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A Vision For Procurement That Does Good
By James Edward Johnson, Director - Procurement Operations, Nielsen
At the same time, consumer awareness of supply chain concerns is growing. Regulators are becoming more numerous and reaching further. Hackers have wider access. Risk rises.
The problem is that most people were not built to juggle this level of complexity. Cost pressures limit us from hiring an army of specialists to address all the possible issues on every transaction. Pressure for fast turnaround and operational efficiency prevent us from manually checking every issue. Traditional solutions limit our access to new opportunities and leave us exposed to new risks.
Fortunately, technology is enabling us to navigate this increasingly complex environment. At Nielsen, we are working with SAP Ariba to chart a course forward.
One of the key problems with any new system is that there are often too many systems for people to use them reliably. You can get people to check their email and their calendar. They almost certainly use some sort of office software. But how many other work systems occupy a person’s attention? The short answer is too many.
Contributing to the problem are a stack of procurement and payments systems. Many companies have a supplier registration system, a purchase order system, a request for proposals system, a risk system, an invoicing system, a reporting system, … In that environment, people lose sight of the broader importance of their trading relationships and work in a silo. They ignore problems downstream because it is the only way to get things done.
Instead, supplier relationships should be managed through a simple experience. It should be easy to navigate and help people see what is relevant to them. It should enable people to juggle unfamiliar challenges and see unexpected opportunities. It should help them do the right thing and engage the right people at the right time.
This is the ideal. In the past, such visions were left to dreams. Today, they are around the corner.
SAP Ariba lays the foundation for such visions with a huge supplier network. It further reduces the challenges to buyers by enabling suppliers to provide information directly through the system.
Transactions occur over SAP Ariba and it automates the match of purchase order to invoice. Suppliers see payment status in the system. People stop doing work outside the system. Instead, the work is done by the system.
These functionalities provide a comprehensive platform to solve many of the problems familiar to procurement professionals and ordinary purchasers within companies.
But, where SAP Ariba has a unique focus is in its vision for the role of procurement in modern companies.
For many corporate employees, work is what you do to pay the bills. We may find a sense of accomplishment, but the satisfaction lacks depth. Purchasing for a company rarely feels meaningful. It does not have to be that way.
At Nielsen, we know that people are increasingly finding meaning in their consumer choices. Many retail categories are facing flat or declining revenues. And yet, products with sustainable ingredients and ethically sourced inputs draw rising revenues. The trend is being driven by all demographics. People who used to have a transactional approach to what they buy are looking for something more. But the trend is particularly strong among younger people and in global growth markets. The people who will define the future are pushing even harder to transform the mundane into something meaningful.
These people aren’t just retail consumers. They’re our clients. They’re our employees. They’re our suppliers. Transactional efficiency is necessary. But, the future belongs to those of us who are pushing towards a greater purpose.
SAP Ariba has made procurement with a purpose a central part of its mission. It brings intelligence on supplier sustainability and ethics into the center of procurement decisions. SAP is partnering with leading companies in the sustainability space to do do it. At Nielsen, we have been working with Ecovadis for years to ensure that we get a broad view of the sustainability of our top suppliers. Earlier this year, SAP announced a partnership with Ecovadis to make its sustainability data a native integration in SAP Ariba. Soon, buyers will have a unified view of suppliers that includes critical sustainability metrics.
SAP Ariba has also shown that it will go deep to stop the worst human rights abuses in global supply chains. Through its partnership with Made In A Free World, it is making the risk of slave labor in supply chains visible to corporate buyers.
SlaveryFootprint.org, an affiliate of Made In a Free World, has enabled 30 million consumers to see the slaves who make things that they buy. I’m fairly conscientious, but an estimated 42 slaves are involved in producing the consumer goods I buy. There is probably a kid, maybe just a little older than my own kids, forced to mine minerals to produce the electronics I buy. There are 41 others like that child. It is heartbreaking. But, where we were blind, we now have an awesome opportunity to do better.
Corporate purchasers have an even greater opportunity to radically impact people’s lives. They just need the insights to make decisions that tilt the balance towards a better world. SAP Ariba is enabling people to do it.
Not long ago, humans produced most of what they needed. They knew the few people who produced everything else. The world has changed a lot and change is coming faster every day. We may not be evolving as fast as the world around us. But, with the right technology, we can overcome the challenges we know. We might even restore part of the world we once lived in, rediscover people we depend on, and make their world better too.