4 WAYS A PROCUREMENT SUITE CAN SUPERCHARGE YOUR ERP

Transcription

1 4 WAYS A PROCUREMENT SUITE CAN SUPERCHARGE YOUR ERP

2 ABSTRACT In order to improve the value of your procurement processes, operate more strategically, and increase savings, you ll need to look beyond your ERP. According to industry analysts, this means adopting a cloud-based procurement solution. ABSTRACT As a manufacturing CPO, meeting the changing needs of your business can be a tall order. The growing list of priorities from the C-suite range from finding innovative ways to use data in the decision-making process to digitizing the business. At the same time, you re tasked with keeping costs down, managing risk, and demonstrating the value procurement provides to the organization. The trouble is, your business is moving faster than the tools you have to support it. Your enterprise resource planning (ERP) system isn t flexible or agile enough to keep up with the pace of doing business in a digital world. Nor is it robust enough to support the new business processes and innovations that your CEO and shareholders demand. What s more, lines of business complain that the ERP interface is too complex, and find it easier to go outside of the system to better address their procurement needs. In order to improve the value of your procurement processes, operate more strategically, and increase savings, you ll need to look beyond your ERP. According to industry analysts, this means adopting a cloud-based procurement solution. The emergence of cloud-delivered, specialized procurement solutions is allowing procurement organizations access to options that are a better fit, enabling them to manage spend more efficiently. Gartner 1 02

3 CONTENTS CONTENTS 1. Your ERP Can t Do It Alone Get Value With An eprocurement Suite Unlock The Potential of Procurement Sources... 7

4 YOU CAN T DO ERP ALONE YOUR ERP CAN T DO IT ALONE ERP is considered the backbone of the enterprise application. Manufacturers rely on their ERP system to streamline their core business processes, automate business functions, analyze data, and improve information flow across the organization. But as demands for agility and innovation continue to rise, these same manufacturers are discovering that there are many areas where this monolithic application falls short including procurement. Here s why: Most native ERP procurement solutions are focused on transactional, purchase-orderdriven procurement of simple goods and services. In many cases, integration with existing financial modules is favored over a solution s ability to service today s evolving procurement needs. In the strategic sourcing space, none of ERP native modules have been able to compete with specialists in areas such as spend analytics, e-sourcing, contract life cycle management or supply base management. 2 Support for supplier collaboration (like catalog and content management) is inadequate, or worse, nonexistent. Because of these shortcomings, organizations are beginning to move away from the onesize-fits-all promise of an ERP to more specialist solutions that better meet the needs of their business. According to Gartner, only 38 percent of companies are holding on to a traditional monolithic ERP strategy, and analysts expect that number to decrease to 11 percent by GET MORE VALUE WITH AN eprocurement SUITE When it comes to digital procurement, manufacturing CPOs believe that renewing operational and strategic procurement tools, as well as analytics, will have a major impact in the next two years. 4 Here s how an eprocurement suite can go beyond your legacy ERP system to help add value to your processes. 1. OPTIMIZE YOUR SPEND. A procurement suite goes beyond simply managing transactions to helping you understand the whys behind your spending. In addition, you can realize tangible spend savings through strategic sourcing, spend reduction and identifying cost-saving opportunities. 04

