Emerson finds multiple uses for procurement software
By Staff -- Manufacturing Business Technology, 8/1/2006 12:00:00 AM
The name Emerson has long been associated with innovative technology for industrial, commercial, and consumer markets. But soon this St. Louis-based conglomerate may be well known for its innovative use of strategic sourcing software.
Among other things, Emerson uses the sourcing tool it purchased from i2 Technologies to forecast the potential procurement savings associated with acquiring another company. "We can take an acquisition that might otherwise be marginal, and use the tool to quickly drive through procurement savings," says Tom King, corporate procurement material analyst for Emerson.
This is possible, King adds, because data from a new company can be added to the comprehensive procurement database Emerson created with its sourcing application. This includes prices paid, payment terms, the manufacturer's part numbers, parametric details, freight terms, and any associated contractual requirements about material purchased at each of Emerson's 60-plus operating units.
Apart from its usefulness in vetting potential acquisitions, King says this sourcing package has far-reaching value in Emerson's ongoing operations. Individual business units can compare the deals they get from their suppliers with the deals available to other units. Better still, the parametric information stored on purchases—such as size, material, and specifications—enables procurement officers to search for deals available on equivalent parts from alternative suppliers.
Having purchased this application more than six years ago, King believes Emerson knows how to use it for maximum benefit. One lesson learned: The greatest value comes from widespread use.
"There's a positive network effect," explains King. "The more people buy into the system, the greater the results it produces." That's why each of Emerson's 275 locations is required to use the i2 sourcing application.
