The Direct Approach - Finding New Value with Direct Procurement

For product makers, the costs associated with direct materials - the components that actually make up the product - can represent as much as 70% of costs.

Bringing new efficiency to direct materials supply chain and sourcing, therefore, represents a huge opportunity for companies to realize new value.

Within many organizations, however, value remains out of reach.

They continue to plod along with traditional, often manually intensive methods of acquiring direct materials.

They might rely heavily on electronic data interchange (EDI), a decades-old peer-to-peer method that allows two parties with an established relationship to exchange procurement related documents.

But amid today’s dynamic digital business landscape, EDI is starting to show its limitations, and businesses are clamoring for powerful new tools that can help them collaborate more actively with direct suppliers, bring efficiencies to direct materials sourcing, and remove risk from the equation.

Emerging Capabilities
Increasingly, companies such as SAP Ariba are offering product makers hope for transforming how they procure direct materials.

As a long-time player in the indirect space - for things like services and finished goods - SAP Ariba continues to add features and functionality that will allow users to see new value in their direct procurement activities.

The SAP Ariba suite of solutions provides a modern digital platform for commerce.

As a global trading community, the Ariba Network serves as a business-to-business marketplace for buying and selling goods and services “at the speed
of the internet.”

SAP Ariba’s solutions encompass functionality that includes sourcing, contract management, supplier management, various direct procurement processes, working capital optimization, and spend visibility - to help businesses better visualize information, make meaningful decisions, and execute effectively.

As SAP Ariba continues to innovate, it has emerged as an enabling platform for direct materials procurement activities, with SAP continually adding new
capabilities to support complex directprocurement processes.

And it augments the direct solution enabled in SAP ERP or SAP S/4HANA to bring incremental value for organizations using those solutions.

It’s All Connected
Direct procurement activities can represent a huge portion of costs for product manufacturers.

They also represent an opportunity for new efficiencies and savings.