The Amazon.com for Business

April 2, 2013 by Tony Harris

Photo: iStockphoto

Photo: iStockphoto

With the Ariba Network, customers and their suppliers can exchange purchase orders, invoices, and other related transactions electronically. Compared to other approaches – such as postal mail, fax, phone, and e-mail – the efficient electronic process lowers time and cost.

Customers can also use it to find new suppliers more easily. There are almost one million suppliers on the Ariba Network. Customers can search these suppliers, inviting them to bid for business. Then, once customers choose their suppliers, they can transact with these vendors electronically through the network. This type of functionality is one of the reasons why Forrester Research recently cited Ariba as a leader in the market for sourcing and vendor management (SVM) tool sets – a market that is growing in significance.

“Strategic sourcing has advanced tremendously over the past decade as companies look to optimize supply decisions and award allocations across a globally distributed supply chain,” says Tim Minahan, executive vice president of Network Strategy and chief marketing officer at Ariba.

On the following pages, we provide an overview of the main advantages of doing business on the Ariba Network:

Electronic purchase orders and invoices are fast and accurate, saving both buyers and sellers time and money

Support for EDI means large companies with many transactions can use the network, as well as smaller companies

A full suite of integrated cloud solutions allows companies to manage and analyze their spending

Suppliers can reach hundreds of customers with a single profile/account

Next page: Electronic purchase orders and invoices

The Ariba Network provides more than ease and convenience for SAP customers that wish to find and do business with suppliers electronically. With the Ariba Network, SAP customers can also save money by eliminating the time and cost associated with manual processes.

For example, an SAP customer can send purchase orders in electronic format – from either SAP (such as SAP ERP Central Component) or non-SAP systems – directly to suppliers. Suppliers can send purchase invoices to the customer in the same fashion, and the customer can set up defined rules for these invoice submissions. If an invoice doesn’t follow these rules, it won’t reach the customer, so the customer won’t need to intervene manually.

Companies can save millions with early payment discounts

For a customer dealing with thousands of supplier invoices per year, the benefits of this automated process can really add up. Additionally, by ensuring that they only receive correct invoices in their system, customers can pay earlier – meaning they can save money through early payment discounts that suppliers offer. Some organizations can pocket millions of euros in savings per year as a result.

Next page: Support for EDI & integrated cloud solutions

The Ariba Network can accommodate transactions and customers of all sizes, even bigger companies that may use electronic data interchange (EDI) to transfer data. Customers tend to implement EDI solutions to deal with large volumes of transactions from a select number of vendors. (Typically, a company with EDI will use these solutions to conduct business with no more than 10 percent of its suppliers.) With this in mind, the Ariba Network provides an EDI capability but it also caters to trading relationships where the volumes are much lower.

Not only does the Ariba Network allow for the flow of different types and volumes of data, it can also help with the management and analysis of this information. Ariba offers a full suite of integrated cloud solutions that addresses spend management, including spend analysis, sourcing, contract management, e-procurement, supplier performance management, and working capital management.

Mexican hotel group optimizes purchasing

Leveraging cloud-based applications from Ariba, Grupo Posadas has created a more efficient and effective process for purchasing everything from bedroom furniture to wireless installation — all with quickly delivered results. The Mexican group operates 104 hotels and 17,865 rooms.

“We do not want to be owners of software – we just want to take advantage of the potential of it,” says Fausto Jimenez, Strategic Sourcing VP at Grupo Posadas. “Not only have we achieved 18 percent in savings, we have also increased the corporate spend under contract negotiations by 25 percent.”

Ariba's Solutions (Photo: Ariba)

Ariba’s Solutions (Photo: Ariba)

Next page: Suppliers can reach hundreds of customers

While customers can save time and money by conducting business with suppliers through the Ariba Network, participating suppliers can benefit as well.

To take advantage of the Ariba Network, a supplier only needs to maintain a single profile/account. Suppliers can keep their master data updated easily, yet reach — and conduct business with — hundreds of customers. Additionally, the network’s invoicing process helps ensure payment sooner for their products and services. In other words, suppliers can earn faster, and also build up a customer base for future transactions.

A global network for more than just procurement

And speaking of the future: What does the future hold for the Ariba Network?  A great deal, according to Minahan. The Ariba Network will be the primary SAP business network for as many solutions and transaction flows as possible, expanding its capabilities way beyond the procurement and finance scenarios available today.

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