showcase the truth of this assertion so much more eloquently. If you caught the Smarter Procurement through Effective Collaboration webinar at the end of February (and you can click the link to watch it if you did not), you heard how Caesars Entertainment Corporation has used a business-to-business (B2B) network to make huge gains in procurement control, visibility, risk mitigation, performance and savings. How huge? Consider:
Keep in mind that this is not just a picture of procurement performance improvements at Caesars Palace in Las Vegas. We’re looking at improvements across the broader Caesars Entertainment Corporation—with procurement operations supporting 52 casinos in 15 states and 5 countries, more than 30 million square feet of gaming space, 42,000 hotel rooms, and 70,000 employees.
Using a business network, Caesars has also reduced cycle time for supplier discovery by 50% and project sourcing time by 90%. They’ve lowered costs by up to 10%. And, they are able to meet regulatory, social responsibility, and diversity objectives more effectively than ever. You can read a case study about Caesars’ experiences here.
Capitalizing on the networked economy
Of course, Caesars’ experience is just one example. Compelling in other ways is the story of how Proforma Idea Press, a seller, was able to cut lead times by 40% and gain rapid access to qualified buyers looking for its products. The business network enables a company like Proforma to receive alerts whenever a qualified lead is posted on the platform. The opportunity could be local, if that’s what the vendor seeks, or it could arise from any location in the world if that’s what the company is prepared to support. For small suppliers with large ambitions, such an online commerce network can be a powerful entrée into that global marketplace.
Furthermore, the receipt of good performance reviews within the networked environment provides a kind of virtual street cred that encourages other companies to interact with smaller network partners that they might not otherwise have considered. MarkMaster is an excellent example of a company that has been able to parlay its early successes into an ongoing stream of new business, almost all of which comes through a single business network.
Improved interaction both locally and globally
An organization like Caesars may be looking for a local supplier like Proforma, and an organization like Proforma may be looking for global partners such as Caesars. But the reach and sophistication of a business network can do much more than simply bring these two companies together. It also facilitates, on an ongoing basis, all interactions between the organizations—along the entire source-to-settle process. Purchase orders, invoices, and payments can become automated, to the point of being touchless. And sourcing interactions, contracts, and supplier performance ratings can be managed and accessed from one place, across the entire network of suppliers and buyers. All of this is advantageous not only to the payer but also to the payee, as it saves money and time and reduces the risk for errors, late or wrong payments, and supply chain disruptions that manual processes present.
Given the benefits that these collaboration platforms offer, it’s no surprise that leading buying organizations see the evolution of business relationships through the lens of a business network. Speaking about the role of cloud applications and business networks like the Ariba Network for the future of his company, Ramsay Chu, Global Head of Procurement at Rio Tinto, says: “As we continue to add platforms onto the cloud that help facilitate transactions, I think business will continue to advance, and we’ll be able to create this community uplift in respect to prosperity.”
Put another way, if you’re a supplier that’s not participating in the networked economy, you’re not positioning yourself to respond with the efficiency other companies are looking for, and you may well be foregoing key opportunities to cultivate stronger relationships (and sales) going forward.
Execute your business network strategy in a thoughtful manner—with these helpful resources from The Economist Intelligence Unit and Procurement Leaders.
Ceylan Thomson runs marketing for SAP Business Networks. You can follow her on Twitter at @ceylanthomson.