Software fits Levi Strauss & Co.
New tool helps track spending—and manage suppliers
By Susan Avery -- Purchasing, 7/14/2005 6:00:00 AM
The procurement services operation at Levi Strauss & Co. (LS&CO.) in San Francisco has consolidated the company's temporary labor buy and now uses software to streamline the requisition process for workers and to gain visibility to the multimillion dollar annual spend. Perhaps more important, the software provides purchasing with detailed reporting that promises to help in future negotiations with suppliers.
Founded in 1853, LS&CO. has three apparel brands: Levi, Dockers and Levi Signature Series. In addition to its headquarters in San Francisco, LS&CO. has a financial service center in Eugene, Ore. With annual sales of $4.1 billion, LS&CO. sells its products in more than 110 countries and employs 8,850 people.
Until 2002, LS&CO.'s temporary labor buy was not centrally managed. Like many companies, managers hired temporary workers when they needed them, usually from local suppliers. The purchasing operation had little involvement in the buy. Then, procurement services spent time processing requisitions for each temporary worker LS&CO. hired. The accounts payable department was equally occupied, processing just as many invoices for payment to temp labor suppliers.
"We were decentralized," says Betty Stewart, project manager, procurement services for LS&CO. "We had little visibility into the spend." Stewart, who has been with LS&CO. in Eugene for more than two years, is responsible for systems implementation and process improvement for the purchasing operation.
Procurement services realized that automating the time card and approval process with software developed specifically for that purpose would centralize and consolidate the requisition and invoice process for temporary help workers. "It was a natural extension of other e-procurement initiatives we recently completed," says Jim Butler, director of procurement services.
Stewart sees use of the ad hoc reports provided by software as perhaps the most important reason to implement such a vendor-management system (VMS). "A VMS tool gives us visibility to ensure that we are being charged the correct mark-ups for different position categories once we develop contracts with suppliers. It also provides us data on length-of-stay compliance to help minimize risk. And we wanted to be able to track service levels outlined in our agreements with suppliers."
LS&CO. initially implemented software for the temp-labor buy in 2002. Procurement services negotiated agreements with two suppliers, Venturi Staffing Partners of Cincinnati and and Manpower of Milwaukee. Venturi services the company's San Francisco location while Manpower provides workers to its 20 U.S. field locations. Venturi provides LS&CO. mainly with workers trained for management/accounting/ finance/admin positions as well as models needed for the retail company's marketing and advertising campaigns. Manpower provides LS&CO. with light-industrial workers for its four distribution centers as well as nationwide merchandise coordinators who visit retail outlets to ensure that the company's displays are well represented.
After deploying the software, procurement services quickly learned that the tool did not appear to be a good fit for the company. "It didn't address some business process issues as we would have liked," says Stewart. "We needed an easy way to track staffing of light-industrial workers at our distribution centers." These workers may be hired for one position but actually handle other tasks in a single day or week. These positions may pay different rates. To add to the complexity, there are also shift differentials and overtime pay to consider. The company also wanted to automate its time-card feed process.
Going back to the drawing board, procurement services solicited information from three well-known software providers in the industry. The buyers met with the providers who demonstrated the functionality of their tools for streamlining and automating the process for purchasing such services as temporary help. Ultimately, they selected IQNavigator of Denver as their new supplier. Compared with the other potential suppliers, Stewart particularly liked the company's ad hoc reporting capabilities.
LS&CO. had the IQNavigator software up and running on January 31, 2005. Since the company had already been using software for its temp services it did not run a pilot test of the new tool. "It was a seamless transition," says Stewart, who was responsible for the implementation. "We didn't have many process changes. We simply migrated our suppliers and the users who were already familiar with the tool we had had in place." She adds that procurement services did not take such "a big-bang" approach with the first deployment because of potential risk-management issues. They ran a pilot with one temp labor supplier that serviced one location.
While procurement services' internal customers—mainly hiring managers—were reluctant to use the original tool when it was first implemented in 2002, they reacted positively to the deployment of the software from IQNavigator. Both the hiring managers and the company's temp-labor suppliers are especially pleased with the software's capability to streamline and automate the time-card submittal and approval process. They can complete the approval process without having to log-on to the IQN application. "Being able to approve timecards through MS Outlook e-mail is huge from a user standpoint," says Stewart.
For the temp help suppliers, the software is capable of automatically feeding information from time cards directly into their back-office accounting systems, a primary benefit as it eliminates the need for employees to manually key in the data.
To hire temporary workers for certain positions in the company's warehouses, procurement services first set up a decentralized requisitioning process. Under this model, hiring managers were expected to use the tool when they needed workers. This didn't work out, Stewart explains, because the managers did not use the software often enough to become familiar with it. Next, they tried a centralized model that was set up with six requisitioners. This too was not successful. Finally, they created a model with one central requisitioner who charges back the cost of hiring the workers to individual cost centers.
