Automaker Cuts Procurement Costs With SAP Software - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

IoT
IoT
News

Automaker Cuts Procurement Costs With SAP Software

DaimlerChrysler AG's Mercedes Benz auto-production operation in Spain has realized a more than 80% return on its investment.

DaimlerChrysler AG's Mercedes Benz auto-production operation in Spain has realized a more than 80% return on its investment in E-procurement software from enterprise vendor SAP.

Daniel Saenz, Mercedes Benz Espana's manager of organization and process management, says his company has reduced procurement costs for nonproduction-related supplies by nearly 30%, using SAP's mySAP.com Enterprise Buyer Professional. The company's annual spending for nonproduction-related supplies is about $60 million.

The savings has been achieved by moving half of the 10 employees required to check invoices and process orders to other jobs, consolidating contracts with vendors, negotiating lower pricing, and reducing the paperwork required for orders--which has helped reduce order lead times from 14 days to one day.

Mercedes has cut the number of suppliers from nearly 1,500 to about 200 since it went live on the software in March at its production plant in Vitoria, Spain, and at its Barcelona offices. For example, the automaker had used 109 suppliers for electronic switches used in machines, tools, and plant maintenance. Now they use a single supplier for switches and all orders are handled over the Internet, Saenz says.

The company also has used the software to connect with the U.S.-based automotive exchange Covisint. Aberdeen analyst Fran Howarth says the company is using EBP as its first step to using Covisint for production parts and materials.

Mercedes says integration to Covisint took only two days, using SAP XML connectors to its SAP R/3 enterprise applications and Commerce One cXBL connectors used on Covisint. Mercedes is currently piloting the use of EBP connected to Covisint with a key supplier and expects to begin using Covisint for production materials early next year.

A key benefit is already being realized, Saenz says. For nonproduction supplies, the company is quickly moving toward exposing its inventory of vital materials to its suppliers so those vendors can maintain their own stock. The vendor-managed inventory system should be ready for full-time deployment early next year, reducing the number of required procurement personnel even further, he says. Adds Saenz, "Once a contract is negotiated, it will be closed, no more searching for suppliers. And no mistakes in the process."

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
The State of Cloud Computing - Fall 2020
The State of Cloud Computing - Fall 2020
Download this report to compare how cloud usage and spending patterns have changed in 2020, and how respondents think they'll evolve over the next two years.
News
Top 10 Data and Analytics Trends for 2021
Jessica Davis, Senior Editor, Enterprise Apps,  11/13/2020
Commentary
Where Cloud Spending Might Grow in 2021 and Post-Pandemic
Joao-Pierre S. Ruth, Senior Writer,  11/19/2020
Slideshows
The Ever-Expanding List of C-Level Technology Positions
Cynthia Harvey, Freelance Journalist, InformationWeek,  11/10/2020
Register for InformationWeek Newsletters
Video
Current Issue
Why Chatbots Are So Popular Right Now
In this IT Trend Report, you will learn more about why chatbots are gaining traction within businesses, particularly while a pandemic is impacting the world.
White Papers
Slideshows
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Sponsored Video
Flash Poll