Best Practices in e-Procurement
The Abridged Report
December 2001
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Best Practices in e-Procurement: The Abridged Report
Table of Contents
Preface ................................................................................................................ 1
Chapter One: Executive Summary ..................................................................... 3
Identifying Best Practices in e-Procurement.................................................. 3
Procurement Will Be Key to Survival............................................................. 3
The Procurement Landscape........................................................................ 4
e-Procurement Delivers Rapid and Real Results .......................................... 4
Identifying e-Procurement Best Practices ..................................................... 5
Chapter Two: Summary of Findings.................................................................... 7
Ten Keys to e-Procurement Success ............................................................ 7
Chapter Three: Best Practices in e-Procurement: The Case Studies............... 10
A-Plus Manufacturing Views Online Procurement as Key to Staying
Ahead in High-Tech Industry ........................................................................11
e-Procurement Gives Eastman Chemical Company a Strategic Edge........ 15
FedEx Taps e-Procurement to Keep Operations Soaring,
Costs Grounded .......................................................................................... 20
KMS Creates Supplier Portal to Better Manage Its Supply Chain............... 24
SPX Makes e-Sourcing a Key Driver of Its "Value Improvement Process".. 28
e-Sourcing Is Standard Operating Procedure at Sun Microsystems .......... 32
UNICCO Deploys e-Procurement to Save Money and Win Customers ...... 36
Author Profiles ................................................................................................... 41
Appendix A: Lexicon of Acronyms and Abbreviations ...................................... 43
Appendix B: Related Aberdeen Research ........................................................ 44
Appendix C: e-Procurement Vendor Contact Details........................................ 45
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AberdeenGroup · i
Best Practices in e-Procurement: The Abridged Report
Tables
Table 1: Best Practices in e-Procurement Winners............................................. 6
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ii · AberdeenGroup
Best Practices in e-Procurement: The Abridged Report
Preface
Aberdeen Group is a recognized leader for its research and analysis
of Internet-based technologies that automate, streamline, and im-
prove procurement and supply chain management (SCM) processes.
Aberdeen was one of the first market research firms to analyze
e-Procurement solutions and to quantify the benefits and pitfalls of
these technologies.
In its continued research of emerging procurement automation
technologies, Aberdeen has identified enterprises that have been the
most successful in deploying e-Procurement to control costs, stream-
line processes, and enhance responsiveness across the supply chain.
The full version of Aberdeen's Best Practices in e-Procurement
report contains detailed profiles on all best-practice e-Procurement
winners in one or more of the following areas: non-production
("indirect") procurement automation, strategic sourcing, and produc-
tion ("direct") procurement automation/supply chain management
(SCM). This abridged report documents the selection criteria,
implementation strategies, and process redesign initiatives select few
of the best-practice winning enterprises used for successful
e-Procurement deployment, and it quantifies the benefits that have
resulted from these technologies and initiatives. This abridged
report also provides a high-level overview of best practices for
e-Procurement that can be emulated by solution providers, consult-
ants, and enterprises.
The targets of this report are the following business and information
technology (IT) executives:
· Chief procurement officers (CPOs) that are responsible for
building and managing their organizations' supply chains;
· Chief executive officers (CEOs) charged with improving their
companies' profits, responsiveness, and standing in the market;
· Chief financial officers (CFOs) focused on controlling costs and
optimizing their organizations' resources;
· Chief information officers (CIOs) involved in selecting and
implementing electronic commerce (e-Commerce) solutions;
· Management consultants and systems integrators (SIs) tasked
with identifying leading e-Procurement solutions; and
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AberdeenGroup · 1
Best Practices in e-Procurement: The Abridged Report
· Current and future e-Procurement, SCM, and marketplace
solution providers looking for a roadmap for future products as
well as an analysis of competitors and potential partners.
To assist readers, we have included three appendices: Appendix A
offers a glossary of e-Procurement-related acronyms and abbrevia-
tions; Appendix B provides a list of relevant Aberdeen research for
further reading; and Appendix C lists contact information for the
software vendors whose e-Procurement solutions have been
deployed by enterprises that have demonstrated best practices.
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2 · AberdeenGroup
Best Practices in e-Procurement: The Abridged Report
Chapter One:
Executive Summary
Identifying Best Practices in e-Procurement
Procurement and
This report is intended to recognize those enterprises that have dem-
onstrated industry best practices in deployment of Internet-based
supply chain
procurement automation to control costs, streamline processes, and
management provide
enhance responsiveness across the extended supply chain. The
the single greatest
report examines the selection, implementation, and business process
opportunity to control
reengineering strategies these enterprises used to deploy
costs, manage
e-Procurement technologies in the areas of indirect procurement,
quality, and improve
strategic sourcing, and direct procurement/supply chain
responsiveness.
management.
Additionally, the report is intended to help procurement executives,
corporate executives, and business and IT managers identify best
practices for selecting, deploying, and managing deployment of
e-Procurement technologies.
Procurement Will Be Key to Survival
With the global economy slipping into a recession, cost cutting has
become a priority for most businesses. After reducing headcount
and streamlining internal processes, companies are now looking to
trim the fat and inefficiencies from their extended network of sup-
plier partners. Procurement and supply chain management are at the
head of this charge.
Long overlooked as backwater functions, procurement and SCM are
being embraced by top-level executives -- including CEOs and
CFOs -- as key to remaining competitive in today's economy. The
reason? On a global basis, businesses spend over $20 trillion on
external goods and services each year. Any reductions in these costs
result in dollar-for-dollar improvements in profits.
In addition to cost reductions, procurement and SCM drive a com-
pany's responsiveness and performance in the market. A properly
organized and managed supply chain can deliver significant com-
petitive and cost advantages to the market. Conversely, inappropri-
ate supplier selection or poorly organized supply partners can nega-
tively impact an organization's ability to compete.
All print and electronic rights are the property of Aberdeen Group © 2001.
AberdeenGroup · 3
Best Practices in e-Procurement: The Abridged Report
The Procurement Landscape
Procurement activities can be segmented in many ways. For the
purposes of this report, Aberdeen divides procurement (and
e-Procurement technologies) into three primary categories:
1. Indirect procurement -- which involves the selection, purchase,
and management of a wide range of non-production goods and
services -- from basic office supplies to complex business ser-
vices, such as printing, advertising, and temporary labor.
2. Direct procurement/supply chain management -- which
involves the organization, planning, and management of
procurement and supply chain activities associated with
acquiring the raw materials, parts, and assemblies necessary to
manufacture finished products.
3. Sourcing -- which involves the identification, evaluation,
negotiation, and configuration of products, services, and
suppliers for both indirect and direct materials supply chains.
e-Procurement Delivers Rapid and Real Results
At the highest level, Internet-based procurement (e-Procurement)
creates private, Web-based procurement markets that automate
communications, transactions, and collaboration between supply
chain partners. Most e-Procurement solutions have been developed
to address one of the three primary areas of procurement operations:
indirect procurement, direct procurement/SCM, and sourcing.
Aberdeen's ongoing research of enterprises' experiences with
Internet-based procurement automation technologies indicates that
companies have been able to achieve significant cost and process
benefits by automating key procurement activities.
Specifically, e-Procurement solutions addressing indirect procure-
ment operations have resulted in reduced prices paid for indirect
goods and services; improved contract compliance; shortened
procurement and fulfillment cycles; reduced administration costs;
and enhanced inventory management.
e-Procurement solutions targeting direct procurement activities have
resulted in improved visibility of customer demand and supply chain
capacity; increased accuracy of production plans and forecasts;
reduced inventory and operations costs; shortened procurement
cycles; and enhanced responsiveness.
Enterprises utilizing Internet-based sourcing (e-Sourcing)
technologies have been able to negotiate significant unit cost
(i.e., "price") reductions; shorten sourcing cycles; enhance decision-
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4 · AberdeenGroup
Best Practices in e-Procurement: The Abridged Report
making capabilities; and gather improved product, market, and
supplier intelligence.
Identifying e-Procurement Best Practices
In May 2001, Aberdeen began gathering information from
e-Procurement solution vendors on what the vendors believed to be
their most successful customer implementations. We examined
more than 50 e-Procurement implementations, categorizing them
into one of three categories: indirect procurement automation, direct
procurement/SCM automation, and e-Sourcing.
We conducted blind evaluations of these implementations based on
multiple metrics, including usage, spending volume, process effi-
ciencies, and cost savings. As a result of these evaluations, we iden-
tified enterprises in each of the three categories that represented best
practice deployments. During our research, we also identified sev-
eral companies that had successful e-Procurement deployments in
two or more of these categories. We have placed two of these
enterprises in a fourth category called e-Procurement All-Stars.
This report contains detailed case studies of each of the 18 best prac-
tice e-Procurement deployments. All winning enterprises are repre-
sented in Table 1. Detailed profiles of all these enterprises and their
e-Procurement deployments appear in the full report. This abridged
report contains only profiles and a select few of the winning enter-
prises.
This free, abridged version of Best Practices in e-Procurement, an
Aberdeen research report, is made possible by certain e-Procurement
solution providers. Names and contact information for these spon-
soring e-Procurement solution providers appear in Appendix C.
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AberdeenGroup · 5
Best Practices in e-Procurement: The Abridged Report
Table 1: Best Practices in e-Procurement Winners
Category
Winning Enterprises
e-Procurement
Solutions Used
Indirect
Canandaigua National
Works
procurement
Bank and Trust
Countrywide Home Loans
PurchasingNet
FedEx Corporation
Ariba
Finning International
Verian
iGate Capital
PeopleSoft, Commerce One
Universal Studios
Zeborg
UNNICO
elcom
Direct
A-Plus Manufacturing
Tradec
procurement
(acquired by C-MAC)
Diversified Systems
Agile Software
Georgia Pacific
Nistevo
Komatsu Mining
Baan
Systems
e-Sourcing
Ametek
Dun & Bradstreet
Millennium Chemicals
B2EMarkets
SPX
FreeMarkets
Sun Microsystems
iPlanet, FreeMarkets,
Procuri, ICG Commerce
Volkswagen
eBreviate
All-Stars
Eastman Chemical
Commerce One, Diligent
Software Systems
John Hancock
Frictionless Commerce,
iPlanet
Source: Aberdeen Group, December 2001
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6 · AberdeenGroup
Best Practices in e-Procurement: The Abridged Report
Chapter Two:
Summary of Findings
With an increased emphasis on cutting costs and enhancing produc-
tivity, e-Procurement has experienced major growth in recent years.
