By Andrew K. Reese
Oracle Corporation, the world's largest enterprise software company, has a well-established e-procurement process based on the company's own solutions. But Oracle was challenged by a supplier content management process that had the company's procurement staff loading and managing vendor catalogs within the e-procurement system. To accelerate supplier enablement and shift its buyers onto more strategic work, the company began using a new tool that put the suppliers in the driver's seat.
Aiming for "Touchless Procurement"
Oracle's global electronic procure-to-pay process is based on its own version 11.5.10 Internet Procurement, Internet Supplier Portal and enterprise resource planning (ERP) solutions in combination with the company's electronic supplier network. End users "shop" online through the Internet Procurement solution in the same way that consumers use sites like Amazon.com, purchasing items identified in Oracle-maintained catalogs or external "punch-out" catalogs by adding them to a shopping cart. When users check out electronically, the system automatically generates a requisition, routes it for approvals and then creates purchase orders (PO) to the appropriate suppliers for fulfillment. POs are sent and invoices are received using extensible markup language (XML) through Oracle's Supplier Network. Finally, suppliers are paid electronically to gain the additional advantages of electronic payment through EFT and to reduce the associated administrative burden.
It all adds up to a classic e-procurement process that Greg Tennyson, Oracle's vice president for global procurement, travel & disbursements, calls "touchless procurement." And it pays off for Oracle by allowing for, among other things, significantly reduced PO processing costs. "We've got our touchless process down to an order of magnitude that you would have with a credit card transaction," Tennyson says. "So it only costs about $10 to $20 per transaction."
While Oracle does have a global deployment of its e-procurement system, the company's different regional units have varying degrees of access to catalog content within the system. For example, more than 70 percent of Oracle's almost 400,000 purchase requisition lines in North America are catalog-based, meaning that users can find most of what they need in the catalogs available through the company's e-procurement system. That allows Oracle to capture a tremendous amount of its North American spend through the procurement system, with all the efficiencies inherent to putting greater amounts of spend under management. However, until recently, for the company's Europe, Middle East and Africa (EMEA) and Asia-Pacific regions, less than 20 percent of the purchase requisition lines were catalog-based.
Enabling Supplier Self-enablement
Increasing the catalog content available to end users in EMEA and Asia-Pacific would be, in principle, an easy enough process. Using functionality available within their e-procurement system, Oracle's procurement staff has the capability to bulk load catalog content into the system. But, from Tennyson's perspective, the thousands of hours that it would take the buyers to load and manage content from thousands of suppliers could be much better spent on higher-level projects like strategic sourcing or supplier relationship management. "We made the decision to refocus our strategic buyers on more value-adding activities and identify a third-party that could meet the [catalog-management] requirement," Tennyson explains.
According to Aberdeen Group's "Supplier Enablement Benchmark Report" released last year, companies are pursuing several different strategies for meeting the supplier content challenge, including a buyer-managed process (such as Oracle was using), a supplier-managed process and supplier networks and catalog syndication hubs. In Oracle's case, Tennyson and his staff opted to work with an enabler called Aravo Solutions, based in San Francisco.