Siemens saves 40% on direct materials through e-supply chain collaboration

Siemens Power Generation Group says it’s now saving up to 40% in direct materials procurement and management costs world-wide, and also dramatically reducing cycle times, as a result of collaborative operations powered by e-procurement software vendor Commerce One’s Collaborative Platform 5.0 suite and its SAP mySAP Supply Chain Management implementation. The systems are effectively streamlining the firm’s manufacturing supply chain activities by helping communications between Siemens’ procurement, logistics and accounts payable divisions and its supply base. It’s founded on global procurement provider Siemens Procurement and Logistics Services (SPLS), which has been using Commerce One software to power its buy side e-marketplace, click2procure. SPLS is now expanding its procurement and supply chain services to other Siemens divisions and third party customers in the US, Canada and Germany. SPLS covers the entire order-to-pay cycle for direct materials via a web-enabled purchase order service. It allows Siemens’ buyers to place POs in their SAP system and transmit them via the Internet to suppliers that can in turn update Siemens’ SAP system I real-time with acknowledgements, advance shipment notices and invoices. For suppliers, there’s also a self-service capability allowing them to check the status of their invoices and to retrieve technical documents and so forth. It seems an excellent example of SAP enterprise systems spanning Siemens’ manufacturing supply chain at the automated longer range planning and scheduling level, working in association with buyers at the negotiation and operational level. “The direct material solution ensures a higher level of order accuracy and results in significant savings in process cycles required for fax, e-mail or postal exchange of documents,” says Dr. Ruediger Reitzig, director of material e-procurement solutions for SPLS. “We have reduced the cost of direct materials purchases, as well as purchasing process time from approximately three days to real-time. We can even process emergency orders for our customers within 24 hours, thereby improving customer satisfaction significantly.”