Considering the current economic condition, Aberdeen views
e-Procurement as one of the few enterprise software sectors that will
continue to demonstrate strong growth over the next 12 to 18
months.
Ten Keys to e-Procurement Success
As Aberdeen conducted research for this report, a number of key
findings emerged. The most compelling is that, despite some recent
bad press, e-Procurement works, and companies are gaining signifi-
cant and rapid value from its use. As with any enterprise software
installation or business initiative, organizations have had to over-
come cultural, process, and technical hurdles in order to access the
complete value of e-Procurement. Aberdeen's research found that
the most successful e-Procurement deployments had the following
10 common characteristics.
1. Technology is not a strategy. Successful e-Procurement
deployments utilize technology to support a larger procurement
strategy. They do not view e-Procurement as the strategy itself.
2. Know what you spend. Prior to launching any e-Procurement
initiative, companies must understand how much they spend, on
which products, and with which suppliers. A preliminary
spending analysis can identify opportunities for improving con-
tract compliance, aggregating spending, and rationalizing the
supply base. Spending analysis can also determine the most
effective method for rolling out e-Procurement.
3. Have a plan. Before installing the first byte of e-Procurement
technology, a company must devise a comprehensive plan for
deployment as well as clearly defined goals and milestones for
continued improvements and success.
4. Begin by benchmarking. The companies that have experienced
the most success with e-Procurement have all started by
mapping their internal process flows. This benchmarking activ-
ity identifies non-value-added processes that need to be
reconfigured or eliminated prior to deploying e-Procurement.
Companies attempting to deploy e-Procurement without
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AberdeenGroup · 7
Best Practices in e-Procurement: The Abridged Report
benchmarking their own procurement processes are at risk of
automating inefficient and costly processes.
5. Drive e-Procurement from the top. As with any business initia-
tive, the level of success of any e-Procurement initiative is
inherently tied to the support it receives from "C-level" execu-
tives. e-Procurement touches every aspect of the business,
requiring significant change management across the enterprise.
Successfully deploying these technologies requires top-level
executives to become chief advocates for e-Procurement.
6. Get support from the trenches. While top-level support is
important, user adoption is absolutely essential. The most
successful e-Procurement deployments have all included
programs for training, and they have continually demonstrated
value to potential users.
7. Designate a champion. The most successful companies have
designated a champion to coordinate, monitor, and manage en-
terprise-wide deployment of e-Procurement technology. Typi-
cally pulled from the purchasing and/or IT department, this
e-Procurement champion is responsible for driving system
deployment and adoption, measuring results, communicating
successes, and repairing glitches. Importantly, this champion is
often measured and receives incentive based on the overall
adoption and success of the e-Procurement deployment.
8. Supplier participation requires a carrot and a stick. Supplier
participation has been a thorn in the side of many
e-Procurement initiatives. The most successful companies have
overcome such challenges using a mix of supplier incentives
and demands. Specific strategies include educating suppliers on
the value of e-Procurement, providing tools and services for
easing participation, and driving additional business to
participating suppliers. These companies also create penalties
for non-participants. They range from charging suppliers a fee
for continuing to exchange documents via fax to limiting the
volume of business awarded to noncompliant suppliers.
9. Start with the low-hanging fruit. To gain acceptance and adop-
tion of e-Procurement, a company needs to demonstrate value to
all participants -- from front-line employees to top-level
executives and external supplier partners. The most successful
companies have won early support for e-Procurement by
identifying the areas of spending that could return the biggest
benefits and savings in the shortest amount of time.
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8 · AberdeenGroup
Best Practices in e-Procurement: The Abridged Report
10. Measure, measure, measure. There's truth in the old adage,
"You can't improve what you can't measure." To drive con-
tinuous improvements in e-Procurement, companies monitor
user adoption, contract compliance, process improvements, cost
savings, and supplier performance on an ongoing basis. These
measures can be used to demonstrate the value of
e-Procurement to all constituents. These measures also help
identify areas for improvement or process realignment.
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AberdeenGroup · 9
Best Practices in e-Procurement: The Abridged Report
Chapter Three:
Best Practices in e-Procurement:
The Case Studies
It is difficult to define what a best-in-class e-Procurement implemen-
tation should look like. e-Procurement is about enhancing
collaboration, streamlining processes, controlling costs, and enhanc-
ing information exchange within and across organizational bounda-
ries. Every enterprise has different needs, capabilities, constraints,
and organizational and supply chain structures. As a result, each
company will deploy and utilize e-Procurement in a different way.
However, in its search for best practices in e-Procurement, Aberdeen
examined the results of deployments of indirect procurement auto-
mation, direct procurement/SCM automation, and e-Sourcing
technologies. Specifically, we evaluated enterprises on: the number
of employees enabled on the e-Procurement system; the number of
suppliers enabled on the system; the number of transactions
(i.e., purchase orders (POs) and/or sourcing events); the dollar value
of items channeled through the system; and the time and cost sav-
ings achieved. To balance the playing field, we examined these
factors in relation to the overall size and spend of individual
enterprises.
Aberdeen selected enterprises as demonstrating best practices in
each category of e-Procurement: indirect procurement automation,
direct procurement/SCM automation, and e-Sourcing. We also iden-
tified several companies that had successful e-Procurement deploy-
ments in two or more of these categories. We have placed two of
these enterprises in a fourth category called e-Procurement All-
Stars.
In this abridged report, Aberdeen profiles these best practice
e-Procurement strategies, deployments, and the results of a select
few of these enterprises. These case study profiles appear in alpha-
betical order by enterprise name.
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10 · AberdeenGroup
Best Practices in e-Procurement: The Abridged Report
A-Plus Manufacturing Views Online
Procurement as Key to Staying Ahead in
High-Tech Industry
Executive Summary
Pressures to speed
e-
Company Name
Procurement
time-to-market cycles
A-Plus Manufacturing
and reduce costs has a
growing number of
e-Procurement Solution Provider
original equipment
Tradec
manufacturers (OEMs)
B
outsourcing product
est
Process Time Savings
assembly and manufac-
Pract
Reduced quote cycles by 60%
turing. Outsourcing is
particularly prevalent
ices
Process Cost Savings
in high-tech industries
Reduced FTEs for procurement
where product life-
cycles are often meas-
Purchased Product/Service/Material
ured in months and
Cost Savings
where keeping pace
Yes
with the latest produc-
tion procedures is both
Additional Savings/Benefits
costly and challenging.
Better responsiveness, lower inventories
More than 90% of
electronics OEMs use contract manufacturers -- now known as
electronics manufacturing service (EMS) providers -- for multiple
manufacturing jobs. As companies pare payrolls and cut costs, the
use of EMS providers will only increase. In fact, one industry sur-
vey finds that 85% of electronics OEMs will increase their out-
sourced production during the next 12 months.
In response, EMS firms must operate more efficiently and at a lower
cost than ever before. A-Plus Manufacturing Corporation, a leading
EMS provider with revenues over $150 million, views automating
its direct procurement processes as key to meeting such demands.
A-Plus deployed Tradec's Quote Management System (QMS) to
streamline the bid-and-quote process with its suppliers. As a result,
the firm has significantly improved buyer productivity, shortened
procurement cycles, and enhanced response to customer demands.
Business Challenge
A-Plus Manufacturing, a division of C-MAC Industries Inc., pro-
vides turnkey manufacturing for complex, high-density, and high-
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AberdeenGroup · 11
Best Practices in e-Procurement: The Abridged Report
mix printed circuit boards (PCBs) and box-build assemblies for the
telecommunications, video, medical devices, industrial, and military
markets. A-Plus supports a global customer base with 400
employees located in multiple assembly locations in Silicon Valley.
Like many EMS providers, A-Plus had been grappling with a
double-edged sword -- rapidly increasing demand from a global
customers and razor-thin profit margins.
Selection Criteria
To meet such challenges, A-Plus knew it would need to overhaul its
antiquated method for managing and analyzing supplier quotes. For
years, the company used a labor-intensive quote management
process that relied heavily on paper-based request for quote (RFQ)
documents, redundant data entry, and myriad phone calls, faxes, and
e-mails for every purchase. This time-consuming process hampered
A-Plus' ability to rapidly respond to customer requests. It also
placed significant burdens on A-Plus' supply base.
"We used to send out a complete quote package to suppliers regard-
less of whether they could support the business or not," said David
Kichar, director of Supply Chain Management (SCM) at A-Plus,
adding that suppliers would need to wade through thousands of line
items to find the items that they were qualified to bid on. "Some
suppliers reformatted everything we sent them, so our buyers would
have to cut and paste bids from different spreadsheets in order to do
analysis."
Due to such inefficient processes, it could take A-Plus as long as two
to three weeks to implement a change order or forecast across its
supply chain.
In 1999, A-Plus decided to automate its direct procurement
processes to shorten quote turnaround times and enhance visibility
across its supply chain. The EMS provider began its search for a
Web-based solution that was easy to use, could automate the entire
quote cycle, and could enable communication and collaboration
across multiple tiers of the supply chain. The procurement solution
also needed to support integration with A-Plus' existing business
systems, including its Materials Resource Planning (MRP) solution.
