Getting Deeper Into SRM

Atlas Copco Wagner expands use of supplier relationship management software after larger-than-expected ROI

Bellevue, WA  December 6, 2002  Entomo Inc., a supplier relationship management (SRM) provider has said today that Atlas Copco Wagner Inc. (ACW) would upgrade to version 2.5 of Entomo SmartHub/SRM and expand supplier access to the system.

ACW was an early adopter of Entomo's application, selecting the provider as part of a company-wide initiative to eliminate manual processes and establish real-time communications flow with suppliers of materials, repair and operations (MRO), indirect, and direct materials. According to ACW, during its first 12 months of use the Entomo system increased ACW's return on its investment with more efficient order processes, reduced communication costs with its supply base and more visibility into pending orders.

In addition, ACW said the Entomo system enabled ACW to channel the information it receives from its supply base into its enterprise resource planning (ERP) system. ACW suppliers also have the option of integrating the Entomo system into their business systems, thereby speeding up order fulfillment and eliminating the need to re-key orders.

As a result, ACW announced that it plans to expand its Online SRM initiative by including a full 30 percent of its direct materials suppliers by year-end. The company is considering implementing several of the Entomo system's advanced capabilities, including multi-site collaboration and vendor-managed inventory (VMI).

The company is also working with Entomo to integrate ACW's strategic sourcing and inventory management activities with other global companies in the Atlas Copco Group.

"It would have taken us a significant amount of time and money to develop a custom solution for our supplier integration and communication problem," said Don Larson, procurement planning manager for ACW. "With the system we have cut the number of information transfers required and improved the flow of data from suppliers-efficiencies we hope to pass along to our dealers."

The adoption of the Entomo solution at ACW is an example of a growing trend that points towards more companies implementing systems to better manage relationships with their suppliers.

According to Gartner Analyst David Hope-Ross: "Just 5 percent of Global 2000 enterprises are using some form of SRM now...but that could jump to 30 percent within four years. SRM represents an opportunity for enterprises to improve their profitability picture significantly, which is more important now than ever before."