Transforming a tactical cost centre with procurement tech
A large part of procurement success hinges on maintaining spend visibility, which requires providing in-context information to business consumers and identifying opportunities to manage tail spend of indirect procurement.
Unfortunately, many organisations struggle to manage indirect spend due to a lack of understanding about the process.
Jabil’s procurement team has found a solution by deploying multiple ERPs, P2P systems and e-Sourcing applications across challenging jurisdictions globally, including China, India, Brazil and the EU.
This change has been implemented across more than 100 sites in 30 countries, with an impressive 80% completed within just 24 months.
Heidi Banks, Senior Director of Global Procurement at Jabil - a global manufacturing services and Fortune 200 company, says: “Back in 2017, the procurement team at Jabil understood that spend-management technology would be a game-changer and help us transform our processes.
"So my team and I prepared our proposal to leadership like a court case. Asking for investment is always a challenge, but we did our homework and presented a compelling case.”
The challenge of achieving visibility
Before implementation, Jabil had no way to view their global spend, so were unable to leverage that spend in negotiations.
Despite documented corporate policies, they did not have an effective way to communicate strategic pricing to their buyers, and compliance was low — leaving money on the table.
Communication with their suppliers was also a challenge. The disparate tools they used were not integrated or automated, causing complications and delays in the ordering process.
An ecosystem of applications: The outcome of implementation
Banks says: “Once we got to work implementing Coupa the wins just kept coming. By the end of year two, we had achieved three times ROI – and four years in, we were sitting at seven times ROI.
“It’s all in the numbers — US$6bn under management, 42% on-catalogue purchases, and 67% of our 36,000 suppliers use e-invoicing.
“In fact, 30% of invoices are now completely touchless; a supplier electronically submits an invoice, and no one at Jabil needs to touch the invoice before it is OK to be paid, driving the ultimate efficiency.”
Continuous progress
These numbers were achieved through continuous innovation, as Jabil continuously seeks to enhance their procurement technology practices evolving with new and innovative software partners.
At year four, they were stagnant at 20% on-catalogue purchases. “We knew we could deliver more!,” says Banks.
“We chose a digital adoption technology called WalkMe that changed our guided buying course while enhancing our change management and communication to the organisation in our digital global environment.
“We curated strategic catalogues in our best-in-class Coupa platform, to drive pricing visibility, which — when combined with our guided buying strategies — increased transactions going through catalogues to today’s 42%, a number we expect to continue improving.”
The curated catalogues reduce maverick spend, increase Jabil’s efficiency and deliver cost leadership to their business partners and customers.
Using Coupa Analytics, Jabil creates KPI dashboards to show on-catalogue execution and drill down on transactions, analyse purchasing trends and identify where new category strategies, change management, or guided buying practices may be required.
This transparency into their spend elevates their conversations with customers and helps procurement be a stronger business partner.
“While we were optimistic when we pitched this program to our leadership,” Banks says, “we have exceeded our highest expectations.
“We transformed a tactical cost centre into a strategic asset — and now we want to help others do the same.”
Jabil are a global procurement team with practical experience under their belts, and they want to show other teams how to achieve the same results.
Consulting on supply chain and procurement management has been a service that Jabil has offered its manufacturing customers for a long time.
“Now, we want to offer the same to companies without manufacturing contracts,” she says.
Jabil has created a set of consulting and implementation services designed by practitioners, for practitioners, to help others enjoy the same success that they achieved.