Deployment
After a brief evaluation process, A-Plus found that Tradec's QMS
solution met its key requirements. The Tradec solution also
provided sophisticated analytics tools for reviewing and comparing
supplier proposals and for tracking performance metrics. In
addition, QMS included a bill of materials (BOM)/approved mate-
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12 · AberdeenGroup
Best Practices in e-Procurement: The Abridged Report
rial list (AML) warehouse that enables users to automatically organ-
ize parts for inclusion in a generic or supplier-specific RFQ package.
Tradec's Web-hosted model proved to be a key factor in driving
adoption of the system across A-Plus' procurement organization and
its supply base. A-Plus piloted the QMS solution with a handful of
suppliers in November 1999. By 2001, the EMS provider was
managing nearly 85% of its direct purchases through the system.
Results
The key benefit A-Plus Manufacturing has seen from deploying the
Tradec solution is cycle-time savings for both A-Plus and its suppli-
ers. By using the solution, A-Plus has reduced the time quoting
cycles by more than 60%. Faster procurement cycles have freed up
buyers to focus on more value-added tasks, like supplier qualifica-
tion and quality assurance. It has also allowed A-Plus to bid on
more business.
"To some extent, the previous way we managed procurement kept us
from bidding on new business," said Kichar. "We weren't able to
create and evaluate bid packages fast enough, and our suppliers were
taking days to turn around quotes. With Tradec, we have been able
to shorten procurement cycles and actually secure the parts we need
to service new business."
Such efficiencies have helped A-Plus consolidate direct procurement
activity to a single quoting "hub," keeping full-time-employee (FTE)
headcount to a minimum.
The Tradec solution has also improved information transparency and
analysis for both A-Plus' buyers and its supply base. Armed with
accurate information, suppliers have been able to sort and analyze
A-Plus' requirements more quickly, resulting in faster quote turn-
around times as well as more competitive bids. By consolidating
quotes into a single format, QMS has helped A-Plus buyers better
analyze bids to identify the mix of parts and suppliers that can return
the lowest total cost.
Kichar also credits the Tradec solution for A-Plus Manufacturing's
ability to quickly adjust its operations during the recent economic
downturn. "Accurate data and speed are key to success in
outsourcing," said Kichar. "We still have competitors that can't
communicate with their suppliers or customers in a timely fashion.
As a result, they now have high inventories because they couldn't
respond quickly enough to [turn off supply] even when their orders
had stopped."
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AberdeenGroup · 13
Best Practices in e-Procurement: The Abridged Report
Lessons Learned
Aware of how suppliers contribute to its own ability to respond to
customer demand, A-Plus expended significant effort to ensure that
its supply base understood and accepted the Tradec tool prior to
deployment.
"In any e-Procurement implementation, you need to bring suppliers
in as partners," said Kichar. "You can't just force a new system on
suppliers or you will never get acceptance or results. We sat down
with suppliers, reviewed their quote data and demonstrated how the
[Tradec] system provided them with more accurate [demand] data in
a condensed format."
Future Outlook
With an increased portion of its business and suppliers coming from
overseas, A-Plus is pushing Tradec to develop functionality to man-
age cross-border logistics costing and multi-currency calculations.
"As we move to a global economy, we need to take into account
logistics and currency issues," said Kichar. "Accurate and current
currency information can provide an opportunity for additional cost
savings and profit improvements. We want to use this information
for forecasting and planning our procurement."
Aberdeen Conclusions
A-Plus Manufacturing was among the first EMS providers to
leverage e-Procurement technology to automate and streamline in-
teractions with its direct-material suppliers. Using Tradec's QMS
Web-based quote-management tool, A-Plus has achieved measurable
benefits and significantly improved its responsiveness to rapidly
changing market demands. Not content to rest on its laurels, A-Plus
plans to use the Tradec solution to service customers and manage
suppliers in new, global markets.
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14 · AberdeenGroup
Best Practices in e-Procurement: The Abridged Report
e-Procurement Gives Eastman Chemical
Company a Strategic Edge
Executive Summary
Facing nimble compe-
e-
tition and pressures to
Company Name
Procurement
reduce costs, Eastman
Eastman Chemical Company
Chemical Company set
out in the late 1990s to
e-Procurement Solution Provider
put discipline into its
Commerce One; Diligent Software Systems
disjointed purchasing
B
est
Process Time Savings
organization. The 81-
Pract
year-old global chemi-
Reduced order-to-fulfillment by 86%;
cals manufacturer's
cut sourcing cycles in half
ices
strategy was straight-
forward -- develop
Process Cost Savings
and manage more
Annual savings of $100,000
strategic supply chain
Purchased Product/Service/Material
relationships with the
help of the latest,
Cost Savings
Internet-based tech-
5% to 10% price reduction through improved
nologies. First, East-
contract compliance; 13% price reductions,
man deployed the
on average, through online negotiations
Commerce One plat-
form to automate and
Additional Savings/Benefits
control indirect pur-
chasing. Next, the
Facilitated supply base rationalization
company selected
Diligent Software Systems to standardize and streamline its sourcing
processes for selecting strategic supplier partners. Together with
Eastman's supplier rationalization strategies, these solutions helped
Eastman speed process cycles, improve decision-making, and
achieve significant price reductions.
Business Challenge
Founded in 1920 to supply photographic chemicals to its then-parent
Eastman Kodak Company, Eastman is a global provider of more
than 400 chemicals, fibers, and plastics. Employing 16,500 people
in more than 30 countries, Eastman is headquartered in Kingsport,
Tennessee, with worldwide regional headquarters in Coral Gables,
Florida; The Hague, Netherlands; and Singapore. Eastman has
manufacturing facilities in five states in the U.S. and in 18 countries
abroad. Across all operations, Eastman spends $2.7 billion annually
on goods and services.
All print and electronic rights are the property of Aberdeen Group © 2001.
AberdeenGroup · 15
Best Practices in e-Procurement: The Abridged Report
Until the late 1990s, Eastman relied on a highly decentralized
procurement structure with buying decisions and processes defined
at the local level. As a result, the company struggled with high ad-
ministration costs, off-contract ("maverick") buying, and sub-
optimal negotiation leverage with suppliers. In 1997, an internal
project team recommended a two-pronged strategy to address these
issues: (1) Adopt a channel supply program for key maintenance,
repair, and operations (MRO) commodities; and (2) leverage
Internet-based technologies to automate and streamline corporate
procurement processes.
It's not surprising that Eastman first targeted the procurement of
non-production ("indirect") goods and services as the first area for
improvement. The company was spending $900 million with more
than 7,500 indirect suppliers worldwide.
Previous attempts to automate indirect purchasing through its SAP
R/2 system did little to reduce the costs and cycle times associated
with processing purchase requisitions. Similarly, a corporate
procurement card program failed to enforce the use of Eastman's
preferred suppliers or compliance with corporate contracts.
Eastman realized streamlining its purchasing would require
implementing an entirely new system that simplified the requisition-
ing process while enforcing contract compliance with a small base
of strategic supplier partners. Selecting these strategic "channel
partners" required Eastman to update its manual sourcing processes,
which were cumbersome to manage and took months to complete.
Selection Criteria
Eastman worked with Andersen Consulting to evaluate several solu-
tions, choosing Commerce One EnterpriseBuyer for procurement
and workflow functionality and Commerce One MarketSite for
transaction-management and value-added services. The strengths of
the Commerce One solution were Web-based usability, support for
the Microsoft Windows NT platform, integration with SAP R/2 and
R/3, and effective catalog management.
e-Sourcing dovetailed nicely with Eastman's e-Procurement strat-
egy. After analyzing the leading vendors, Eastman chose Diligent's
SourceSelect for its advanced functionality for supplier selection, its
request for quote (RFQ) builder, and its multi-parameter analysis
capabilities. Diligent's product vision aligned with Eastman's long-
term plans for supply chain rationalization and management.
Deployment
With assistance from Andersen Consulting, Eastman deployed the
Commerce One solution from project inception to pilot in four
All print and electronic rights are the property of Aberdeen Group © 2001.
16 · AberdeenGroup
Best Practices in e-Procurement: The Abridged Report
months. In January 1999, the company began conducting transac-
tions through the system in a limited pilot that included 50 requisi-
tioners and its leading office supply distributor's catalog. Eastman
has extended e-Procurement to 800 requisitioners across four U.S.
sites and is processing 1,800 purchase orders (POs) per month
through the system.
The system's online catalog enables users to search through 350,000
items ranging from office supplies and computer products to strate-
gic MRO items. Eastman established rules within Commerce One
EnterpriseBuyer to automatically translate any purchase requests
below $2,000 into a formal purchase order (PO). These POs are
transmitted to Commerce One MarketSite, which uses the Web to
channel PO and other communications to the appropriate supplier.
(Purchases above $2,000 are processed in Eastman's SAP R/3
system.)
Eastman has wisely married its e-Procurement rollout with an initia-
tive to rationalize its supply base to a few, strategic supply channel
partners that manage all Eastman's requirements for a particular
product category, such as office supplies. As part of its supply chan-
nel strategy, Eastman has restricted the number of unique
suppliers represented on the Commerce One system.
Eastman deployed Diligent 's SourceSelect in August 2000 to iden-
tify and evaluate supply channel partners for indirect commodities.
The company also used the Diligent system to negotiate long-term
contracts with direct materials suppliers. All told, Eastman had run
11 sourcing events through the Diligent system by August 2001.
(It should be noted that Eastman has also used ICG Commerce to
run an auction for commodity-level packaging materials; Moai
Technologies to run auctions for select raw materials and energy;
and the ChemConnect marketplace to access spot market prices for
basic raw materials.)
For direct materials, Eastman is placing orders via supplier-hosted
Web sites, such as Dow.com. The company has also established
system-to-system integration from its SAP R/3 system to the order-
management systems of strategic suppliers using industry standard
eXtensible Markup Language (XML) and a WebMethods' server.
