Improving sourcing and procurement processes in the chemical industry with SAP Ariba
Executive Summary
A large chemical manufacturer needed to strengthen cost control and improve the efficiency of procurement processes. TerraLink deployed a solution based on SAP Ariba to ensure transparent and automated procurement, from source to payment. The new, modernized sourcing and procurement processes helped the company save financial resources and reduce the operational workload.
Customer Business Challenges
The large chemical manufacturer needed to automate its procurement process in order to improve collaboration with suppliers. Previously, the company’s employees created purchase orders in the accounting system and then transferred them to Excel for further processing. Moreover, they used to send purchase orders to vendors via email and manually enter their responses into spreadsheets. Therefore, the manufacturer was eager to optimize the procurement process and make it transparent. It decided on SAP Ariba, because an important factor for choosing a cloud-based solution was the ability to deploy it quickly.
TerraLink's Contribution
The manufacturer chose TerraLink as a solution provider because we had considerable experience with similar projects.
First, the project team configured the Ariba Sourcing module to handle the customer’s business processes. It defined user roles, created templates, and configured formulas. Then the team deployed the Ariba Supplier Information and Performance Management (SIPM) module. SIPM provided the customer with a single supplier database and supported the supplier qualification process. Finally, TerraLink experts implemented Procure-to-Pay. This module collects purchase requests and transfers them to the Sourcing module. The Sourcing module automatically sends requests to suppliers. Then the system collects all incoming offers and generates a summary offer list.
When the company started the project, there were only a few cases of implementation of the Sourcing module in the world. So the project team faced various challenges that were completely new to the industry, and there was no experience in solving them. Despite this, TerraLink’s experts successfully resolved all the problems, and the manufacturer started using the Sourcing module five months after the project began.
TerraLink supported the user adoption process and conducted training sessions so users could successfully and easily use the system.
Now the procurement managers can filter proposals according to the required criteria – the best for the best prices, the best price for all lots, etc. – and get the results in a spreadsheet with just one click. Moreover, the procurement department is able to customize analytical reports in accordance with personal requirements. Suppliers, meanwhile, can review purchase orders, check requirements and delivery dates, and add their offers according to that information. The system ensures that suppliers cannot see their competitors’ bids until the procedure is completed.
Customer Business Outcomes
The new system enabled the company to consolidate 5,000 suppliers in a single database and register more than 200 new suppliers in two months. By increasing the number of suppliers, the company improved the quality of its bidding process. The solution became an essential tool for employees, providing them with 24/7 access to the system, including via mobile devices. This is reflected in the increased interest of employees in modern procurement methods and techniques, such as online auctions.
The company achieved its key objective by increasing the efficiency and transparency of the procurement process. Moreover, automation resulted in a fourfold reduction in time spent on routine operations. The integrated approach allowed the company to reduce procurement prices by 5% on average. In some cases, this number reached 25%. All this resulted in significant financial savings for the company in just six months. The company became a member of the global SAP Ariba Network, which has more than two million users. This implementation was recognized as a one of the most well-executed projects in the company.
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