SAP SRM cuts costs from procurement
Thursday, 7 May, 2009In these uncertain times, it is vital for any organisation to control and minimise costs. One area where there is a substantial potential for cost reduction is procurement.
The ever increasing emphasis on lean processes and the availability of newer technologies and tools to realise them means there is no better time than now for reviewing and enhancing existing processes.
SAP’s Supplier Relationship Management (SRM) provides good tools to not only meet today’s challenges, but also to achieve long term process improvement and cost efficiency. We will briefly look at a few of these tools, and the flow on effect from their use.
Catalogues: With electronic search capabilities, version management, uniform and easy-to-use presentation of rich content and seamless integration with the shopping cart process, catalogues not only make procurement an enjoyable experience for the end user, they also allow the organisation to decentralise the process. Control over expenditure is maintained via pre-agreed prices and a reduction in users buying the ‘wrong’ products, which can occur in a non-catalogue based procurement.
Organisations that have a high volume of spend managed via catalogues should be constantly looking at adding to the total catalogue item count. SRM offers rich functionality for the setting up of catalogues, including bills of materials, sales kits and price scaling.
Consider also that some of these common use items may require extra data to be passed back to the supplier. The E-Form can be used to satisfy this requirement, such as with the procurement of business cards.
Sourcing and Contracts Management: The supplier source determination and contracts management functionality in SRM can be used to lead the users to the correct supplier for the commodity rather than the users trying to find the supplier themselves. The benefits of this approach are the reduction in the end users’ time to find a suitable supplier and avoiding maverick spend. From an organisational point of view, contracts often mean lower prices for products of an acceptable quality.
Automation: The end-to-end procurement process from catalogues to payment presents multiple opportunities for process automation making the process more efficient and bringing about long term administrative cost savings via the reduction /elimination of manual steps.
Supplier invoice processing is one such area which often is a pain-point and organisations should look to bring more suppliers to electronic invoicing. The suppliers that provide catalogue items should be the logical first choice for electronic integration, primarily due to the accuracy of price and standardisation of data in the purchasing process.