Results
Through the use of Commerce One's EnterpriseBuyer, Eastman has
cut prices paid by 5% to 10% through increased contract compli-
ance, shortened order-fulfillment cycles from a week to 24 hours,
and lowered administration costs by $100,000 annually through
attrition-based reduced headcount. Commerce One MarketSite has
cut transaction costs by enabling Eastman and its suppliers to
All print and electronic rights are the property of Aberdeen Group © 2001.
AberdeenGroup · 17
Best Practices in e-Procurement: The Abridged Report
transition document exchange from costly electronic data inter-
change (EDI) value-added-networks (VANs) to the Internet. All
told, Eastman was able to realize a 126% return on investment (ROI)
on the Commerce One solutions in just 10 months.
The key benefit Eastman has realized from Diligent 's SourceSelect
solution is the ability to evaluate a larger group of suppliers based on
a broader range of parameters than it could with its traditional, man-
ual-based sourcing processes. This increased visibility into the cost
structure of supplier bids has helped Eastman determine the total
cost of doing business with a supplier. It has also reduced sourcing
cycles by 25% -- taking it from 4 months down to a few weeks.
Eastman expects to cut sourcing cycles even further as its buyers and
suppliers become more familiar with the Diligent solution. Such
time reductions will free up Eastman's buyers to apply strategic
sourcing to a broader range of expenditures.
Lessons Learned
Eastman has learned that technologies should be used to adapt and
improve preferred business processes. Eastman is using Diligent
for collaborative activities with suppliers, not just big corporate
sourcing events. The company is using the platform to survey
suppliers on capabilities and to handle routine communications that
in the past were done by paper or telephone.
Future Outlook
Eastman plans to expand the use of both the Commerce One and
Diligent solutions globally, with Commerce One BuySite being used
in Singapore already. Eastman also plans to deploy Diligent Con-
tracting to further solidify the link between its sourcing and
on-going procurement activities.
In addition, Eastman is integrating the catalog-based e-Procurement
system with its SAP R/3 system. Eastman is currently deploying a
supplier hub that will allow suppliers who receive SAP R/3
generated orders to receive and respond to orders through
acknowledgements, advance ship notices (ASNs) and invoices via a
Web browser interface.
Aberdeen Conclusions
Eastman achieved the strategic supply chain vision it set for itself
four years ago by establishing the technology infrastructure to
streamline processes, gain leverage with suppliers, and improve sup-
ply chain visibility and communications. The company followed
through by deploying e-Sourcing tools to ensure it was selecting an
optimal base of supplier partners. This multi-faceted strategy places
All print and electronic rights are the property of Aberdeen Group © 2001.
18 · AberdeenGroup
Best Practices in e-Procurement: The Abridged Report
Eastman among the e-Procurement Best Practice All-Stars. It is also
presents a model other procurement organizations would be wise to
emulate.
All print and electronic rights are the property of Aberdeen Group © 2001.
AberdeenGroup · 19
Best Practices in e-Procurement: The Abridged Report
FedEx Taps e-Procurement to Keep
Operations Soaring, Costs Grounded
Executive Summary
FedEx Corporation
e-
delivers nearly five
Company Name
Procurement
million packages a day;
FedEx Corporation
this makes operations
support at FedEx Corp.
e-Procurement Solution Provider
a mission-critical func-
Ariba Inc.
tion. To keep all levels
B
est
Process Time Savings
of operations -- from
Pract
delivery fleets to IT
Purchase request to goods delivery: 17 to 19
(information technol-
days to two days, depending on goods
ices
ogy) infrastructure --
in top-notch working
Process Cost Savings
order, FedEx needed to
Yes
streamline and auto-
Purchased Product/Service/Material
mate its paper-based
procurement processes.
Cost Savings
FedEx chose Ariba Inc.
Up to 40%, depending on goods purchased
to provide the technol-
ogy
Additional Savings/Benefits
infrastructure to sup-
Able to re-deploy people to more strategic
port its e-Procurement
initiatives and saw a
tasks, extend system to contractors
full return on
investment (ROI) within three months. FedEx was able to save time
and money in purchase order (PO) processing, to achieve more com-
petitive pricing from suppliers, and give its own employees better, if
not overnight, response.
Company Background
FedEx Corp. is a $20 billion global enterprise, consisting of FedEx
Express, FedEx Ground, FedEx Freight, FedEx Custom Critical,
FedEx Trade Networks and FedEx Services. FedEx has over 370
facilities in the U.S. and Canada alone, and a presence in over 211
countries worldwide.
In total, Fedex spends over $7 billion dollars annually on indirect
goods and services. These include office supplies, cell phones,
pagers, food services and catering, delivery carrier supplies, vehicle
parts, technology (such as PCs, routers and hubs), and books,
magazines and other subscriptions.
All print and electronic rights are the property of Aberdeen Group © 2001.
20 · AberdeenGroup
Best Practices in e-Procurement: The Abridged Report
Business Challenge
"Our business is getting a package from one place to another in a
short time," said Chris Cawein, manager of business systems at
FedEx Express. "If we need something to get a plane off the ground,
a truck on the road -- anything that affects our organization -- we
have to make sure we have it."
Although FedEx had a centralized purchasing infrastructure, the
company relied on inefficient paper-based processes to manage indi-
rect purchase requisitions, ordering, and fulfillment. When the
company needed an item, FedEx employees would fill out purchase
requests by hand and mail these to the central logging facility.
Clerical employees would keypunch these requests into a home-
grown tracking system where requisitions were assigned to a buyer.
The buyer would try to source and buy the items requested, eventu-
ally creating a paper purchase order, which had to be keypunched
into the legacy system as well. "It was a very labor-intensive and
manual process," said Cawein.
Selection Criteria
FedEx identified e-Procurement as a key strategy to automate and
streamline the whole procurement process. In early 1999, FedEx
evaluated a number of e-Procurement solutions based on three
primary factors:
1. Ability to integrate with a heterogeneous computing
environment;
2. Inclusion of dynamic workflow to deliver better control over
corporate purchasing; and
3. Delivery of powerful reporting tools to facilitate spend analysis
and purchasing pattern identification.
The company selected the B-to-B Commerce Platform from Ariba to
satisfy these requirements, and for the ease of use of the Ariba
Buyer system.
Deployment
Deployment went quickly; FedEx Express implemented the Ariba
system within a month. The company was able to load its existing
business rules and establish new rules in the same timeframe it took
to simply map a new process and finalize a plan for business system
implementation in the past.
FedEx began seeing a ROI, as processing requisitions -- the time a
person requests an item until the item shows up at the person's
All print and electronic rights are the property of Aberdeen Group © 2001.
AberdeenGroup · 21
Best Practices in e-Procurement: The Abridged Report
desk -- shrank from weeks to days. While it previously took four to
five days for a purchase order requisition to move through the
approval chain and get signatures from the appropriate parties,
approvals can now happen within one day.
To date, 12,000 to 13,000 employees have used the system, but
FedEx plans to give 20,000 to 25,000 users access to the
e-Procurement system. Additionally, the Web-based front-end
allows any worker authorized to work on FedEx's behalf, such as
outside contractors like auto mechanics that maintain the FedEx fleet
in smaller cities, to also order through the e-Procurement
system.
Eighty percent of U.S. Fed Ex employees have access to the system
today; eventually over 220,000 people could be using the system, as
FedEx expands its implementation to Europe, North Africa, Asia
Pacific, and South America. Indeed, FedEx plans to expand
e-Procurement to its other operating companies as well.
FedEx Corporation, FedEx Express, and FedEx Services, the sales,
marketing, and the IT support unit, are currently using Ariba Buyer,
but FedEx is aggressively rolling Ariba technologies out to all of the
FedEx Corp. companies. This includes an implementation of Ariba
marketplace offerings at FedEx Ground, where the opportunity for
process and product cost savings among its network of buyers exists.
Results
Since the advent of Internet automation in purchasing at FedEx,
overall purchasing cycle times have been reduced from 20% to 70%,
depending on items purchased. For example, purchase requests for
PCs have gone from taking 17 to 19 days to process to just two days.
Ariba Buyer has helped FedEx manage an increased number of
purchase requests with fewer people. In addition, FedEx has been
able to transfer procurement professionals to more strategic activi-
ties.
By implementing company-wide strategic sourcing initiatives three
to four years ago, FedEx reduced the number of suppliers by more
than half, from 90,000 to 110,000 down to 40,000 to 50,000. Of the
2,500 suppliers that FedEx does regular business with, 75 are cur-
rently enabled on the Ariba system. These Ariba-enabled suppliers
represent FedEx's largest volume buys. The improvement in these
contracts alone has saved FedEx money above and beyond the cost
of the Ariba Buyer system.
The main ROI factor was additional competition among vendors
alerted to new purchasing contracts with the Ariba Buyer product.
All print and electronic rights are the property of Aberdeen Group © 2001.
22 · AberdeenGroup
Best Practices in e-Procurement: The Abridged Report
"Now suppliers know they are going head-to-head," said Cawein,
"so they very aggressively price products to gain business."
For example, in the technology arena, FedEx has seen savings of up
to 40% since it started purchasing PCs through the Ariba system.
With FedEx spending $378,000,000 on IT in its 2001 fiscal year that
amounts to huge savings.
Today, only about 20% of FedEx's 25,000 yearly requisitions go
through the Ariba Buyer system; FedEx expects additional savings
as purchases in other product areas start flowing through the system
as well. The number of requisitions processed through the Ariba
Buyer system will increase dramatically, Cawein noted, as the
company steps up its compliance efforts over the next year.
