Keynote speakers highlight AribaLive
By Dave Hannon -- Purchasing, 5/11/2006 2:00:00 AM
Spend management firm Ariba held its annual user conference this week in Las Vegas and continued its tradition of having some of the most innovative procurement executives provide keynote addresses on their respective companies’ best practice work.
Christie Breves, CPO of Alcoa and member of Purchasing’s editorial advisory board, gave a main stage presentation on “Creating sustained value” in a procurement organization. Breves emphasized that procurement executives need to make their organizations a competitive advantage within their companies, using Alcoa’s work in this area as an example.
“We’re now 16 months into a 24-month transformation,” Breves said, emphasizing that Alcoa now has nine global commodity councils in place with executive sponsors and a steering committee to guide its decisions. The councils are in close contact with the supplier communities in their respective areas.
“Suppliers can be a great source of innovation,” Breves pointed out.
She also emphasized that procurement organizations need to manage their expectations and validate line-by-line all savings achieved.
To read about Breve’s work at Alcoa in the past, see Purchasing stories here (http://www.purchasing.com/article/CA241558.html?text=christie+breves) and here http://www.purchasing.com/article/CA257474.html?text=christie+breves.
Mark Cotter, vice president of global sourcing and category management at BHP Billiton, focused his presentation on the role of governance in a center-led supply transformation. Cotter cited the Three C’s: Command and control, collaboration, and capitalizing. Cotter’s organization reports directly to the company’s executive committee, which he says is a major advantage.
The biggest challenge in moving to a center-led sourcing strategy was getting business units to comply with some of the companywide sourcing projects. “Sourcing projects need to be a win-win for both the company and the business unit,” he said, adding that any spend category over $5 million qualifies for a sourcing project at BHP Billiton. “This gives us access to some categories that had previously been hands-off,” he said.
“We’ve been quietly benchmarking the work of other companies with the goal of becoming a benchmark target ourselves,” he said.
Leon Shivamber, vice president of supply chain management at Harris Corp., talked about Harris’ decision to outsource its indirect spend to Ariba. “We treat them as part of our virtual supply chain and let them innovate for Harris,” he said. “It’s not viewed as outsourcing as much as partnering. It’s like hiring an employee for a specific function.
For a detailed story on Harris’ supply chain strategy, see the Purchasing story here: http://www.purchasing.com/article/CA6310803.html?text=harris+corp%2E
Also on the outsourcing front, Lucent announced it would be continuing its indirect spend outsourcing agreement with Ariba, which now covers 14 indirect spend categories. “By outsourcing the management of non-strategic spend to Ariba, we have been able to increase our savings while reducing our global indirect spend,” said Joe Carson, vice president of supply chain networks at Lucent.
To read a detailed story on Lucent’s outsourcing strategy, see the Purchasing story here: http://www.purchasing.com/article/CA6315356.html
Bryan Harris, vice president of global supply chain management at JLG Industries, focused his presentation on managing quality in the supply chain during times of extreme growth. JLG has seen in the neighborhood of 60%, 40% and 30% growth in the past three years, which Harris says requires a “scaleable approach” to supply chain management. “We use JIT and VMI with our suppliers,” he says, adding that “you don’t have to be a big company to leverage spend management.”
JLG bases its supply chain decision-making on three factors, in order: quality, delivery and cost. “Price for me is not the answer,” Harris said. “Our products will not be sacrificed by cheap parts. We look for cost-reduction, not price reduction.”
Harris said JLG relies on Ariba for “supplier mining” services and emphasizes all of the spend the company has put through Ariba tools has been direct spend.
And while Harris admits he’s “Not a fan of low-cost country sourcing,” as JLG enters new consumer markets with smaller margins, “We will look more closely at LCCS for materials and possibly final assembly.”
On the product side, Ariba said it is expanding its line of on-demand tools. In addition to Ariba Sourcing and Ariba Spend Visibility on-demand solutions, Ariba now offers on-demand its Procure-to-pay, electronic invoice, travel and expense management and contract management tools.
"With mandated corporate savings targets, enterprises are expanding their spend management initiatives to deliver the required results," said Craig Federighi, CTO at Ariba. "With our latest on-demand release, Ariba is continuing its tradition of innovation and commitment to providing companies with leading solutions that enable them to achieve their spend management goals and increase their returns on investment."
To read a detailed story about the on-demand software market, see the Purchasing story here: http://www.purchasing.com/article/CA6310787.html
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