| |
| Case Study |
| |
Procurement consolidation using Oracle Sourcing
helps US market leader slash operational costs |
By partnering with Patni, a Fortune 100 group company consolidated its procurement practices and
rationalized its IT assets.
The Client
The client is a $12 billion
market leader operating in
the white goods and
industrial products space. It
manufactures and sells more
than 15 million appliances in
over 100 world markets.
The Challenge
The client had two separate businesses catering to a common consumer base.
The two business entities procured their indirect materials from locations
spread across the world. As separate entities, both had installed two separate
systems to manage the procurement of indirect materials. While one division
used a legacy system for procuring both direct and indirect materials, the other
division sourced only indirect materials through its system.
Recognizing the need to rationalize its costs; the client reorganized its business
by merging the two business entities. Restructuring created an opportunity to
capitalize on the base of common customers and suppliers. Better negotiating
power with suppliers and reduced administrative expenses promised savings
for making investments in new technologies. Following the merger, the client
decided to rationalize its IT assets and consolidate its procurement of indirect
material.
The client was scouting for a partner who could facilitate rationalization of its
IT assets and simultaneously provide a solution to manage the combined
procurement of the merged entities.
The Solution
Patni's analysts studied the indirect procurement processes of both divisions prior to
the merger, and identified the parameters that influenced overall procurement for
the client. Patni also conducted an assessment to optimize IT investments and
demonstrated through financial models, the savings due to consolidation of orders,
shipments and supplies.
Best practices followed by the two business units prior to the merger became the basis
for the new procurement process. The client in consultation with patni, selected the
Oracle Shared Sourcing System to manage the combined procurement of the new
merged entity. Oracle Sourcing was chosen as it would help the client build the
capability to negotiate online with multiple suppliers. Its support for multiple
currencies was ideally suited for transactions with suppliers from different
geographical locations.
Apart from offering basic implementation services, Patni also advised the client on
best practices for sourcing, provided assistance in supplier participation, and helped
the client rationalize its IT assets.
The Technology
 |
Oracle Sourcing |
| |
 |
The Benefits
|
Direct Savings in Overall Spend
Procurement from locations all over the world became
simple, and the company was able to exercise a tight
control over procurement operations. The company was
also able to reduce the purchasing staff. As a result, the
company was able to save $1.8 million in the new sourcing
model. In addition, the new system could scale up to
handle growing number of transactions. It was also flexible
to accommodate changes as per the requirements of the
growing business |
|
Reduced Application Maintenance Cost
The rationalization of IT assets reduced the maintenance
costs. Due to the new procurement system, the company
could achieve yearly savings of $50,000 from the costs of
maintaining the IT support infrastructure |
|
Unified System
Prior to the merger, stand-alone systems of the two
business entities had different environments for business
reporting. Consequently, the reports generated by these
systems were not consistent with each other. The single
installation of Oracle Shared Sourcing has provided a
consolidated reporting system of the durables business that
was consistent with the parent company's overall businessreporting
format. |
| |
|
|
