Ariba broadens offering to complete production materials sourcing and management

Yesterday saw the launch of Ariba Enterprise Sourcing, a significant upgrade to its Ariba Sourcing application that the firm claims will take e-procurement to the heart of manufacturing production materials sourcing and management. Essentially, the new software enables buyers to manage whole materials and components sourcing processes, if need be including defining requirements, with on-line managed RFIs (requests for information), RFPs and RFQs (requests for proposals and quotations), to qualifying and selecting suppliers across all of direct materials, resources and services. The firm insists that manufacturers will quickly save money not only by automating and improving sourcing processes, way beyond the ideas of reverse auctions and the rest, but also through negotiating better contracts, enforcing compliance to them and executing on the deals. Speaking yesterday in London, John Watton, Ariba’s UK marketing director, said: “We’ve been doing a lot of due diligence with our customers. They want different ways to manage the different categories of spend, better ways for all the processes from supplier identification, to user compliance with our workflow, and on to payment. So now we’re all about spend management.” Watton concedes that e-procurement has fallen somewhat from grace in recent months, but counters: “For every one detractor I can show you 10 great happy customers. [The industry] has gone through a period of maturation.” He insists: “We have a pedigree in e-procurement (albeit predominantly in indirects). So now we’re releasing a new front-end for the job that will do the rest.” And Watton says beta testing at an unnamed high tech manufacturer in the US has proven the new software in a big way. “They chose toner cartridges for a six month indirect commodities pilot, and saved 36%, $70,000 in that period. “Then production, which had said it couldn’t possibly work for them, chose a particular transistor they needed to source. And they got 20% savings in six months – which was worth $542,000 – and what historically took them three or four months to source took just 16 days.” Quite an improvement. And he also says that whereas the buyers conventionally had had to satisfy themselves with just two appropriate suppliers, “we provided our technology and services, went out on-line and did some discovery, and expanded that to eight. Then our optimising software helped them rate the best selections.” Meanwhile, Susie Ross, purchasing manager, Honeywell Federal Manufacturing & Technologies, said: “Ariba Enterprise Sourcing helps us create a complete procurement decision support and compliance platform. Requisitioners can write requisitions in Ariba Buyer, using information and drawings from design software; generate the RFP into Ariba Enterprise Sourcing to handle its distribution and management of the bidding process; and, once the bidding and awarding process is done, send the purchase order directly to the supplier over Ariba CSN (Commerce Services Network) – all in one streamlined process. Watton accepts that this example is hardly typical for the rest of general discrete manufacturing, but claims Ariba’s new front-end system, its classification system and its manual services will handle just about any direct production e-procurement. “We have a content management engine; we have complex parts attribute management; and we have a team of experts... We have a public directory of 45,000 suppliers (mostly for indirects and high tech) and we can create private directories.” Paul Hampton, Ariba’s product manager in Europe adds: “We’ve got experience in sourcing commodity and vertical market components, with templates of attributes to get buyers up and running. Senior procurement people can then add attributes and line items to make those complete for them.” And he suggests that even in comlex manufacturing the Ariba templates are “75% complete”, with greatest strengths being in high tech, automotive supply and aerospace. Says Watton: “We’re offering find, negotiate and contract management here, backed by our compliance engine, workflow and people to make it stick.” The new application is integrated with Ariba Buyer, to handle the procurement execution side, and Ariba Enterprise Sourcing users get access to the Ariba CSN, providing a single point of connection to all the suppliers on its public directory. Ariba expects average savings of “13% on purchasing costs, and creating efficiencies that reduce the cycle time and buyer effort required to conduct and manage sourcing by greater than 30% and 50% respectively.”