5 GET MORE VALUE WITH AN EPROCUREMENT SUITE When Vulcan Materials Company, the largest US manufacturer of construction aggregates, wanted to gain more visibility into spend categories related to their purchase order, PCard, and accounts payable transactions, they turned to the analytics capabilities of their procurement solution. By harnessing the data from their ERP and existing systems, the manufacturer normalized more than 75,000 suppliers, and classified more than 98 percent of their spend ($3 billion) in just 12 weeks. We were able to look deeper into the line level data and see with greater accuracy where we are spending, who we are spending with, and identify specific areas where there are opportunities to reduce cost, Source: Michelle Lax, Procurement Product Manager, Vulcan⁵ 2. INCREASE DATA TRANSPARENCY. Whether you work with one ERP or many systems, increasing data transparency is an important way to strengthen your procurement processes. This can be especially challenging when data is scattered across multiple systems in different geographic locations. MTU Friedrichshafen the core business of Rolls-Royce Power Systems knows this all too well. A global manufacturer of high-speed engines and propulsion systems for ships and heavy vehicles, MTU had information on suppliers and pricing spread across four SAP systems. They wanted a central location that made it easy for all of their purchasing locations to access supplier and price data, while ensuring materials were purchased at the same prices worldwide. By implementing an eprocurement solution, they were well on their way to achieving their goals. By interfacing with their SAP systems, the procurement solution now holds master records for their suppliers, and data can flow freely between all systems, ensuring that buyers can easily access the most updated information, and are working with the same data.⁶ 3. REALIZE FASTER TIME TO VALUE. Adding another module to your existing ERP system might seem like an easy way to get more value from your procurement processes. But when you factor in the longer implementation times, sluggish onboarding, and slow adoption rates typical of most ERP implementations, you realize that the effort far outweighs the financial investment. By contrast, eprocurement solutions are more Customers should find the balance between ERP suites that will reduce the need for integration when deep functional differentiation is not needed, and cloud-point solutions that will offer a competitive advantage and quick time to value for a particular process. Source: Gartner⁷ 05

6 UNLOCK THE POTENTIAL OF PROCUREMENT nimble, providing a quicker return on your technology investment, whether you re integrating with an ERP or not. Because these modern solutions are developed with consumer-like interfaces, they re easier to use, and allow you to reap immediate benefits. 4. MAKE INTEGRATION EASY. The power of any new solution lies in its ability to work well with your existing systems. When data moves easily back and forth between ERP and procurement, you reduce the chance for duplication, lighten the IT workload, and can truly make the most of your technology investment. For Hologic, a medical products manufacturer, integration between eprocurement and their ERP helped the company save $1.5 million from its annual spend. Prior to implementing the procurement solution, the company lacked visibility into their processes and potential savings opportunities due to the high use of PCards and lack of a centralized solution. These manual purchase requisitions also pushed approval times to three business days and beyond. Hologic adopted an eprocurement solution to add value in areas beyond what their current SAP Supplier Relationship Module could offer. The new solution streamlines approvals by flagging items like hazardous materials or computer equipment that require specific approval, and automatically routing requisitions within their ERP to the appropriate group. Approval times have gone from days to minutes. UNLOCK THE POTENTIAL OF PROCUREMENT The spend performance that we have been able to deliver through [our eprocurement solution] has made the team a significant catalyst to raise our competitive advantage in the biotechnology marketplace. Maricel Mustion, former Senior Strategic Buyer, Hologic⁸ The pace of digital business has made slow-moving legacy systems a liability for procurement organizations. But with the right procurement platform, you can energize your ERP to realize savings and strategic advantages you never thought possible. To learn more about how an eprocurement solution can supercharge your ERP, contact us today for a free consultation

7 BARRIER 02/ BARRIER 03 SOURCES ¹ Magnus Bergfors, Nigel Rayner, The Impact of Postmodern ERP on Procurement, Gartner, September 13, ² Magnus Bergfors, Nigel Rayner, The Impact of Postmodern ERP on Procurement, Gartner, September 13, ³ Mike Guay, Ranadip Chandra, Nigel Montgomery, Market Guide for Product-Centric Cloud ERP Solutions, Gartner, February 3, ⁴ The Deloitte Global CPO Survey 2017, Deloitte, ⁵ Vulcan Materials Strengthens Relationship with JAEGGER to Drive Greater Spend Visibility, JAGGAER Press Release, February 21, ⁶ Global Standards, Local Flexibility, JAGGAER Customer Success Story. ⁷ Mike Guay, Ranadip Chandra, Nigel Montgomery, Market Guide for Product-Centric Cloud ERP Solutions, Gartner, February 3, ⁸ Hologic Creates Strategic Advantage with Procurement Solution, JAGGAER Customer Success Story. 07

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