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Procurement prices reduced by 5-7% in the chemical industry with SAP Ariba

Procurement prices reduced by 5-7% in the chemical industry with SAP Ariba

Executive Summary

A large chemical manufacturer needed to eliminate manual work and streamline its source-to-pay processes to improve overall efficiency. By implementing SAP Ariba, the company digitized the entire procurement cycle and reduced procurement prices
by 5-7%.

Customer Business Challenges

The procurement department employed manual work and non-automated data processing in its everyday operations. Procurement managers used email to send RFPs to suppliers, and proposals also came by email. Procurement staff created all necessary documents, including RFPs, contracts, and spreadsheets, by manually using office applications. They printed all documents to store them in paper-based archives. They also manually entered data into the ERP system. The whole process was time-consuming and error-prone. As a result, supplier selection processes took a very long time.

The company decided to digitize the procurement process to increase efficiency and eliminate human error. It also wanted to build a single ecosystem for communicating with suppliers across the whole source-to-pay process. Moreover, it was important to reduce purchase prices by increasing competition between suppliers.

TerraLink's Contribution

TerraLink implemented a project based on SAP Ariba solutions, including Ariba Sourcing for procurement, Ariba SIPM for supplier database management, Ariba Buying for ERP integration and order processing, and Ariba Contract Management for contract approval processing. The project was rapidly deployed, and the company started using the system six months after the project began.

The new automated process starts with creating a purchase request. Then the system transfers these requests to the Ariba Buying and Ariba Sourcing modules. Then category specialists collect all requests by category and create procurement projects. They use pre-defined project templates based on key project parameters, including purchase type, purchase amount, and the number of procurement stages.

All of this information is saved in the procurement project. The head of procurement can review the status of all projects and analyze the results and effectiveness of procurement procedures. The system automatically transfers the data required for creating a purchase order and a contract to the ERP system, eliminating manual data entry errors. Ariba SIPM helps to keep the supplier database up to date.

Customer Business Outcomes

The company managed to fully digitize its supply and procurement process with SAP Ariba solutions, giving more transparency to the management team and shareholders. The system helped to provide better control for the purchasing plan and control over data from request to payment. By ensuring on-time delivery of materials and equipment, and by providing efficient operational planning, the company improved its EBITDA targets. In addition, purchase prices decreased by 5-7% as a result of using the solution. The workload on category managers has also been reduced due to the elimination of manual processing.