Aberdeen Conclusions
FedEx Corporation had everything to gain by automating its pro-
curement practices -- money saved in processes, products pur-
chased, and better response times to the day-to-day requests that
keep the overnight leader in business. It was able to recoup the
money invested in Ariba technologies quickly, and the savings are
poised to grow, as it exemplifies what disciplined purchasing and
well-informed sourcing can be. With just one-fifth of its procure-
ment spend being automated and tracked through the system, FedEx
should continue to expand its e-Procurement activities in terms of
users, suppliers, and deployment footprint worldwide to garner even
more buying benefits.
All print and electronic rights are the property of Aberdeen Group © 2001.
AberdeenGroup · 23
Best Practices in e-Procurement: The Abridged Report
KMS Creates Supplier Portal to Better
Manage Its Supply Chain
Executive Summary
Capital equipment
e-
manufacturing is an
Company Name
Procurement
industry based on
Komatsu Mining Systems, Inc.
change. Faced with
building high-value
e-Procurement Solution Provider
products with long
Baan
production cycles,
B
est
Process Time Savings
makers of heavy ma-
Pract
chinery, manufacturing
Reduced administrative tasks by 120 hours
equipment, and other
per week; cut parts lead times in half
ices
capital products must
juggle a vast array of
Process Cost Savings
parts and subassem-
Yes
blies, unique product
Purchased Product/Service/Material
configurations, com-
plex logistics scenar-
Cost Savings
ios, and countless
N/A
change orders. To be
successful, these com-
Additional Savings/Benefits
panies must manage a
Increased supply chain visibility; improved
network of supply
partners that can be
responsiveness to changes
rapidly assembled and
dissolved, as needed, to provide optimal response to customer de-
mand. Leading capital equipment manufacturers realize that such
responsiveness depends on their ability to electronically communi-
cate and collaborate with their supply bases.
Faced with this reality, Komatsu Mining Systems (KMS), a $500
million global manufacturer of construction and mining equipment,
last year moved to create a private, Web-based network that could
both integrate with its existing Baan Enterprise Resource Planning
(ERP) system and automate direct procurement processes with key
supplier partners. In conjunction with SysComSoft, one of Baan's
systems integrator partners, KMS created a Web-based supplier por-
tal that exposes the company's ERP system to approved supplier
partners, enabling a wide range of fully automated inter-enterprise
processes -- from basic purchase order (PO) exchange to joint-
planning and scheduling. Based on the iBaan B2B Server platform,
KMS's supplier portal has dramatically increased information
All print and electronic rights are the property of Aberdeen Group © 2001.
24 · AberdeenGroup
Best Practices in e-Procurement: The Abridged Report
visibility and provided process efficiencies for all supply chain
participants.
Business Challenge
As a leading manufacturer of mining equipment, KMS prided itself
on developing and delivering high-quality products ahead of the
competition. However, elevated customer demands and increased
competition were forcing KMS to develop new, highly customized
products faster and at a lower cost than ever before. The manufac-
turer realized that meeting such demands would require dramatic
improvements in how it managed and interacted with its direct mate-
rials supply base.
Aware of the successes early movers had transitioning certain busi-
ness operations to the Internet, KMS set out to develop a private,
Web-based portal that could facilitate communications and collabo-
ration with its direct materials supply base.
Selection Criteria
Having deployed Baan's ERP solutions to automate and manage
internal operations, KMS made integration into these systems a key
requirement. "We wanted a single source of support for the
e-Procurement product and our ERP solution," said Ken Ryburn,
director of Information Technology (IT) development for KMS.
Considering these criteria, it is not surprising that KMS selected
Baan's iBaan B2B Server, primarily because of its ease of integra-
tion with their existing ERP system. The iBaan B2B Server auto-
mates transmission of eXtensible Markup Language (XML)-based
transactions over the Internet, giving KMS a standard method for
exchanging standard business documents -- such as POs and
advanced shipping notices (ASNs) -- with suppliers over the Web,
regardless of their size or technological sophistication. The iBaan
B2B Server also provided a platform to facilitate system-to-system
process flows between KMS and its suppliers.
Deployment
Pioneering the supplier portal concept, KMS had no playbook to
follow. At the time, Baan was still building out its Web-based iBaan
suite of products and solutions from vendors that did not support the
appropriate level of integration with KMS's back-end systems.
Unwilling to wait for new functionality, Komatsu enlisted the exper-
tise of SysComSoft, which had considerable experience deploying
Baan solutions.
Komatsu mapped out the process flows for its direct procurement
activities and identified how these processes could be represented
All print and electronic rights are the property of Aberdeen Group © 2001.
AberdeenGroup · 25
Best Practices in e-Procurement: The Abridged Report
and improved through automation programming by SysComSoft.
The resulting processes were instantiated in role-based workflows
between KMS's Baan ERP solution and the iBaan-driven supplier
portal. Authorized suppliers could access the supplier portal via a
standard Web browser or download documents directly into their
own business systems, in essence giving suppliers real-time access
to Komatsu's ERP systems.
KMS and SysComSoft tested the fruits of their labor with a limited
pilot of Komatsu's supplier portal in September 2000. At the time,
KMS connected one dozen suppliers to the portal for the purpose of
exchanging POs, order forecasts, order reports, and changes. By
September 2001, 370 of KMS's most critical direct materials suppli-
ers were enabled on the supplier portal, and the company had
exchanged nearly 10,000 POs through the system. KMS continues
to bring new suppliers online each week.
Results
One of the most dramatic benefits Komatsu has realized since
deploying its supplier portal is reducing the time it takes to propa-
gate changes in plans, forecasts, and POs. In the past, such changes
were communicated via a disconnected array of electronic data in-
terchange (EDI), faxes, mailings, and phone calls. For example, it
was taking one week, on average, from the time a materials require-
ments plan was issued from its Baan system until a (PO) reached the
supplier. By transmitting business documents via the supplier por-
tal, KMS has been able to share production and purchasing changes
to suppliers in real time.
Such visibility has cut cycle times for nearly all supplier-related
activities. One example: KMS reported that since using the supplier
portal, lead times for parts delivered from its core suppliers cut in
half, dropping from more than 60 working days, on average, to 30
days or less.
The supplier portal is also driving significant productivity improve-
ments within KMS. The company estimates that each buyer was
spending about two hours a day managing paper-based communica-
tions with suppliers. Across the KMS buying group, the portal has
saved nearly 120 hours per week in non-value-added time. In addi-
tion, KMS estimates that automating supplier interactions has elimi-
nated more than 3,000 pages per month of correspondence that was
once printed, faxed, and mailed to suppliers.
Suppliers have equally benefited from Komastu's supplier portal.
"In the past, suppliers received our plans by fax and had to rekey
these into their own systems," said Ryburn. "Now they can
download plans and orders directly from the Web in an Excel format
All print and electronic rights are the property of Aberdeen Group © 2001.
26 · AberdeenGroup
Best Practices in e-Procurement: The Abridged Report
to do their own analysis of the data. We also give them a forecast
report of the material we need in the future." One supplier reported
that it was saving 20 hours every other week merely from being able
to download KMS's forecasts into its systems instead of keying it in
by hand.
Lessons Learned
"We recognized early that if we were going to get our supplier part-
ners to participate in this [supplier portal] concept, we would need to
provide them with some value in return," said Ryburn. "This reali-
zation has been key to why our site is so successful in gaining sup-
plier adoption and trust."
Future Outlook
Building on its early successes with supplier-facing functionality,
KMS is currently deploying capabilities to support the online
exchange of detailed request for quote (RFQ) documents and engi-
neering drawings via the Web.
The company also has plans to deploy functionality that will let sup-
pliers create and print shipping labels directly from the portal. The
next phase in this process will be to integrate radio frequency (RF)-
based receiving functionality into its supplier portal so that items
scanned with an RF scanner at the loading dock can automatically be
registered in the system. Once operational, RF-based receiving will
enable fully automated three-way match, audit, and payment of sup-
plier invoices, eliminating KMS's lengthy, manual, and error-prone
settlement processes and giving suppliers immediate payment on
product receipt.
And, with its iBaan-based supplier portal in place, KMS is consider-
ing deploying other components of the iBaan Procurement solution,
including iBaan Portal, a buyer-side portal for the tracking and
analysis of key performance indicators; iBaan Decision Manager,
Baan's data warehouse product; and iBaan e-Procurement, a work-
flow-based solution for the purchasing of engineering prototypes
and indirect materials.
Aberdeen Conclusions
Komatsu's supplier portal debunks the myth that e-Procurement is
focused on squeezing more out of suppliers. On the contrary,
KMS's portal initiative is a model for effective supplier relationship
management. Existing and planned enhancements to the supplier
portal should position Komatsu to create and manage efficient
supplier relationships that can effectively respond to the challenges
of the complex capital-equipment manufacturing sector.
All print and electronic rights are the property of Aberdeen Group © 2001.
AberdeenGroup · 27
Best Practices in e-Procurement: The Abridged Report
SPX Makes e-Sourcing a Key Driver of
Its "Value Improvement Process"
Executive Summary
Companies in every
e-
industry are under in-
Company Name
Procurement
creasing pressures to
SPX Corporation
reduce costs, to com-
pete globally, to shrink
e-Procurement Solution Provider
time-to-market cycles,
FreeMarkets
and to deliver cus-
B
est
Process Time Savings
tomer-specific prod-
Pract
ucts. The weakening
Yes
global economy has
ices
Process Cost Savings
magnified these pres-
sures. In this hyper-
Yes
competitive economic
Purchased Product/Service/Material
environment, the most
Cost Savings
successful companies
will be those that can
10% unit cost reductions, on average
organize their assets to
Additional Savings/Benefits
deliver consistently the
right quantity of the
Increased buyers' skill sets; standardized on
right products to
global-sourcing strategies
market at the lowest
total cost and for the maximum profit.
