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Making Procurement Strategic

How the Ariba Network Improves Efficiency and Reduces Costs

by Gurminder Sandhu | SAPinsider, Volume 16, Issue 2

April 1, 2015

Streamlining the procurement process has become a top priority for many supply chain executives. In the era of globalization and specialization, the ability to procure materials efficiently is paramount. Find out more about leveraging the Ariba Network to optimize supply bases and enhance real-time business-to-business collaboration.

 

In a global economy, finding ways to streamline and integrate the procurement process is a top challenge for C-level and supply chain executives. With suppliers located all over the world, the increasing importance of collaboration, and the trend toward specialization leading to new supplier streams and product variety, the days of procurement professionals relying on spreadsheets and paper-based purchase orders are long gone.

Organizations are also under increasing pressure to reduce costs and improve efficiency. Opportunities exist to integrate procurement processes downstream for greater visibility, but companies struggle to take that first step for a variety of reasons. For starters, there is usually a considerable on-premise system investment, creating a reluctance to move to a new platform. Second, procurement has traditionally been more operational than strategic. Third, users are comfortable working with their own spreadsheets and methods of communication. Transitioning to a state-of-the-art procurement platform is often seen as a leap of faith for end users and decision makers without a clear vision for how integration can transform procurement into a strategic business partner.

The cloud provides organizations an opportunity to keep pace with new practices, processes, and software functionality without depending on IT budgets and resources.

A Path to Value

The clearest path to value is to create an integrated procurement suite that provides end-to-end visibility that includes sourcing, spend analytics, contract management, and downstream transaction management. A cloud-based business-to-business procurement network such as the Ariba Network may be a logical choice for organizations that are looking to reduce procurement costs and manage transactional spend. Traditional on-premise procurement implementations are labor-intensive and may take a long time to realize return on investment (ROI). Procurement organizations have to depend on IT departments to continuously maintain and upgrade functionality. In the cloud, however, implementation timelines are short and leading practices are built in, which helps organizations realize ROI. The cloud provides organizations an opportunity to keep pace with new practices, processes, and software functionality without depending on IT budgets and resources. The potential to discover new supply sources and transact in real time with vendors opens up new avenues for cost savings and process efficiency. This is why solutions such as the Ariba Network are generating heavy interest. PwC has worked with several organizations that are looking to transform current processes or add capabilities through a hybrid approach. We help customers develop a roadmap for such a transformation with technology as the key enabler. The Ariba Network and its suite of procurement applications provide an opportunity to just do that. 

An optimized supply base is another challenge that organizations are facing today. With disparate, siloed processes, companies are sometimes buying the same product from different vendors. The Ariba Network allows companies to consolidate spend, improve visibility, and increase collaboration throughout its supply base, even shifting some operational day-to-day tasks onto the suppliers. 

Everyone’s a Customer

For the long-standing SAP customer, one of the advantages to leveraging the Ariba Network for procurement is collaboration functionality. In a digital economy that values real-time collaboration, traditional business-to-business interactions are tilting toward more of a business-to-consumer model. So having access to a nearly unlimited number of vendors, and being able to automate interactions with them, is an advantage.

Ariba’s integration with SAP systems provides the same sort of collaboration internally, as procurement now has the flexibility to link with SAP ERP Financials, for example, providing additional transparency and another outlet for procurement to become a strategic arm of the business.

A Helping Hand

PwC helps customers fine-tune their vision to re-engineer procurement with the goal of saving time and money. With the Ariba Network, companies can do just that, and make procurement strategic.

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Gurminder Sandhu
Gurminder Sandhu

Director, Advisory
PwC



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