The LS&CO. employees who serve as central requisitioners require the most training, says Stewart, who was responsible for ensuring that they were able to proficiently use the software. She also provided training for hiring managers and time-card approvers. IQNavigator provided training for the temporary help suppliers.
More important, she says, is a strong internal help desk. "To ease the transition to the IQNavigator product, it was vital that everyone—both at LS&CO. and its temporary help suppliers—knew who to go to get answers when they had questions." The LS&CO. help desk acts as liaison between its employees, suppliers and IQNavigator.
SOURCE: LEVI STRAUSS & CO.
A buyer's guide to software for sourcing services
| Company | Description of software |
| Ariba www.ariba.com Tel: 650-390-1000 |
Leveraging knowledge and the sharing of best practices, Ariba's Strategic Sourcing tool provides "a combination of best-in-class technology with commodity and sourcing expertise." Global services include on-demand event support, program management, project outsource and education. |
| Elance www.elance.com Tel:650-316-7500 |
Elance Enterprise helps improve the way companies buy and manage external resources and outsourced services. According to Elance, companies that deploy its tool reduce costs of external services up to 17%; achieve compliance and track supplier performance. |
| Emptoris www.emptoris.com Tel: 781-993-9212 |
Emptoris 5 is a suite of Web-based applications that integrates spend analysis, supplier negotiation, optimization-based bid analysis, contract compliance and supplier performance management capabilities. The company says it can help improve productivity of procurement teams. |
| eWork Marketswww.workmarkets.com Tel: 800-983-9737 |
Web-based sourcing tool provides procurement services and technology for managing the bidding and selection processes, RFx and milestone tracking, and payment to and rating of, a supplier. Users can specify requirements and competitively select a supplier. |
| Fieldglass www.fieldglass.com Tel: 312-279-8700 |
InSite, a Web-based enterprise application, helps create a secure, private marketplace between customers and selected suppliers for sourcing, delivering and managing third-party services, including contract labor, consulting and fixed-price projects. |
Frictionless Commerce www.frictionless.com Tel: 617-495-0180 |
Frictionless SRM software is a suite of modules for spend analysis, supplier profiling, sourcing, contract management and supplier performance management. Users may leverage Frictionless SRM to source an array of services, in addition to direct and indirect spend categories. |
| Iasta www.iasta.com Tel: 317-579-6401 |
Iasta SmartSource helps users source goods and services with an average cost reduction of 17%, in addition to “significant” reductions in sourcing cycle times. |
| IQNavigatorwww.iqnavigator.com Tel: 877-267-0905 |
IQNavigator7 automates the end-to-end process for sourcing, procurement and payment of purchased services, controlling spending, and enforcing compliance to contract terms and delivered service quality as well as providing enhanced spend analysis capabilities. |
| Ketera Technologieswww.ketera.com Tel: 408-572-9500 |
Ketera Services Procurement provides a single repository for service-related purchases and interactions with suppliers. It manages project timeliness and costs for professional services, consulting and IT services, facilities management and human resources management. |
| Noosh www.noosh.com Tel: 888-286-6674 |
Noosh Print Management tools provide print purchasers with the knowledge necessary to make well-informed sourcing decisions for print and direct-mail projects. Users may reduce print costs by up to 30% using such sourcing tactics as reverse auctions. |
| Oracle www.oracle.com Tel: 800-ORACLE1 |
Oracle Services Procurement enables control and oversight for services spending. With the tool, users can maximize preferred supplier savings, eliminate over-billing and create visibility into services spending. Services Procurement is a key component of Oracle Advanced Procurement. |
| Oracle www.oracle.com Tel: 800-ORACLE1 |
PeopleSoft Enterprise Services Procurement enables users to gain visibility to and control over services spend, collaborate with suppliers and lower costs. With the tool, they can effectively manage and automate the entire services procurement process. |
| Procuri www.procuri.com Tel: 877-360-1600 |
Procuri TotalSource enables users to streamline sourcing processes through comprehensive on-demand tools. They can plan and manage events, negotiate pricing and terms and optimize results to make best-value sourcing decisions. |
| Rearden Commercewww.reardencommerce.com Tel: 877-778-2763 |
Rearden Commerce provides an all-in-one tool for scheduling, managing and procuring travel, packaging shipping, audio and Web conferencing and dining services. It helps ensure that employees comply with policies to curb maverick spending. |
| SAP www.sap.com Tel: 610-661-1000 |
mySAP Supplier Relationship Management helps integrate supply processes to achieve sustainable savings. By closing the loop between sourcing and procurement, mySAP SRM also establishes a foundation to secure cost and quality advantages. |
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