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Founded in Chicago in 1917, John Crane has the kind of pedigree that makes it a poster child for e-procurement, and its experiences to date offer some lessons for other organizations seeking to implement e-procurement in a multinational corporation.

The company, with its North American headquarters in Morton Grove, Ill., is part of the sealing solutions division of U.K.-based Smiths Group PLC, a $4.5 billion engineering and manufacturing company that, besides sealing, also specializes in the aerospace, medical and industrial sectors. With annual sales of about $1.1 billion, John Crane employs more than 9,000 people at 200 facilities in 47 countries, including 25 manufacturing plants and 135-plus service centers.

The sprawling organization made indirect spending a disaggregated nightmare, according to Colin Clark, director of procurement for John Crane. "The indirect spend was carried out by many different sites that were not connected by a common procurement system," Clark says. "Contract take up was limited and difficult to track, communication was poor, and smaller sites were not aware of activity in larger sites." The company's facilities also used a variety of ERP [enterprise resource planning] systems, making it problematic to leverage John Crane's size and total spend to achieve cost reductions on its indirect purchases.

John Crane and parent Smiths Group began looking at providers of e-procurement solutions for indirect spend in early 2000, eventually settling on Mountain View, Calif.-based Ariba. Clark said the functionality that Ariba offered in its software and the operating costs for the system were key factors influencing the choice of the provider. Ariba's global reach was another factor. Interestingly, although Clark did not say what the Ariba system cost John Crane, he asserts that, given the potential return on the company's investment in the system, "price was a non-issue."

Even as they were looking for a solution, John Crane and Smiths Group were also searching for a consulting company to assist in the implementation. The criteria, Clark says, included the ability to provide support in both the U.K., Europe and the United States and a willingness to help John Crane and its parent company develop in-house expertise so that the two companies could manage the e-procurement system following the implementation. By April 2000 Smiths Group had selected Chicago-based CCP global and European-based Archway Consulting, two consulting companies that partnered to offer transatlantic implementation services for Ariba systems.

To get its employees onto the new system, Smiths Group "regionalized" its facilities, bringing groups of its U.K., U.S. and European sites together, 10 to 15 at a time, for train-the-trainer conferences. Once the conferences were over, the facilities' staffs had all the tools they needed to do an implementation at their own site. The target completion date for the implementation is the end of 2001, by which time somewhere between 2,000 and 3,000 users will be purchasing indirect goods through the system.

The Smiths Group had the equivalent of eight full-time employees working on the project and, in addition, had incurred 113 consultant person-days on the implementation by early July. The company is measuring its return on investment in terms of savings by commodity and has targeted a 7.5 percent reduction in costs on the $150 million to $200 million of its indirect-materials purchases that Clark calls "Ariba-addressable spend."