Making The Transition From Transactional To Strategic At J.D. Edwards
Diane Brown, C.P.M., CFPIM
Diane Brown, C.P.M., CFPIM - Director of Worldwide Supply Chain Operations, J. D. Edwards & Company, One Technology Way, Denver, CO 80237, 303/334-8806, firstname.lastname@example.org
Sue Chara - Worldwide Procure-To-Pay Process Manager, J. D. Edwards & Company One Technology Way, Denver, CO 80237, 303/334-1253, email@example.com
86th Annual International Conference Proceedings - 2001
Abstract. J. D. Edwards develops software products that deliver agile, collaborative solutions for the Internet economy. We have over 6,000 customers with sites in 115 countries supported by 5,000 employees in 20 U. S. and 46 international offices. Our revenues exceeded $1 billion in FY 2000.
In 1998 an assessment was made of accounts payable and why they were having such a hard time processing supplier payments in a timely manner. It was discovered that the problem was not in accounts payable, but upstream in procurement. Less than 16% of J. D. Edwards' purchases were coming through purchasing, and over half of those purchases were "after-the-fact". All internal supply chain processes were fragmented, paper-based and, as a result, labor-intensive.
The Opportunity. In April of 1999 an initiative was launched to address these issues and create a worldwide supply chain organization that demonstrated leading practices and would be a showcase for J.D. Edwards' software products.
Laying The Foundation. The first step in this transition was to conduct an assessment that would tell the team what was being purchased, what the spend was for those purchases and who was doing the purchasing. This process took four weeks and the primary source of data was the payables files. This information was automated and was collected on a worldwide basis. The goal was to gather enough data to be directionally correct in setting specific sourcing priorities (around 60%). This information was segmented into commodity groups.
The second step was to develop an executive level educational presentation to assist them in understanding the magnitude of spend for indirect goods and services, the opportunity available and the level of organizational change and investment required to capture the opportunity. Presentations were made at every opportunity to every executive group on a worldwide basis to secure buy-in.
The third step was to develop a business case. In that business case the following commitments were made:
- Implement cross-functional sourcing teams to work collaboratively and utilize a fact-based approach to optimize the value of externally purchased goods and services
- Streamline all related processes
- Enable end-users to seamlessly execute transactions using a web-based system
- Save $16.7 million dollars
The business case was approved in late July of 1999.
Implementation. The first step in the implementation process was to hire a team of professional sourcers to manage each of the commodity groups. This was the most difficult part of the transition. They in turn were challenged with getting 80% of our spend under contract.
The second step in this transition was to implement eProcurement. J. D. Edwards had chosen Ariba as our business partner to provide eProcurement solutions to our customer base and we decided to implement their product internally and to work with our development team to create the necessary linkages into our accounting, receiving and fixed asset packages. A pre-requisite to our Ariba Buyer implementation was the simplification of any processes that would be e-enabled.
We had aggressive implementation targets. Our goal was to go-live in four weeks. The team was launched in December of 1999 and we went live in February of 2000.
Accomplishments. We have integrated all of J. D. Edwards' internal supply chain processes within the United States into one organization. Each commodity manager has end-to-end process responsibility. This includes supplier payments and expense reporting and payment.
42% of our spend is under contract
$7.7 million has been saved
- Commodity specific ordering, receiving, approval and invoicing/payment processes
- Catalogs maintained by suppliers
- Enhanced contract compliance
- 22 Punch-out and CIF catalogs
- Catalog filtering
- US, Canada and UK implementations
- ROI realized within five months
Lessons Learned. Active executive level support is critical. Putting objectives and results in terms of their priorities and ongoing education and communication are the methods we used to secure this.
Good sourcers are hard to find.
Ongoing communication customized to the numerous constituencies within the organization is also critical to ultimate success.