SPX Corporation, a US$5 billion global provider of technical prod-
ucts and systems, industrial products and services, flow technology,
and service solutions, is acutely aware of these pressures -- and is
positioned to respond. The Muskegon, Michigan-based multi-
industry firm has instituted an enterprise-wide "Value Improvement
Process®" designed to streamline processes, reduce costs, and
acquire, divest, and assemble assets for maximum customer value
and profit. SPX's procurement and supply chain operations have
been key drivers of this initiative and its success.
SPX recently focused on automating its sourcing activities, tapping
FreeMarkets to shorten sourcing cycles and to negotiate significant
price reductions -- all while maintaining a high level of quality and
service within its global supply base.
Business Challenge
SPX is a fast-growing company with 34 business units and opera-
tions in 34 countries. The firm boasts a highly diversified product
All print and electronic rights are the property of Aberdeen Group © 2001.
28 · AberdeenGroup
Best Practices in e-Procurement: The Abridged Report
mix, ranging from storage area network products and telecommuni-
cations equipment to electrical transformers and vehicle compo-
nents. As part of its value improvement process, SPX adjusts its
operations -- including acquiring and divesting businesses -- in
response to changing market demands. This "rightsizing" strategy
has helped SPX remain among the top providers within the product
and market sectors in which it competes. It also has forced the
multi-national firm to devise strategies for managing an operational
infrastructure that is constantly in flux.
Selection Criteria
To assimilate and control its diverse and geographically dispersed
business operations, SPX has instituted corporate-wide procedures
based on Economic Value Added (EVA) financial measurement
methodology. The EVA methodology ensures that all business deci-
sions and processes are aligned and executed for maximum profit.
Procurement has played a leading role in SPX's value improvement
initiatives.
Unlike many large enterprises, SPX has maintained a decentralized
purchasing structure, giving each business unit the autonomy to
organize and manage suppliers required to meet the unique needs of
the products it manufactures and the markets it serves. All of SPX's
purchasing groups participate in a global purchasing council that
facilitates the sharing of procurement best practices.
While such efforts were well-intended, SPX could not ensure that its
business units had the skills or resources to implement the best prac-
tices identified. The purchasing council viewed Internet-based
sourcing as a means to elevate the skill set of buyers and to
institutionalize common procedures across the enterprise.
The council set out to identify an e-Sourcing solution that would
allow SPX to deploy best-in-class sourcing procedures and to
achieve significant price ("unit cost") savings while maintaining the
integrity and quality of its supply base. After evaluating several
vendors, SPX selected FreeMarkets for its product category exper-
tise, for its proven sourcing methodologies, and for its considerable
experience in creating and managing online negotiation events on a
global basis.
Deployment
In April 2000, SPX licensed FreeMarkets' FullSource solution,
which includes FreeMarkets' auction platform coupled with Free-
Markets' supplier network, commodity expertise, and market-
making and market operations services. This initial pilot returned an
All print and electronic rights are the property of Aberdeen Group © 2001.
AberdeenGroup · 29
Best Practices in e-Procurement: The Abridged Report
average 15% reduction in unit cost, prompting SPX to roll out the
FullSource solution on a global basis.
By August 2001, SPX had run more than 30 online negotiation
events through FreeMarkets for a total of US$150 million of pur-
chases in 20 different commodity areas including metals, stampings,
machining, transportation, and temporary labor. The company
began using this solution at a single location in April 2000, running
pilot events for printed circuit boards (PCBs), metals, castings, and
wirings. SPX has been careful to use multi-parameter request-for-
quote (RFQ) and auction formats to ensure that non-price factors --
including quality, delivery, and switching costs -- are amply con-
sidered in every sourcing event.
As SPX buyers grew more experienced with online negotiations, the
company extended its license to include FreeMarkets QuickSource,
a fully hosted software application that enables enterprises to create
their own markets.
Results
Since deploying FreeMarkets, SPX has been able to achieve signifi-
cant unit cost savings, ranging from 0.5% to over 20%, depending
upon the commodity being sourced. SPX attributes such savings to
the extensive knowledge FreeMarkets has in specific commodities
and markets, as well as to the global accessibility of Internet-based
auction technologies.
"Most of our divisions are in remote U.S. locations and could not
reach a significant number of suppliers on a global basis," said Bob
Ward, Director of Global Sourcing at SPX. "FreeMarkets has given
us the ability to evaluate and negotiate with suppliers in other parts
of the globe."
FreeMarkets' ability to deliver enhanced supplier information and
proven sourcing methodologies have helped raise the skill set of
SPX buyers. It has also improved SPX's processes for identifying
and negotiating with suppliers. Prior to deploying FreeMarkets,
SPX used a labor-intensive sourcing process that relied on faxes,
e-mails, and phone calls. Supplier proposals were evaluated using
basic spreadsheet applications, limiting the depth to which a buyer
could compare and analyze suppliers' bids.
With FullSource automating data collection, publication, and revi-
sions, SPX's buyers have been able to focus on more strategic tasks,
such as qualifying new suppliers and thoroughly analyzing bids.
These efficiencies have allowed SPX to apply strategic sourcing to
spending areas -- such as temporary labor, transportation, mainte-
nance, repair, and operating (MRO) supplies -- that previously had
been overlooked due to time and resource constraints.
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30 · AberdeenGroup
Best Practices in e-Procurement: The Abridged Report
Lessons Learned
Knowing that continued success required widespread acceptance
and adoption of the online sourcing model across its global enter-
prise, SPX utilized three strategies for rolling out FreeMarkets:
1. Enlist "C-level" executive support;
2. Target areas of spending that could return the greatest savings
in the shortest amount of time; and
3. Continually monitor performance and compliance.
"Our chairman is very involved with the purchasing council and was
an early supporter of this [e-Sourcing] initiative," said Ward. "His
support helped make adoption go a lot quicker. We also went after
the low hanging fruit first in order to test the FreeMarkets model and
to provide the greatest opportunity for savings and success. We
constantly monitor the performance of our online negotiations, as
well as our compliance, to ensure that negotiated savings are actu-
ally realized."
Future Outlook
SPX will continue to use the FreeMarkets FullSource solution for
complex negotiations and for penetrating new supply markets. Hav-
ing gained familiarity with online negotiations, SPX will begin to
manage sourcing events for routine and standard products internally,
using FreeMarkets QuickSource tool. Together, these solutions
offer SPX a common platform for further standardizing and
improving sourcing procedures across the enterprise.
Aberdeen Conclusions
In less than a year, SPX has been able to realize significant sourcing-
process improvements as well as multi-million dollar cost savings --
without sacrificing the product quality or level of service it received
from its suppliers. Aberdeen anticipates that e-Sourcing will be a
major contributor to SPX's continued efforts to drive value-based
improvements across its diverse and geographically dispersed or-
ganization.
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AberdeenGroup · 31
Best Practices in e-Procurement: The Abridged Report
e-Sourcing Is Standard Operating
Procedure at Sun Microsystems
Executive Summary
Time-to-market, tech-
e-
nology innovation, and
Company Name
Procurement
product quality are the
Sun Microsystems, Inc.
yardsticks by which
high-tech manufactur-
e-Procurement Solution Provider
ers have been meas-
iPlanet, FreeMarkets, Procuri,
ured. Electronic Origi-
B
ICG Commerce
est
nal Equipment
Pract
Manufacturers
Process Time Savings
(EOEMs) that deliver
Cut sourcing cycle times in half
ices
the right products to
market faster than the
Process Cost Savings
competition can realize
Not available.
greater profit margins
Purchased Product/Service/Material
and business volumes.
However, the window
Cost Savings
for success in the high-
Negotiated 20% unit cost reductions, on
tech sector is extremely
average
narrow.
Additional Savings/Benefits
With product life-
cycles measured in
Improved sourcing discipline and process
months and high-tech
standardization; enhanced market data
products losing as
much as 20% of their value in a single business quarter, high-tech
manufacturers have little room for error. Producing more product
than the market demands can leave EOEMs with worthless inventory
on their books. (Witness the billions of dollars of finished electronic
goods and component inventories currently on shelves worldwide.)
On the other hand, going to market without ample capacity can re-
sult in customer angst and missed sales opportunities.
Avoiding such risks requires EOEMs to quickly source the right
amount of electronic components and assemblies at the lowest total
cost. Unfortunately, sourcing cycles in the electronics industry
average between three months and five months. In fact, even lead-
ing manufacturers report that the sourcing process can constitute as
much as one-third of the time-to-market cycle for new products.
Faced with such challenges, Sun Microsystems Inc., a leading
provider of computer hardware, software, and services, set out to
speed and improve its sourcing procedures by deploying Internet-
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32 · AberdeenGroup
Best Practices in e-Procurement: The Abridged Report
based sourcing and dynamic bidding technologies as part of its over-
all sourcing strategy. Mixing internally developed software applica-
tions from iPlanet, Sun's business software applications
division, with commercially available e-Sourcing solutions from
FreeMarkets, ICG Commerce, and Procuri, Sun has created an
e-Sourcing framework that has helped cut sourcing cycles in half
and reduce the unit costs of its direct materials by 20%. e-Sourcing
has also helped Sun to instill discipline into its sourcing process and
to access improved market intelligence.
Business Challenge
As a leading provider of high-end servers, computer equipment, and
business software, Sun has always prided itself on getting high
quality, innovate products to market first. Key to Sun's success has
been its ability to identify and groom close relationships with lead-
ing electronic component and assembly suppliers. In recent years,
increased competition and downward pricing pressures forced Sun
to take a hard look at its cost structure -- both internally and across
its supply chain. Those challenges led Sun to develop a strategic
sourcing program that could achieve four key goals:
1. Identify true market pricing for select commodities;
2. Make more informed sourcing decisions;
3. Shrink sourcing process cycle times; and
4. Drive process discipline and visibility -- within Sun and across
its supply base -- into the request-for-quote (RFQ) creation and
sourcing process.
