Avnet automates req-to-check process for MRO

Staff -- Purchasing, 9/2/2004

When Phil Wehrli joined Avnet Inc., as director of procurement services in 2003 he was tasked with automating the company's purchasing system for indirect goods and services in North America. Headquartered in Phoenix, Ariz., Avnet is one of the world's largest technology marketing, distribution and services companies.

Embarking on the project in June of that year, Wehrli and his team conducted a spend analysis of Avnet's indirect buy, renegotiated agreements with suppliers, created a dozen or so online catalogs and trained employees to use a new e-purchasing system. Within a year, Avnet reduced "hard" costs of purchasing indirect goods and services by 15%, exceeding a target of 10%.

Since he had worked to automate the purchasing process at a previous employer, Wehrli was well aware of the challenge that faced him upon his arrival at Avnet. This time, a cross functional team of leaders from the company's business units selected Ketera Technologies as its provider of procurement applications and services, which it delivers on demand. On demand is a business model for delivering services similar to the model for delivering utilities (gas, water, electricity) to consumers.

Specifically, Avnet uses Ketera Procurement Services, a suite of applications for spend analysis, sourcing, e-procurement, payment and reconciliation and supplier enablement as well as the Leveraged Procurement Service of its partner, IBM, which provides strategic sourcing expertise and services.

"We were looking to accomplish two things," says Wehrli of the decision to deploy Ketera Procurement Services and IBM LPS. "We wanted to better leverage Avnet's spending on everything from standard office products to maintenance, repair and operations (MRO) goods and services, and we wanted to put a system in place to support the company's purchasing agreements and its savings objectives. And, we wanted to do it fast and realize a quick return on our investment."

With the assistance of Ketera and IBM, Wehrli and his team conducted an analysis of Avnet's indirect spending across North America. "It was relatively easy to pull all the information together," says Wehrli, explaining that Avnet has one centralized accounts payable operation and consistent general ledger codes for all of North America. They quickly categorized the spend and got agreement from leaders across the company's business units on the purchasing operation's strategy for the buy.

With the spend data in hand, the team worked with IBM's LPS to renegotiate all the company's contracts with its indirect suppliers to take better advantage of Avnet's immense purchasing leverage. Not a consortium or buying club, LPS is a strategic sourcing service through which IBM negotiates agreements with its LPS suppliers or its client's preferred suppliers on behalf of its client. In most cases, Wehrli says Avnet continues to do business with its incumbent suppliers.

With the new agreements in place, the team worked with Ketera to set up an online purchasing system that houses supplier catalog content maintained by Ketera. There are now 14 catalogs on the system.

Initial users of the e-procurement system were administrative assistants and other power requesters—Avnet personnel who write high volumes of purchase reqs. While the system is intuitive, comparable to placing orders at consumer sites like Amazon.com, Ketera and IBM have developed a computer-based training program that is housed on Avnet's intranet. All Avnet employees were up on the system beginning on the first of July.

Although Avnet does not have a mandate for employees to purchase indirect goods and services through preferred suppliers, the company is currently at 80-90% compliance. Wehrli also intends to automate Avnet's payment process for indirect purchases, working with another Ketera partner, American Express.