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SAP Ariba’s role in the transformation of procurement in a digital economy

MDS AP February 17, 2021

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The digital economy and technological innovations are transforming procurement processes as we know them. Thanks to technological advancements in data management software platforms like SAP Ariba, procurement processes have become simpler, smarter and more strategic than ever before. 

SAP Ariba provides the tools to automate most transactional activities and processes, making companies much more resource-efficient and productive. This drives down the costs of procurement operations and frees up resources to focus on strategic efforts to add value to their customers and grow their businesses. According to research, procurement organisations that adopt digital transformation through SAP Ariba, reap the following benefits:

  • World-class procurement organisations have 22% lower labour costs.1
  • 60% of source-to-pay processes have the potential to be fully or largely automated, yielding up to 3.5% of overall spend savings.2
  • 84% of procurement organisations believe that digital transformation will fundamentally change the way their services are delivered over the next 3-5 years.3

It is no surprise then that over 2.5 million businesses use SAP Ariba to transform and improve their procurement processes.

 

What is SAP Ariba?

 

SAP Ariba is a cloud-based procurement solution that helps buyers and suppliers connect at one single network. SAP Ariba Partner program provides you with tools, resources, and benefits to help build, run, and grow your business. With SAP Ariba spend management solutions, you can digitalize and simplify all your processes end-to-end, on a single, integrated platform in the cloud.

SAP Ariba helps businesses consolidate and control all spending from source to pay:

  • Source: Make better sourcing decisions with spend analysis insights. Negotiate best-value agreements for sustainable savings on both direct and indirect materials. Minimise risk and accelerate the contract lifecycle with built-in contract management functionality.
  • Procure: Cut costs and risks and ensure compliance using the market's broadest set of e-procurement solution capabilities. Lead employees to preferred suppliers with a simple, guided buying experience. Transact with all suppliers easily and confidently over Ariba Network.
  • Pay: Strengthen your financial supply chain by transforming payables into strategic assets. Automate accounts payable, from invoice capture through approval. Give suppliers payment visibility. Improve cash flow and working capital management to reduce supply chain costs and liquidity risks.

 

Factors driving the transformation of procurement

 

Emerging technologies and innovations are revolutionising how goods and services are procured, tracked, delivered, and managed. Advancements in real-time connectivity, blockchain, 3D printing, drones, self-driving cars, self-learning systems, artificial intelligence and a host of other technological innovations are disrupting existing supply chains, forcing organisations to adopt these new innovations in order to gain a competitive advantage.

A few technologies in particular are transforming core procurement solutions across secure cloud architectures and driving more productive business processes and adding more value to the customer experience. Some of these disruptive technologies include:

1. Automation & Machine Learning

Intelligent enterprise systems are increasingly self-learning, evolving to provide consumer-grade, personalised user experience (UX), and products. Automation technologies supported by robust machine learning algorithms are redefining activities across the entire source-to-settle spectrum.

These technologies are enabling organisations to perform transactional activities at much greater speed, lower cost, and higher accuracy. As these self-learning systems develop, they will adapt and strengthen to evolve with the organisation. 

2. Predictive Analytics

Big data capabilities with advanced analytics engines drive holistic and futuristic insights to enable procurement to become cognitive, to identify breaking points early, and unmask opportunities to innovate. This enables organisations to drive proactive strategy and smart decision-making by transforming data into insight.

3. Blockchain & IoT

Blockchain and IoT technologies help organisations ensure that goods and digital assets can be trusted and are efficiently transferred from one party to another. Smart contracts – which contain criteria, triggers and actions embedded into a blockchain record itself – leverage the blockchain’s underlying distributed ledger technology, enabling trusted relationships among multiple parties without the need for extensive paperwork, intermediaries, or dedicated staff. This results in reduced operational costs and increased ability to adapt supply chains quickly.

4. Human Engagement & Customer Experience

As customer experience technologies develop, self-service capabilities will simplify the ordering process –unlocking scale and agility – while real-time guidance and embedded policies will boost compliance. Over time, users will be able to adopt and apply capabilities, and bridge the physical and digital worlds faster and with little to no guidance.