Selection Criteria
Sun viewed e-Sourcing in general, and dynamic bidding in particu-
lar, as a key pillar of its sourcing strategy. An early adopter of
emerging procurement technologies and strategies, Sun approached
e-Sourcing cautiously, refusing to take risks with unproven applica-
tions or services. In fact, Sun's leading criterion for selecting an
e-Sourcing solution was the success of the solution's previous
deployments, particularly in the area of direct materials
negotiations. Other factors weighing in Sun's decision included the
depth of the solution vendor's market-making and dynamic-bidding
knowledge, and the sophistication of the e-Sourcing or auction tool
itself.
After surveying the market in 2000, Sun created a unique e-Sourcing
framework that combined a mix of sourcing and reverse auction
All print and electronic rights are the property of Aberdeen Group © 2001.
AberdeenGroup · 33
Best Practices in e-Procurement: The Abridged Report
technologies from FreeMarkets, Procuri, ICG Commerce, and
iPlanet, a Sun-Netscape Alliance.
Deployment
Sun began its e-Sourcing initiative in May 2000 by running 15
controlled pilot events for particular direct materials, such as printed
circuit boards (PCBs). The manufacturer quickly extended its
e-Sourcing initiative to cover a wide range of direct materials parts
and assemblies, and select, indirect expenditures, as well.
By June 2001, Sun had run 100 online bidding events involving
trusted supplier partners from around the world. All told, during the
first year of its e-Sourcing initiative, Sun ran dynamic bidding
events for over US$1 billion worth of materials and services online,
making it one of the largest users of e-Sourcing.
Results
Through its e-Sourcing initiative, Sun has been able to negotiate
annualized savings of 20%, on average, across all product areas. It
is important to note that these savings reflect the awarded price,
which was not always the lowest bid. Sun sourcing policy requires
that awards be based on the total cost of doing business with a
supplier.
Sun has also cut the cycle time for repetitive sourcing decisions in
half, from six weeks to three weeks or less. However, Sun believes
the biggest benefit of e-Sourcing is that it offers enhanced process
control and consistency in the sourcing process across the enterprise.
"[e-Sourcing] has driven a higher level of discipline into our sourc-
ing practice," notes Tony Cavotta, senior manager of eSolutions and
Dynamic Bidding at Sun. "It has helped us preserve our key
supplier relationships and access more valid data."
Suppliers have also benefited. Sun rationalized its supply base years
ago, engaging in long-term commitments with a select group of
supplier partners. As a result, Sun has primarily used e-Sourcing to
automate, streamline, and enhance negotiations with its existing sup-
pliers.
"[e-Sourcing] has provided our suppliers with greater visibility into
our requirements and equal access to information," Cavotta
explains. "All suppliers are getting unbiased data on how they stack
up against the market in real time."
Lessons Learned
Sun strategically designed an e-Sourcing plan that simultaneously
hedged risks and ensured compliance. Aware that the e-Sourcing
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34 · AberdeenGroup
Best Practices in e-Procurement: The Abridged Report
market was still in its infancy, Sun avoided tying itself to a single
technology, instead using a mix of commercially available, proven
solutions, and internally developed applications and sourcing
methodologies.
Sun also knew that success relied on rapidly gaining participation
both internally and among suppliers. According to Cavotta, "One of
our big mantras has been process credibility. We recognize that if
suppliers and internal participants don't trust this process, the whole
value proposition is blown."
Sun's procurement team gained support for e-Sourcing from the very
top, with CEO Scott McNealy publicly advocating the value of dy-
namic pricing and online negotiations. The team also trained sup-
pliers on the use of dynamic bidding systems and educated them on
the value of e-Sourcing. However, the key reason for Sun's
success is the company's early realization that e-Sourcing is about
improving processes. "This is a change-management game," notes
Cavotta. "It's not about software or technology; it's about changing
processes."
Future Outlook
Buoyed by early results with e-Sourcing, Sun plans to establish
dynamic bidding as a routine sourcing activity across all its business
units and for an increasing number of commodities. The manufac-
turer also plans to integrate dynamic bidding solutions with related
software applications, such as contract management and supplier
score-carding systems. Finally, Sun plans to help its suppliers use
dynamic bidding for their own sourcing initiatives, driving further
process improvements and cost benefits across the sub-tier supply
base.
Aberdeen Conclusions
Sun's success demonstrates that adopting new technologies need not
be risky. Using a well-defined strategy that includes garnering
executive support and preserving supplier relationships, Sun was
able to rapidly deploy an e-Sourcing framework that dramatically
reduced costs, streamlined processes, and instilled sourcing
discipline across the enterprise. Such achievements should help Sun
in its quest to deliver the most innovative products to market faster
and at a lower cost than its competitors.
All print and electronic rights are the property of Aberdeen Group © 2001.
AberdeenGroup · 35
Best Practices in e-Procurement: The Abridged Report
UNICCO Deploys e-Procurement to Save
Money and Win Customers
Executive Summary
As a facilities services
e-
Company Name
company, UNICCO
Procurement
thrives by providing
UNICCO Service Company
the materials and peo-
e-Procurement Solution Provider
ple that keep other
businesses up and run-
elcom inc.
B
ning. To support these
est
Process Time Savings
needs, UNICCO has
Pract
made the strategic
Weeks to days
decision to deploy el-
ices
Process Cost Savings
com Inc.'s
Cut PO process costs by 40%
e-Procurement offer-
ing. UNICCO's goal
Purchased Product/Service/Material
was to use the elcom
Cost Savings
solution to keep
UNICCO's business
$500,000 in first six months
running efficiently,
Additional Savings/Benefits
and to save time and
money by consolidat-
Improved data gathering and system
ing and standardizing
integration
its almost $90 million
maintenance repair and operations (MRO) spend across North
America.
The technology investment, coupled with process design improve-
ments and a company focus on leveraging national programs, is
paying off in saving the firm over a half a million dollars in the first
six months of implementation, and cutting UNICCO's purchasing
process cycle in half. The automated Web-based system has also
given UNICCO an edge in securing new customers, as it is now able
to offer clients quick access to necessary facilities supplies and
services at the click of a mouse.
Company Background
UNICCO Service Company is a top provider of integrated facilities
services to more than 2,000 commercial, industrial, and institutional
clients throughout the U.S. and Canada. The firm offers a wide
variety of services from administrative and office support; to
specialized cleaning such as laundry, granite and marble, and drains;
to heating, ventilation, air conditioning (HVAC), electrical system
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36 · AberdeenGroup
Best Practices in e-Procurement: The Abridged Report
and lighting installation; to buildings, grounds, plant, and vehicle
maintenance.
Employing 20,000 people across North America from 16 offices in
the U.S. and five in Canada, UNICCO has revenues of more than
$600 million annually. Citing 25% of the Fortune 100 as clients, the
company prides itself on being responsive to customers, boasting
one of the highest retention rate in the facilities services industry
with 20 of its largest accounts doing business with UNICCO for an
average of 10 years.
Business Challenge
UNICCO has an annual spend of $160 million, with $85 to $90
million going to MRO materials. Thirty-five percent of its MRO
spend is for subcontracted work it farms out to partners, like land-
scaping and security services. The company processes over 100,000
purchase orders (POs) annually, using 9,000 active suppliers. Hun-
dreds of employees are empowered to purchase goods, which
contributes to the fact that 80% percent of its invoices are for less
than $300.
Despite such high purchasing volumes, however, UNICCO had a
decentralized procurement organization, relying on paper requisi-
tions and POs. Independent business units managed their own pur-
chasing, often working with local suppliers, in the face of corporate
attempts to establish national contracts. This resulted in a high
degree of maverick spending, ranging from 75% to 80%.
Overall, communication was poor between requisitioners and pro-
curement officers within the business units, as well as between the
procurement departments and suppliers. And with no real compre-
hensive centralized vendor management programs in place,
UNICCO could not enforce procurement policies, nor negotiate
preferred rates with suppliers for volume business across organiza-
tional units.
"We weren't getting the bang for our buck leveraging our national
spend," said Jeff Peterson, Vice President, Information Technology/
Shared Services. "We needed to push to create national programs
and put the technology in place to support a standard process."
In addition, UNICCO anticipated a considerable increase in purchas-
ing workload as the company experienced 6% to 7% revenue growth
each year. With the existing procedures poorly managed and
disjointed, UNICCO needed a company-wide solution that would
facilitate national purchasing reporting and vendor management.
All print and electronic rights are the property of Aberdeen Group © 2001.
AberdeenGroup · 37
Best Practices in e-Procurement: The Abridged Report
Selection Criteria
UNICCO addressed its need for an e-Procurement solution in early
2000 as part of an overall business process re-engineering initiative
to create a shared services business model for its separate business
units. Purchasing was to be one of the first shared services to be
deployed, and UNICCO wanted a system that was easy to use, could
be implemented quickly, and did not have to be built internally.
UNICCO selected elcom Inc.'s PECOS Internet Procurement
Manager (PECOS.ipm) as its e-Procurement platform because the
remotely-hosted solution eliminated internal IT commitments, in
terms of both development and maintenance efforts. Its application
service provider (ASP) model was also important to UNICCO
because it represented a "practice what you preach" solution for the
company as a provider of outsourced services.
elcom's supplier enablement initiatives also attracted UNICCO's
interest. elcom partnered with Arthur Andersen to offer "Supplier
Summits" where the companies bring together all of a customer's
suppliers to educate them on what they need to do to participate in
the e-Procurement system by way of catalog content and receiving
orders. This approach took all the "heavy lifting" away from
UNICCO, which didn't have to worry about on-going content and
system maintenance.
Finally, the PECOS Internet Procurement Manager was able to inte-
grate with UNICCO's existing Enterprise Resource Planning (ERP)
system from JD Edwards. UNICCO wanted a sophisticated work-
flow that could tie the necessary approvals and budget integration
into its back office as well.
