Given that imperative, the supply chain function's role at the company is to work assiduously to lower the company's costs, thereby freeing up precious dollars that can be spent on developing new products, assuring the company's position in the marketplace. To that end, AstraZeneca — formed by the 1998 merger of competitors Astra and Zeneca — began implementing an e-sourcing tool from solution provider Ariba, starting in 2001. Currently the company has deployed that tool globally, and AstraZeneca is now rolling out other pieces of Ariba's spend management platform, such as Buyer, Contracts and Invoice. Eventually, the company's plans call for putting all its indirect spend — $2.2 billion in the United States alone — through the Ariba system, with the exception of very low-dollar, high-volume goods that will continue to be bought with a purchasing card.
Silva says the company already has achieved significant savings by running reverse auctions for certain services and some maintenance, repair and operations (MRO) goods through the e-sourcing platform, averaging 15 to 20 percent cost reductions. (Silva declined to specify which goods AstraZeneca has put through the system or to quote dollars and cents savings because that information is considered proprietary.) "Those [savings] really were credited to the technology," Silva says, "because we had already had what we considered to be some pretty solid contracts in place, but we were able to squeeze a little more."
Not that Silva believes that technology is a panacea. On the contrary, he believes that in the long run supply chain practitioners must use technology to free themselves of tactical chores — the order processing and paper shuffling — so they can concentrate on more strategic work. "Just using the technology to squeeze down costs may help you get cost savings in the short run, but long-term savings are going to come from working with your suppliers to help them lower their costs so that they are getting more out of it while you are also getting savings," he says.
[SIDEBAR] The Practitioner's Perspective: Countrywide Financial Corp.
Countrywide Financial Corp. has taken a customer-centric approach to applying technology to advance its business and become more competitive, according to Richard Jones, managing director and chief information officer at the Calabasas, Calif.-based company, which is number 209 on the Fortune 500 list. "Our drivers are primarily about the customer," says Jones, explaining that the company's e-business efforts have been directed toward integrating the institution's Web presence with its telemarketing and branch office operations. The goal of this transformation from "brick-and-mortar" to "brick-and-click": to create a better customer experience and therefore to increase customer loyalty, ultimately driving higher revenues.
Currently, Countrywide's online presence accounts for about 50 percent of its B2B business, and about 25 percent of its B2C business, according to Jones. That's up from single-digit percentages back in 1999, a year when online upstarts like e-Loan and others looked set to give Countrywide and its "brick-and-mortar" brethren stiff competition as the Internet boom unfolded. At that time, Jones says Countrywide decided that while the e-upstarts had good Web sites, Countrywide itself had a good business model but needed to improve its e-business assets to compete head-to-head with the newcomers.
To that end, the company undertook initiatives to upgrade its online presence, culminating last November in the debut of a new Web site, CFC portal, that ties together Countrywide's various online offerings — home loans, banking, insurance — allowing customers to access various services through a single sign-on. Moreover, by integrating these online services with the company's offline systems, Countrywide has been able to create a customer relationship management environment that facilitates a potential client's transition from the CFC portal, to contact with one of the company's call center representatives, to a visit to a branch office down the street to close a deal. "We view e-business as just another channel, integrated with their other channels, rather than as something separate from the 'brick-and-mortar' sides of our business or as a different business model," says Jones.
Jones, who was named Citigroup Smith Barney CIO of the Year Award for 2003, says that Countrywide's application of e-business technology to improve its competitiveness is nothing new. This is a company, after all, whose CEO, Angelo Mozilo has said that Countrywide is a technology company that happens to find itself in the financial services industry. "We've always viewed our technological capital as the key element that gives us a competitive advantage," Jones says. "That's been understood since our beginnings in 1969, when we were up against the large banks that had a lot of investment capital, and we were the little guys that were starting a mortgage banking company. Technology was really the way we could distinguish ourselves, and we've always sought technological superiority in what we do. It's how we stay ahead of the competition."