SAP Ariba Tames Complexity of Direct Materials Sourcing

Ariba Collaborative Sourcing Professional fuels an efficient and simple digital process for purchasing direct materials

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Today’s consumers want products with the latest innovations customized to their needs. And they want them now. Procurement plays an important role in bringing these products to market quickly, but with hundreds or thousands of high-quality components that need to be sourced at low cost to build them, it isn’t an easy task. SAP Ariba is helping to simplify it with Ariba Collaborative Sourcing Professional. The latest addition to SAP Ariba’s sourcing applications, the cloud-based offering provides a single solution through which companies can drive an efficient digital source-to-contract process, and procure direct materials with the same simplicity and speed as indirect goods and services.

“Direct materials sourcing carries a unique set of challenges—it is driven by production planning rather than requisitions, there are enormous variations between different industries in how it is done, it’s usually time critical, and it is executed across many different enterprise systems and processes,” said Bill McBeath, chief research officer, ChainLink Research. “To do it well requires connecting the systems and processes that support procurement across the end-to-end process and dimensions of collaboration—from design to planning and forecasting to execution, logistics/delivery, quality and finally reconciliation/settlement—both internally and externally.”

Forging Connections

This is exactly what Ariba Collaborative Sourcing Professional is designed to do. Delivered on a global platform—the Ariba Network—the solution integrates seamlessly with enterprise resource planning (ERP) and execution systems to connect the people, processes and information procurement needs to manage all of their sourcing activities in a simple, smart and open way.

“We continually strive to improve our procurement system to ensure that the products we purchase meet our standards of quality, cost and delivery, as well as to build good business relationships with our suppliers for trust, cooperation and mutual benefit,” said Julie Daugs, director of corporate supply chain management at Yaskawa America Inc. “Ariba Collaborative Sourcing Professional gives us one platform from which we can manage both our direct and indirect spend, driving greater simplicity and efficiency, and reduce our costs while creating equal and fair opportunities for our partners.”

Accelerating Results

But procurement is about more than just efficiencies and savings. With Ariba Collaborative Sourcing Professional, global procurement organizations can:

  • Get new products to market faster by integrating sourcing and product design teams.
  • Model product costings at the bill of material (BOM) level to understand the cost impact of different assemblies and components.
  • Track item costs across time, suppliers and BOMs to negotiate more savings.
  • Achieve contract compliance and stop leakage through ERP integration.
  • Source and contract faster by integrating master data across systems.
  • Manage suppliers at the item or plant level to enhance supplier qualification and performance.

“Procurement has made great strides in indirect spend by leveraging technology to create a consumer-simple, yet compliant process to manage it,” said Tony Harris, general manager of direct procurement solutions, SAP Ariba. “With Ariba Collaborative Sourcing Professional, they can bring the same efficiency and simplicity to direct material categories and open the door to innovations that transform their business.”

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