Deployment
UNICCO kicked off the PECOS.ipm implementation process in
October 2000, rolling it out in a three-month pilot program with 60
users at two business units. Full deployment was reached by July
2001, with over 300 users trained and 100 people currently using the
system. UNICCO has set a target of 500 employees empowered to
use it in total.
UNICCO has 40 supplier catalogs so far, with another 20 to 25
pending. The goal is to get 100 to 200 suppliers in the biggest spend
areas with online catalogs or via punch out technology to facilitate
vendor management and control. The purchasing department then
plans to negotiate discount prices moving forward.
So far, UNICCO has automated the purchase of areas such as
janitorial supplies and equipment, industrial supplies and equipment,
computer supplies, shipping services, and copy services. Currently,
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38 · AberdeenGroup
Best Practices in e-Procurement: The Abridged Report
20% of total spending is going through the system, which Peterson
attributes to its relatively early application life cycle stage.
However, he is making a big push in compliance efforts this year,
and hopes to eventually see 75% to 80% of total spend being
processed online. UNICCO also uses P-cards for specific service
categories and is looking to integrate that buying channel into the
elcom solution.
Results
Overall, Peterson noted implementing an e-Procurement system has
shown UNICCO lowered administration costs, improved data
gathering, increased purchasing contract compliance, reduced requi-
sition cycles and improved systems integration.
In hard-dollar savings, UNICCO was able to recoup $500,000 in
product cost savings from better commodity analysis and aggregate
spending with just 25 suppliers. The system has allowed the firm to
better manage its spend and negotiate reductions above its normal
preferred vendor discounts.
The biggest internal plus for UNICCO has been improved transac-
tion management, dropping administrative costs 40% per purchase
order. Cycle times have decreased dramatically as well -- while in
the past requisition process times varied from site to site, the worst
case scenario has gone from "months and weeks" to receive goods,
to "days and hours," Peterson said.
In addition, PECOS.ipm now gives UNICCO better data on what is
being spent and where. In the past, the little purchasing data that
was captured in the enterprise resource management (ERP) wasn't
coded correctly and it couldn't be analyzed accurately.
"It was like pulling teeth, getting information out of our ERP system
in the past," said Peterson. "Now we can hold suppliers account-
able."
UNICCO also sees having an e-Procurement solution as a strategic
advantage. It gives the company more credibility with customers, as
UNICCO provides the opportunity to clients to buy MRO material
through its own channels. Peterson attributes having an
e-Procurement system as a contributing factor in winning some new
key accounts.
"If you are not in the e-Procurement game in our industry, the high-
profile customers look at you kind of funny," he concluded. "The
implementation of an e-Procurement process and solution is part of
building an e-Business framework, which provides customers the
account management tools to help manage facility costs."
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AberdeenGroup · 39
Best Practices in e-Procurement: The Abridged Report
Aberdeen Conclusions
UNICCO had no excuse for manual procurement procedures given
its status as an outsourcing services organization with responsibility
to provide the products and personnel to keep organizations running
efficiently. So indeed practicing what it preaches, UNICCO took
advantage of the outsourcing model to deploy e-Procurement
through elcom, which was quickly and efficiently able to step in and
set up and run the system, as well as enable suppliers. UNICCO has
set a goal of reducing suppliers by 50% in implementing
e-Procurement, and should follow through in streamlining its vendor
base by at least that amount. With half a million dollars in savings
to date, the company is poised to reap considerably more unit cost
reductions as it truly consolidates and controls its spend across
North America.
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40 · AberdeenGroup
Best Practices in e-Procurement: The Abridged Report
Author Profiles
Tim Minahan, Vice President, Supply Chain Research
Minahan provides analysis and assessment of business-to-business
Internet commerce and EDI solutions for procurement, sourcing,
logistics, and supply chain management. He specifically focuses on
supply chain and procurement technology solutions that drive unit
cost savings, reduce process costs and cycle times, support self-
service procurement capability, integrate with key back-office and
trading partner systems, and provide metrics that enable manage-
ment to improve design and administration of the supply chain and
to better utilize corporate purchasing dollars. Minahan continually
consults with early implementers of these applications to identify
world-class supply chain and e-Procurement strategies and to deter-
mine the strengths and weaknesses of technology solutions and ser-
vices that are competing in the supply chain software market.
Minahan recently published a research report on e-Sourcing, and he
has completed survey research on e-Procurement user experiences,
solution functionality, and catalog management functionality. He is
currently conducting research into end-user experiences with
e-Sourcing and auction technologies as well as functionality re-
search of leading Logistics Resource Management (LRM) solutions.
Minahan joined Aberdeen after a decade of researching, reporting,
and advising on procurement, supply chain management (SCM),
e-Commerce, computer policy, and technology issues. He previ-
ously served as senior editor of SCM for Purchasing magazine, edi-
tor for Electronics Purchasing, and a technology reporter for
Government Computer News. Minahan has a B.A. from Boston
College.
Christa Degnan, Research Analyst
Degnan researches the purchasing requirements and indirect spend
of businesses, government agencies, and educational institutions.
She analyzes how these organizations can optimize their operational
dollars. Degnan then consults with the software vendors and service
providers that support the automation of the procurement and
expense management processes online to help them develop and
position their offerings to best meet end-users' business needs.
Degnan has conducted survey research on e-Procurement user
experiences and the functionality of software and service vendors'
solutions. Her findings were published in the Market Viewpoint,
All print and electronic rights are the property of Aberdeen Group © 2001.
AberdeenGroup · 41
Best Practices in e-Procurement: The Abridged Report
e-Procurement: Finally Ready for Prime Time (March 2001). She
has also worked to quantify the specific benefits of e-Procurement
implementations via case studies in the banking and healthcare
industries, as well as in South East Asia. Most recently, Degnan
studied early efforts to automate the purchase of complex business
services such as travel, printing, and contract labor, and she dis-
cussed the drivers of this emerging market in the Executive View-
point, Thinking Outside the Catalog: Online Services Procurement
(OSP) (October 2001).
Degnan brought nine years of experience in the technology industry
to Aberdeen, including reporting beats on Internet business applica-
tions at PC Week (now eWeek) and a New England regional technol-
ogy paper, Mass High Tech. Most recently, Degnan was the manag-
ing editor of Computer.com, where she was part of the team respon-
sible for architecting and implementing the con-
tent/commerce/community Web site. Degnan holds a B.A. from
Barnard College, Columbia University, incorporating studies at Uni-
versity College, University of London.
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42 · AberdeenGroup
Best Practices in e-Procurement: The Abridged Report
Appendix A:
Lexicon of Acronyms and Abbreviations
API
Application Programming Interface
APS
Advanced Planning and Scheduling
ASP
Application service provider
ATP Available-to-promise
BOM
Bill of Materials
BPN
Business Process Networks
BTO Build-to-order
EAI
Enterprise Application Integration
ERP
Enterprise Resource Planning
JIT Just-in-time
LRM
Logistics Resource Management
MRO
Maintenance, Repair and Operating
MRP
Material Requirements Planning
PO Purchase
Order
OSP
Online Services Procurement
RFI
Request for information
RFP
Request for proposal
RFQ
Request for quote
SCEM
Supply Chain Events Management
SCM
Supply chain management
XML
eXtensible Markup Language
All print and electronic rights are the property of Aberdeen Group © 2001.
AberdeenGroup · 43
Best Practices in e-Procurement: The Abridged Report
Appendix B:
Related Aberdeen Research
Aberdeen Group has produced several publications that provide
complementary market research and strategic market information
relating directly to e-Procurement:
· Logistics Cost Management: Speeding Global Business, White
Paper (May 2001);
· e-Procurement: Finally Ready for Prime Time, Viewpoint
(March 2001);
· Strategic e-Sourcing: A Framework for Competitive Advantage,
Report (March 2001);
· Logistics Resource Management: It's Not Just About Moving
Goods Anymore, White Paper (September 2001); and
· Thinking Outside the Catalog: Online Services Procurement,
Viewpoint (October 2001);
Information on these and any other Aberdeen publications can be
found at www.aberdeen.com or by e-mailing info@aberdeen.com.
All print and electronic rights are the property of Aberdeen Group © 2001.
44 · AberdeenGroup
Best Practices in e-Procurement: The Abridged Report
Appendix C:
e-Procurement Vendor Contact Details
Ariba Inc.
Baan
1565 Charleston Rd.
Apeldoornsestraat 131
Mountain View, CA 94043
3781 PM Voorthuizen
P.O. Box 41
(650) 390-1000
3780 BA Voorthuizen
www.ariba.com
Netherlands
+31 342 47 7500
www.baan.com
Diligent Software Systems Corp. Commerce One Inc.
(formerly Webango Inc.)
CarrAmerica Corporate Center
3508 Bassett Street
(Buildings #1 & #4)
Santa Clara, CA 95054
4440 Rosewood Drive
Pleasanton, CA 94588
(408) 562-9925
(800) 308 3838
www.commerceone.com
FreeMarkets Inc.
elcom inc.
FreeMarkets Center
10 Oceana Way
210 Sixth Avenue
Norwood, MA 06062
Pittsburgh, PA 15222
(800) 446 9904
(888) 434-0500
www.elcom.com
(412) 434-0500
www.freemarkets.com
iPlanet e-Commerce Solutions
ICG Commerce Inc.
901 San Antonio Rd.
610 Old York Rd., Suite 300
Palo Alto, CA 94303
Jenkintown, PA 19046
(650) 960-1300
(877) 935-ICGC
(888) 786-8111
www.icgcommerce.com
www.iplanet.com
Tradec Inc.
Procuri Inc.
84 W. Santa Clara St., Suite 500
Tower Place 200, Suite 200
San Jose, CA 95113
3348 Peachtree Road NE
Atlanta, GA 30326
(408) 291-2565
www.tradec.com
(404) 846-5400
www.procuri.com
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