E.ON Ruhrgas understood the opportunities and potential of electronic procurement at an early stage: faster, optimized processes, largely digital processing, and lower prices thanks to online buying. The prerequisite for it is that efficient IT solutions must be systematically based on optimized process structures.
The starting point for the future e-sourcing solution was an intensive analysis of the requirements, and this determined that, alongside catalog-based buying of standardized products, the solution should also support the handling of complex bid invitations from service providers. A bid invitation – for example for civil and underground engineering services, for communication and electrical engineering, or for corrosion protection – can often cover several hundred items. In addition, the intended solution needed to meet E.ON Ruhrgas’s general criteria: high quality and established, state-of-the-art standards.
Process efficiency through SAP integration
E.ON Ruhrgas quickly abandoned its initial idea of using a standardized marketplace solution. Deeper integration in the existing SAP landscape was absolutely essential in order to map all the necessary processes efficiently. Interface problems, redundant data, and complex handling would also have quickly canceled out the benefits of efficient bid invitations.
Criteria such as experience, enterprise size, and SAP competence were the deciding factors informing the decision in favor of the autinform E-Sourcing-Add-On for SAP, and for autinform as the implementation partner. “With autinform, we are directly in the SAP environment,“ explains Friedrich Eifert, department manager of logistics, procurement support, and e-procurement at E.ON Ruhrgas AG and as project manager, responsible for the implementation of the e-sourcing solution. “With the autinform e-sourcing solution, the complete process chain – from the creation of the specification and automatic notification to bidders, quotation entry and release by the vendors, quotation comparison, award recommendation, and ordering right through to entry of services performed and self-billing (planned in 2005) – is mapped digitally from end to end.”
At the same time, a high level of transparency is created for all those involved in the process. Instead of constantly having to page through thick files, buyers can now find out about the current status of a bid invitation or call up important data with just a few mouse clicks. Thus in two hours, the e-sourcing solution can achieve a result that would previously have required a whole day of negotiation, for example with an auction following up a bid invitation. “This is a completely new way of working for our buyers,” stresses Eifert.
Another advantage of the new solution is that all transactions are automatically documented and archived in SAP, and the individual steps can therefore be traced in detail. The procedure thus meets all the requirements relating to non-repudiation – an important quality, particularly for sensitive data and complex procedures. A security mechanism ensures that incoming quotations cannot be opened before the end of the bid period. The system therefore guarantees the correct procedure for pricing, and eliminates the potential for bias. The relevant specifications are created by the user departments as pegged requirements in SAP R/3 Materials Management.
The specifications can also be created directly in the SAP System via a structured Excel file, and can be used in the purchase requisitions. “Previously, specifications were often available as Word or Excel files in different structures, but usually only in paper form,” explains Eifert. Now, they are also used in the generated SAP purchase requisitions and processed in Purchasing as SAP RFQs for the Internet bid invitation. This produces a constantly growing number of specifications in SAP, which accelerates and simplifies future work.
More than 100 bid invitations have already been processed in this way in the first six months of 2004. Because the quality of service, along with the price, is a determining factor for success, the managers at E.ON Ruhrgas place high value on a prior internal evaluation of the suppliers involved. “In our experience, it is not just a large number of bid participants but also the highest possible competences and qualifications that leads to the best results,” says the e-procurement manager.
High level of acceptance
An easy-to-understand process, a reliable system and user-friendliness are the basic prerequisites for a high level of acceptance among internal users. A growing group in the Procurement team is therefore already intensively making use of the new opportunities – and can communicate the benefits to colleagues. “These are the multipliers that we need for a change in culture,” states Friedrich Eifert.
The route towards further increases in efficiency is already marked out for the project team. The user group will be systematically expanded both internally and externally. The digital entry of services performed is in the implementation stage, and will be followed by the introduction of the self-billing procedure.