Analytics & Data Community Insights Society

Procurement That Saves Money, and Even Lives

Are these farmworkers treated well? You should know, if you’re buying their output, and companies are finding that better managing their supply chain can make it possible. (Photo courtesy SAP Ariba)

As a procurement professional, James Edward Johnson was hitting it out of the park. He’d embraced technology to turn a painful, manual process that his colleagues at Nielsen had hated into a consumer-like, digital one that made things easy for them. Costs were lower. People were happy.

But Johnson wasn’t satisfied. He wanted to do more. “When my kids ask me ‘what did you do today?’ I don’t want to tell them that I saved my company a bunch of money,” he says. “I want to tell them I saved lives.”

It’s something I often hear as I travel the world meeting with customers in my role as President of SAP Ariba. In addition to doing well for their companies, procurement executives also want to do good. They don’t want to simply buy stuff anymore. They want to make a difference. They want to drive ethical behavior across the supply chain, and take on things like supplier diversity, as well as tougher challenges like the elimination of forced labor or the use of minerals that come from conflict zones. And they have the power to do it.

Collectively, companies in the Global 2000 spend a staggering $12 trillion on goods and services annually. And by tying their purchases to purposes, these companies can ensure they provide fair labor practices across their supply chain. They can make opportunities available to minority and female-owned businesses. And they can ensure that no slave labor is being used to make their products.

I see many companies trying to connect these dots. But many are struggling because they lack the transparency of information about their supply chain, and the connections required to make changes. This is where networks come into play. Just as social networks allow consumers to share shop, and consume, business networks give companies the power to discover, connect and collaborate across a global network of partners in an open and informed way. That way the learnings of one organization can benefit all. We can all work together to do good. Procurement organizations that harness this power can provide greater transparency and new insights into supply chains and ensure they are acting in ethically responsible ways.

Johnson, for instance, has implemented software that leverages historical and real-time purchasing data and supplier intelligence that lives on the Ariba Network in conjunction with applications for data analysis to help him detect and mitigate the risk that forced labor may be present somewhere in Nielsen’s supply chain.

Using networks – and the cloud-based applications delivered on them – procurement can drive a simple, digital process for managing spending from end to end.  But beyond this, executives can elevate the function and deliver more broad business value by aligning with and driving a company’s higher purpose.

Nedbank, one of the largest banks in South Africa, is a great example of this. When it set out to digitize procurement, its goal was simple – and similar to that of most companies: create a standard process that could lower costs and drive efficiencies. So they joined a network and began using the software delivered on it to automate everything from sourcing and orders to invoices and payments. Today, things are nearly paperless.

Many companies would have stopped there. But Nedbank figured out it had the data and connections to do more, beyond saving money. As part of the bank’s efforts to forge a more collaborative way of doing business and support its suppliers, Nedbank launched a development program to identify trading partners whose businesses it could make more sustainable and successful.

One of the first participants in the program was Monabo, a minority-owned cleaning firm. Nedbank assigned a mentor and provided additional resources to help Monabo secure new clients, manage cash flows and financial statements and position itself as an innovative ‘green’ cleaning and hygiene company – all of which gave the company access to new markets and allowed it to triple its turnover.

That’s the power of purpose. And I believe it is the greatest power of all. Purpose inspires us. It moves us. It enables us to reimagine and reinvent what is possible. It enables us to achieve great things.

Alexander Atzberger is president of SAP Ariba. 

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