James Lee, Chief Operating Officer at SAP Ariba and SAP Fieldglass, discusses how the role of procurement has transformed supply chain strategies in the industry over the past few years.
Recognised as the leader in spend management and the go-to place for organisations to connect and get business done, SAP Ariba is considered one of the largest software organisations worldwide and ranked first in Supply Chain Digital’s Top 10 Largest Software Companies Worldwide in November.
James Lee, Chief Operating Officer (COO) at SAP Ariba and SAP Fieldglass, believes the organisation is truly one of a kind. “SAP Ariba is the only true procure, source-to-settle, end-to-end solution provider, that also addresses all of the expense categories. We also possess the largest B2B network in the world,” he explains. “We have more than 4mn suppliers and buyers in over 190 countries connected to our network and nearly US$3trn in commerce is flowing through it annually. Based on commerce value, we’re larger than eBay, Alibaba, and Amazon combined — that’s a pretty incredible number.”
The success of its Ariba Network is unrivalled. With its platform achieving such significant growth, Lee puts it down to several key reasons. “When you're the market leader, both buyers and suppliers recognise that this is where you’re more or less a de facto standard,” says Lee. “Our network is for suppliers who are looking to expand their business and find more buyers, while it’s also for buyers who are looking to upscale their supplier network too. We make it very seamless and adaptable for our suppliers and buyers to transact over our network. If you think about all the different communication mediums, there’s a lot of thought and investment that has gone into ensuring our platform is as streamlined as possible for both buyers and suppliers.”
Managing spend successfully is critical. In order to achieve this, it takes more than just increasing compliance and decreasing costs. SAP Ariba has leveraged Intelligent Spend Management (ISM) to enable spend data to come together from across all sources and categories and allow for smarter, faster spending decisions. “Our customers expect to see a unified strategy, product roadmap and go-to-market interface that addresses all of the spend categories,” says Lee. “We don’t want to deal with one team that looks at indirect, another at services and one that deals with travel expenses. You’re one company, so it’s important to have one space and one product. Under ISM, we have Ariba, Fieldglass and Concur as one family. Combining these three organisations together is the best way to serve our customers.”
Procurement has transformed significantly over the past few years. Traditionally recognised as a back office function, companies are beginning to unlock the true value of the procurement function. Lee believes that the supply chain industry is waking up to the requirement for a dedicated CPO position. “I’m a strong believer in the importance of a procurement organisation. In the past, it was rare to see a company with a CPO role,” explains Lee. “Usually procurement was a function that was under the COO or CFO’s remit and was primarily considered a cost-cutting department. They were essentially there just to ensure that they were getting the best deals and squeezing every dollar and cent out of the negotiation process.” However, Lee recognises that due to the advancement of technology, procurement professionals are now freer to focus on making relationships with suppliers more strategic. “Technology is having a major influence. Now, all of a sudden, procurement is helping factories minimise stock outs and allowing supply chains to run more efficiently,” he says. “I’ve been talking to lots of customers recently and there’s an increasing number of organisations beginning to understand that you need a CPO function separate from the CEO. The scope is much broader than just cost-cutting.” With digital transformation shaking the supply chain industry up considerably, Lee believes digitalisation is centered around insights. “Digital transformation goes beyond automation or processes moving from paper to online transactions,” explains Lee. “It’s important to question: how can I rely on a platform like Ariba to provide information to me from all over the world? This could be from regulators, suppliers, my users or trade partners. Finding out how to harness all that information to ultimately make better decisions is vital.”
Lee also believes in “procuring with a purpose” and maintains that companies such as SAP Ariba should drive responsibility in the supply chain. “We believe procurement isn’t just dollars and cents,” affirms Lee. “Organisations need to use third party data and intelligence to proactively identify risks and then respond to protect their brand and minimise disruption. Profitability is only one aspect. Sustainability is also in our spectrum as a supplier, so it’s important to adopt ways to manufacture the goods in a sustainable manner, in terms of energy efficiency, greenhouse gas emissions and so on.”
With the supply chain industry in a state of flux due to the influential impact digitalisation is having on companies’ operations worldwide, organisations must remain lean and agile in a bid to achieve sustained success in the space. With customer-centricity at the heart of many businesses’ strategies, Lee affirms that listening to the changing demand of customers and observing how to demonstrate the most value for them is the central focus. “The only way to achieve long-term success is to provide solutions that are meaningful and better serve customers,” summarises Lee. “We will continue to work with our own customers to better improve our solutions offering and see how we can further engage with them in a bid to upscale.”
For more information on all topics for Procurement, Supply Chain & Logistics - please take a look at the latest edition of Supply Chain Digital magazine.