SAP provides a sounding board for purchasing pros

Susan Avery -- Purchasing, 10/6/2005

"We in purchasing are constantly being challenged to look for new ways to control expenses and generate additional benefits," says Ray Hill, chief procurement officer, Pitney Bowes. After years of yearning for a seat at the table, purchasing professionals are finally being recognized for their contributions to the bottom line, he says. "The downside is that a lot of companies are hooked on the results piece. No one is going to take his foot off that gas pedal."

He says the less time purchasing pros spend crawling through data the more time they can spend managing not just price, but the consumption or demand side of the equation.

Hill's words provide a glimpse into one of the topics covered by purchasing and supply chain professionals attending the first meeting of the SAP Advisory Board for Purchasing and SRM in San Francisco recently. Hill is a member of the board, which consists of 21 purchasing and supply chain professionals representing companies from around the world. Fourteen members attended the meeting.

Demand management, category management and supplier-relationship management all are on the minds of purchasing professionals like Hill who attended the meeting. There they discussed among themselves the future of the purchasing profession, as well as functionality they expect they will need from tools such as SAP's SRM software over the next five years or so.

SAP, which has similar forums in other areas, founded its advisory board for purchasing and supply chain professionals as a way to embed best practices in its software. Traditionally, the company had been listening to the voice of its users who are represented by very active user boards. "But what we find is that user groups help identify current best practices," says Faheem Ahmed, director of SRM strategy, SAP Labs. "This new board is all about helping us identify next practices." Ahmed says that purchasing and supply chain management have become more of a focus for SAP in the past two or three years. "We are investing so heavily now that we need to know what's going to be important in purchasing and supplier relationship management three, four, five years out," he says. "This is where our development efforts are focused now." He adds, as with much of its software, SAP is evolving its SRM application from a solution to more of a platform.

At the meeting, SAP did not reveal its technology roadmap to attendees. Rather, execs representing the company asked the board members to discuss their priorities and compare them with priorities of SAP. "In the end, our top priorities matched 95% of the priorities of our board members," says Ahmed. Then, the SAP execs asked the board members to help them flesh-out details of four of the top priorities on the list. Of the members attending the meeting, nearly everyone said his or her company would devote major resources to the project. Ahmed makes clear that just half of the attendees use SAP's SRM software. The others, he says, could be using competitors' products or developing in-house applications.

Ahmed says that the board will meet twice a year; the next meeting is scheduled for early February in Singapore (members select the location). In between meetings, board members also have the opportunity to serve on one of four subteams that are expected to get together once a month to discuss certain issues. Now that initial contacts are made, board members are also likely to routinely share best practices among themselves. Membership on the board is voluntary; the purchasing and supply chain professionals are not compensated for their time.

Working with two independent consultants, Ahmed and his team spent four months selecting innovative purchasing and supply chain professionals from global companies that run a significant portion of some part of their business for the advisory board. During the selection process, they consulted the editorial advisory board of PURCHASING magazine and the advisory board of the Institute of Supply Management. They also looked at purchasing operations that recently received industry awards. They eliminated competing companies and gave heavier weight to those in industries served by SAP. Then they individually invited those who made the list. "Finally, we ended up with 21 people who are highly respected and recognized as leaders in the industry worldwide," says Ahmed, adding that he's still looking to fill seats with purchasing and supply chain professionals working in the public sector and in retail.

Hill, who has been with Pitney Bowes for 10 years and IBM's procurement function for 17 years before that, led his company's implementation of SAP applications for purchasing and supply chain management. Able to deliver the project on time and on budget, he considers the effort one of his biggest achievements at Pitney Bowes, along with earning respect for the procurement function within the company. Now, he and his team are ready to roll out the SAP SRM application.