In our last article, we discussed Ardent Partners’ recent report focused on Collaborative Sourcing which we define as the process “which blends traditional sourcing approaches with more robust category strategies, more penetrating views of supply markets, and deeper collaborative ties with suppliers is how the next generation of sourcing professionals will keep the business charging forward today while preparing to meet tomorrow’s top challenges.” Today we highlight a case study from that same report which can be downloaded here (registration required). The report was sponsored by Ariba.
In 2009, the executive team at a Large Financial Institution asked its Enterprise Spend Management (“ESM”) team how much money the company was spending on consulting. The team could not answer the question very well since it lacked spend visibility and struggled with misclassified spend and limited reporting or data mining abilities. The company was operating with decentralized sourcing, contract, and procurement processes and the ESM team saw an opportunity to centralize and automate operations and drive significant savings. Referring to that earlier time, the Vice President of ESM recalls that “people were able to buy whatever they wanted without a contract. We saw a big opportunity to change that and drive savings.”
The ESM team made the business case to automate the entire source-to-settle process and selected Ariba’s suite of solutions. The team knew that it also needed to have the right organization and policies in place if it was going to achieve its targets and requested and received approval for (1) an Executive Steering Committee (2) the ability to set policies, standards and processes and (3) support and resources for a comprehensive communication and change management program. The Ariba system was deployed and the team experienced several large early wins. It now has great program momentum and is on target to achieve its three year goal.
The VP of ESM believes that there are several key takeaways that have positioned the ESM team for success:
* Collaboration with business partners (internal and external) is the key to success
* Understanding business drivers and end-to-end value chain is the key to strategic sourcing and establishing a win-win partnership
* Early intervention and relationship building are vital ingredients for long-term success
* Having an integrated solution has been a significant key in allowing the team to adopt a collaborative sourcing approach