 

SAP Ariba’s role in digital procurement transformation

 

Digital transformation can be achieved with SAP Ariba by integrating production data and experience data on a single digital core that includes a comprehensive business network spanning end-to-end processes. Here’s how the SAP Ariba solution can help procurement teams leverage the technologies driving digital transformation.

1. Automation & Machine Learning

  • Problem: Based on a recent study with over 630 customers, 52% of a procurement organization’s time is spent on transactional activities.4 Though much of this time is dedicated to reconciliation and compliance activities, maverick spend, cycle time, and accuracy rates still fall short of expectations. To make matters worse, many of these activities are reactive and unable to address issues until after the fact.

  • SAP Ariba Solution: SAP Ariba provides intelligent and adaptive business capabilities to automate activities and improve results. SAP Ariba’s next-generation enrichment service employs advanced machine learning technologies that deliver fast and accurate supplier enrichment and commodity classification of massive volumes of data, rapid project deployments, and ongoing refreshes along with improved quality assurance coverage. You will be able to gain deeper insight into your supply base, find sourcing opportunities within existing relationships, bring more purchasing clout to negotiations, identify risks in your supply base, and classify spend through efficient collaboration between trading partners by automatically clustering and matching products based on machine learning analysis of flows across the business network.

2. Predictive Analytics

  • Problem: Traditionally, procurement has focused on cost. While this remains an important concern, the current growth rate in savings isn’t sustainable. Moreover, rapidly changing consumer habits and complex supply chains are creating new demands on procurement to bring in much-needed agility and risk mitigation techniques.

  • SAP Ariba Solution: SAP Ariba transforms data into powerful insights to drive proactive strategy and smarter actions. SAP Ariba’s Supplier Risk capabilities enable you to manage supplier risk at scale across your entire supply base and proactively monitor risks from external data sources with 360-degree supplier engagement exposure.

3. Blockchain & Internet of Things

  • Problem: Supply chains need to be far more responsive and dynamic than ever before. Customers have more information and choice at their fingertips, while sustainability and risk requirements are becoming larger concerns. To meet these challenges, procurement must reinvent itself to provide the necessary speed, agility, security, and traceability to the supply chain.

  • SAP Ariba Solution: SAP Ariba is a trusted B2B Commerce platform that guarantees trust by enabling the transparent and secure transfer of digital value, assets and records. In partnership with Everledger, SAP Ariba can track each asset’s movement and inherent value from origination to end consumption.

4. Human Engagement & Customer Experience

  • Problem: More and more, personalised digital assistants, tools, and processes are promising to drive productivity and compliance. For this reason, human engagement will increasingly become a top priority for procurement organisations looking to deliver valuable services to their internal and external customers.

  • SAP Ariba Solution: SAP Ariba influences user behaviour with simple, relevant information delivery to drive actions that maximize value. With SAP Ariba’s Guided Buying capabilities, users enjoy a simplified experience with preferred buying channels and built-in policies. SAP Ariba’s Spot Buy Catalog is a ready-to-go marketplace that provides a consumer-grade experience for the user and solves maverick spend challenges for businesses, eliminating the long tail of suppliers.

 

Conclusion

 

Real-time data insights, predictive analytics, blockchain, and customer experience solutions are making procurement simpler, smarter, and more strategic than ever before. SAP Ariba enables organisations to take procurement beyond the basic process and recreate the entire experience to guide users to the best choices in the least amount of time. Applying innovations within SAP Ariba procurement software and solutions, you can:

  • Rethink the experience to get the process out of the way – Remove obstacles that can distract users, improving the buying experience while intelligent technologies do more of the work for your team.
  • Link all spend categories together, all around the world – Tackle direct, indirect, and services spending in every market, managing it all in one place while automatically adapting to individual market requirements.
  • Create deeper, dynamic collaboration, end-to-end – Remove barriers between your teams and trading partners to securely share data, get insights, and manage workflow over Ariba Network for a more efficient procurement process and greater cost control.

Resources

 

1 “Raising the World-Class Bar in Procurement through Digital Transformation” The Hackett Group, June 2017

2 “A road map for digitizing source-to-pay” McKinsey, April 2017

3 “Digital Procurement From Myth, to Unleashing the full Potential” Oliver Wyman, 2017

4 SAP Performance Benchmarking

Topics: Blog

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