Soft landing leads to pliable spend-management program
By Staff -- Manufacturing Business Technology, 7/1/2006 6:00:00 AM
Few companies epitomize the ups and downs that the entire high-tech industry has experienced over the past decade more than Ariba. Less than two years after introducing the first e-procurement application, Ariba launched one of the most successful initial public offerings Wall Street had ever seen. Then, even more suddenly, the company's survival seemed in doubt as the post-2000 economic downturn caused both its sales and stock price to plummet.
Recently, however, Ariba's business appears to have stabilized, and industry analysts believe it faces a prosperous future as soon as the vast majority of business executives catch on to the value its solutions offer. Having expanded well beyond systems for automating simple tasks like purchasing office supplies, Ariba now offers a broad range of applications for a group of procurement-related processes it dubs "spend management."
Spend management involves first analyzing how much a company is spending with various vendors, and then finding ways of getting not just better prices, but also higher-quality goods and favorable delivery terms on a consistent basis. Lou Unkeless, Ariba's senior VP of marketing, says Ariba's solutions and expertise in this area extend to the purchase of direct materials—those used in building products.
Unkeless also wants manufacturers to know that Ariba offers multiple ways to quickly initiate a spend-management program. Buyers can tap into the Ariba Supplier Network, an open business transaction platform with links to more than 140,000 qualified suppliers. There also is the option of subscribing to on-demand applications that give users quick access to everything from spend-analysis functionality to request-for-quote preparation and invoice and payment, without installing new software.
For those seeking an even easier route, Ariba can manage all of a company's spend-management functions through its Managed Procurement Services offering.
With all these choices, says Unkeless, "There's no reason not to invest in spend management."
Analysts including Mickey North Rizza of Boston-based AMR Research argue that managing supplier relationships—a central tenet of Ariba's spend-management vision—is becoming "a strategic imperative," and companies that have adopted solutions like Ariba's are getting a leg up on the competition.
The growing list of satisfied Ariba customers includes Pittsburgh-based Alcoa, a leading aluminum producer; and Harris Corp., a Melbourne, Fla.-based manufacturer of microwave, radio-frequency, and broadcasts communications systems that has outsourced its entire procurement operation to Ariba.
Hagerstown, Md.-based JLG Industries, which makes aerial work platforms, turned to Ariba when its manual processes for securing production materials were no longer adequate for the rapidly growing business.
"Our ERP system has no advanced procurement functionality," says Bryan Harris, VP of supply chain management for JLG. As business expanded, due to the combination of acquisitions and the worldwide construction boom, Harris says improving procurement processes became essential for a number of reasons.
Noting, for instance, that workers' safety depends on the stability of its products, Harris says JLG "won't compromise" on the quality of components it uses. "We have a thorough testing cycle and we track [the performance of parts after they are in the field]."
With the Ariba solutions in place, JLG is confident in its ability to build quality products while also meeting customer delivery dates.
"The Ariba database prequalifies suppliers to a certain extent," Harris says. "And with our automated processes in place, we know that every drawing we send to a supplier is 100-percent correct. It's also easier to convey contractual obligations to suppliers, such as the need for Six Sigma quality and 100-percent on-time delivery."
With the Ariba solutions handling these tasks, Harris says JLG's procurement people are free to concentrate on more strategic goals—like scouting for good suppliers.
Ariba bullish on "spend management
02/28/2002A living platform
12/01/2002
Featured Company
Most Recent Resources
- FICO™ Xpress Optimization Suite Schedules Big Profits For Clients
- Strategic Pricing: Three Steps to Higher Profit Margins
- Driving Innovation Through Lean Product Development Practices
- Demand Planning Maturity Model Strategies for Demand-Driven...
- Simulation-Driven Product Development:Will Form Finally Follow...
