John Deere Plows into e-Procurement

Ariba to build platform

Oct. 19, 2000  Deere & Company announced Thursday that it has selected Ariba to provide an e-procurement platform for the agricultural and construction equipment sections of its company.

Deere, which has an annual spend of about $7 billion, will roll out its e-procurement program in stages, beginning with the purchase of indirect materials and services for the companys factories, engineering centers and sales and marketing offices worldwide. Deere employees will use Ariba Buyer to order goods directly from their desktops, and the system will direct the spending to preferred suppliers and B2B marketplaces.

Deere will also use Ariba Marketplace Network Edition and Ariba Dynamic Trade applications to streamline purchasing processes and create new Internet opportunities for B2B transactions.

We are aggressively pursuing our objective to run lean and will use Ariba e-commerce solutions to implement a more efficient Internet-based system in supply management, said Dave Nelson, John Deeres vice president of supply management. We will save time and money in our purchasing process and develop other capabilities in e-commerce transactions.

The Deere & Company announcement is the second bit of good news in two days for Ariba, which, on Wednesday, reported it had come within $1.1 million of breaking even for the fiscal quarter that ended Sept. 30.

Ariba is not Deere's only partner in e-procurement. Deere announced in August that it had selected online reverse auction site FreeMarkets ( as the manufacturer's platform for sourcing $150 million in production and non-production materials, including some components that go into Deere equipment. Deere had been running a pilot program with FreeMarkets since February.

During the pilot trial, Deere competitively bid more than $50 million in goods in a range of product categories, streamlined its supply base, consolidated the spending of various divisions and increased the speed of its evaluation and negotiation processes, according to Jim Olson, supply management director for Deere Power Systems Group.

In May, for example, Deere conducted an online auction for more than $26 million of components for products made by its equipment divisions. More than a dozen suppliers from around the world participated in the event, which consolidated spending on those components by three Deere plants, two of them in the United States and one in France.

Deere & Company is a major producer of agricultural equipment; a leading manufacturer of construction, forestry, commercial and consumer equipment and a business leader in parts, engines, financial services and special technologies.

The company, founded in 1837, grew from a one-man blacksmith shop into a worldwide corporation that, today, does business in more than 160 countries and employs approximately 37,000 people worldwide.

Editor's Note: Deere & Company Vice President for Worldwide Supply Management Dave Nelson discusses the impact of e-procurement on buying organizations and on the purchasing profession in the article "America's Number One Purchasing Professional" in November issue of iSource Business.