Aravo offers a set of Web-based, on-demand tools for automating much of the supplier enablement process, or what Aravo calls the "supplier information lifecycle." The toolset allows suppliers to self-register through Aravo's online portal and then load, edit and manage their catalog content for syndication to buying companies' e-procurement systems. The solution puts the onus for updating content and maintaining data accuracy on the suppliers, but at the same time it provides a dashboard for buying organizations so that procurement executives can monitor their suppliers' activities within the platform. After a supplier has loaded and cleansed the catalog data in the solution, the system provides exception reporting tools that verify the data for accuracy and completeness. Once the data check out, the buying organization "grabs" the new catalog content and posts it within the company's e-procurement system.
Increasing Procurement's Productivity
Oracle began its engagement with Aravo in 2004 by undertaking a pilot project in EMEA involving some 20 suppliers and 200 catalogs. The pilot demonstrated the relative speed and ease with which the company could onboard suppliers into Oracle's e-procurement system in EMEA, Tennyson says, and the initial success of the pilot led Oracle to expand its engagement out across its supply base in the region. Within months, the solution allowed Oracle's procurement staff in EMEA to double the number of suppliers that they were onboarding, from 50 to 100 per month. Moreover, the new process enabled by the Aravo solution allowed Oracle to reduce its first catalog submission error rates from 35 to 40 percent down to just 2 to 5 percent. Finally, Oracle has estimated that the initiative allowed it to increase the percentage of its purchase requisition lines that are catalog-based in EMEA from 10 to 20 percent up to 60 percent. And by driving more of its spend through catalogs in its e-procurement system, the company has been able to boost its spend under management to an estimated 75 percent, up from 45 percent, for the EMEA region.
Even as it rolled out the project in EMEA, Oracle also extended its use of the supplier enablement solution to its Asia-Pacific region. Here, too, the project met with success, allowing Oracle to increase its catalog-based requisition lines to about 40 percent to date. As in EMEA, that has helped the company drive its spend under management in the region from about one-quarter (23 percent) to two-thirds (68 percent) without adding additional procurement headcount. Ultimately, Tennyson says the company is looking to increase the level of catalog-based purchase requisition lines up to about 70 percent in both EMEA and Asia-Pacific, as well as convert the suppliers in its North American e-procurement system to the Aravo solution as well. That will allow Oracle to move its procurement staff away from this tactical activity and pass the catalog maintenance responsibility largely back to the suppliers.
In choosing which suppliers to target for enablement in EMEA and Asia-Pacific, Oracle began with the types of commodity categories that had been successfully enabled with catalogs in North America — categories like IT peripherals, laptops and desktop computers, office supplies and even some service categories like temp labor. The company also has expanded into new categories where appropriate, for example tackling mobile telephony in EMEA, where cellular device adoption is higher.
Putting Suppliers in the Driver's Seat
Tennyson says that Oracle did not encounter significant resistance on the part of its supply base to moving to the Aravo solution, although the company did need to undertake some education among its targeted suppliers to explain the benefits of the new process. "Once they have seen Aravo, they've bought into the concept of self-authoring because it allows them to control the data quality," Tennyson says. "They no longer have to rely on a buyer to manage the catalog content. They're empowered to do that themselves, and they'd rather be in the driver's seat." Suppliers don't need to invest in any particular technology to support the program, as all they need is a Web browser to load and manage their content. Tennyson says that the principle issue with suppliers has been ensuring continuity and consistency in how a supplier manages the content; staff turnover at a vendor may necessitate follow-up training for the new employee to ensure that the catalog continues to receive updates.
The normal success factors that apply to any technology implementation have been valid for Oracle's deployment of Aravo, according to Tennyson. "You need to have an executive mandate and a clear understanding of the project's value proposition so that you can articulate the message and drive it within your organization," he says. "And obviously you need the underlying technology around touchless procurement: a Web requisitions tool like Oracle Internet Procurement, an ERP application, the functionality around generating a PO without buyer involvement, XML messaging and a network to deliver and receive those messages."