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Ariba said this week it has made procurement of direct materials much simpler with a new release of Ariba Sourcing, adding integration with SAP ECC that allows companies to use the Ariba Network to source more efficiently.
The Ariba Network brings a consumer-like experience to businesses for indirect materials sourcing, and now Ariba Sourcing does the same for direct materials, according to Tony Harris, global vice president at Ariba. "Ariba has usually focused on the indirect side, and this has been dramatically simplified through the Ariba Network," he said. "Now the ambition is to do the same for the direct space, where there's usually a lot of manual effort involved."
Indirect spend is anything that a company buys to run its business, but not related to the actual product -- such as office supplies. Direct spend comprises things key to the operation, like engine parts for a car manufacturer, Harris explained. Managing this process is typically complex and can be critical if, for example, the manufacturing line has to shut down because the correct parts are not available at the right time. Ariba Sourcing's integration with SAP ECC is intended to simplify the user experience and automate the process, maintaining availability and reducing cost and complexity, according to Harris.
Tony Harris, global VP at Ariba
For example, a request for quotation generated in SAP ERP is automatically sent to the Ariba software, where procurement managers can determine the action to take and return it to the ERP system as either a purchase order or an outline agreement for long-term contracts. Harris said this capability brings several benefits, including a more streamlined process, avoiding duplication of data entry and eliminating customization of the different systems.
Bidirectional integration of vendor master data from Ariba Sourcing and SAP ECC allows companies to keep their data consistent and ensure that vendors are matched with appropriate sourcing opportunities, Harris said. Suppliers also have the ability to create and maintain all of their information in one source. "A supplier can now manage all the information for all their customers in one location," he said.
According to Ariba, it also has a new user interface with consumer-like search capabilities. Searches entered from a single location are automatically performed across all projects, suppliers and associated documents and the results are returned in seconds on a single page list in Google format.
The announcement indicates that Ariba and SAP may be starting to make good on their promise to make complex business processes simpler. In numerous statements since the 2012 acquisition, both companies have touted the potential benefits of tighter SAP-Ariba integration, including enhanced mobility and predictive analytics.
"For many companies, supplier data is inconsistent and stored in multiple systems, making it difficult to determine if the right things are being bought from the right suppliers at the right prices. By synchronizing this data and managing it in a single location, procurement departments can access the knowledge they need to optimize sourcing decisions and improve compliance," said Andrew Bartolini, managing partner and chief research officer of Ardent Partners, a Boston-based research firm that specializes in supply management issues.
"Ariba's integration with SAP ECC means that users of both systems are now working from the same data set. This helps to ensure that you are sourcing the right materials and working with preferred suppliers, or at least including them in new sourcing projects. This makes the sourcing process more efficient and more effective."
Ariba Sourcing is available now, with all current Ariba customers having access. Suppliers can self-register on the network or be suggested to join by their customers, the vendor said.
Read a procurement handbook
Learn about Ariba integration with QuickBooks
Watch a video on the SAP-Ariba combo