SAP Ariba: No turning back as procurement goes digital
The new age of digital is fundamentally reinventing business processes, from operations to customer engagement and more. A key driver behind this shift is the Internet of Things and Industry 4.0 creating reams of data that allow decision makers to get the information they need, anytime and anywhere.
Accompanying this mass of data, the evolution of advanced analytics is accelerating decision making without any adverse effect on accuracy or performance quality. At the same time, business networks are creating highly efficient levels of collaboration that enhance productivity and generate value from data, regardless of where employees are located.
Procurement professionals have long been the unsung heroes of helping businesses adapt to these changes, tasked with reducing costs and ensuring savings are realised. But the most innovative among them are utilising new technologies like self-service portals, mobile apps and cloud or social collaboration tools to streamline processes, manage spend and simplify traditionally complex purchasing experiences. The end result is empowering buyers to comply with internal policies and best practices, while keeping costs down and raising the strategic value of every purchase.
Procurement organisations are more than comfortable with delivering buying experiences and supply chains that are fast, simple, sustainable, and low risk. But the key target here is to add value to the delivery of services and goods to customers. This is the future of procurement.
From backroom to boardroom
The ongoing transformation of purchasing processes and supplier networks provides an opportunity for procurement organisations to move from a back-office cost centre to a strategic boardroom partner.
A prime example of this in practice is the relatively recent vogue that is the coffee-pods market. The goal of delivering the perfect cup of coffee in any kitchen – not just your local high street coffee house – is seeing a simplification of buying processes and increased focus on generating value for the enterprise and the customer.
The entire buying cycle – from pricing and quotes to orders – is now handled by one company, using a cloud-based application. This digital approach not only makes it easier and more intuitive for customers to buy coffee – by using purchasing data to automatically replicate previous orders – it also provides coffee retailers with vital market data and access to customer preferences that help them reshape their business model.
This quiet digital revolution is being seen across industries, helping all manner of businesses to increase their sales productivity, encourage consumer adoption, and improve their understanding of the buyer engagement cycle.
Combining data analytics with decision support also helps brands to improve visibility and gain insight from their supply chain and operations. With procurement’s involvement, this can drive value across the business, including:
- Supply innovation: Procurement can speed up the introduction of new products and reduce material costs by providing more critical insight into suppliers and their capabilities
- Risk management: Procurement can prevent issues such as supply shortages or product disruption before they happen by providing better analysis of spend and supplier data across the business
- Secure and sustainable supply chains: Procurement can help businesses have the right mix of suppliers and order schedules, which will ensure that all materials are delivered in a timely manner, with a high level of quality and in the right quantity.
From cost savings to value generation
Procurement is undoubtedly a different game than it was not only a decade ago, but even 12 months ago. The ultimate winners in this game will be those that embrace the ongoing digital transformation, reimagine their roles and use the plethora of technology, data and insights at their fingertips to run simpler and smarter.
EU and US agree end to Airbus-Boeing supply chain tariffs
The EU and US have agreed to resolve a 17-year dispute over aircraft subsidies, suspending tariffs on billions of dollars' worth of goods that have plagued procurement leaders on both sides of the Atlantic.
Under an agreement reached by European Commission Executive Vice-President Valdis Dombrovskis and US Trade Representative Katherine Tai on Tuesday, the tariffs will be halted for a period of at least five years.
It will bring an end to punitive and disruptive levies on supply chains that have little to do with the argument, which became embroiled in the trade battle. Businesses on both sides of the dispute have been hit with more than $3.3bn in duties since they were first imposed by the US in October 2019, according the EC.
The US imposed charges on goods upto $7.5bn in response to a World Trade Organisation ruling that judged the EU’s support of Airbus, its biggest aircraft manufacturer, unlawful. A year later in November 2020, the EU hit back. The WTO found the US had violated trade rules in its favourable treatment of Boeing, and was hit with EU duties worth $4bn.
In all the tariffs affected $11.5bn worth of goods, including French cheese, Scotch whisky, aircraft and machinery in Europe, and sugarcane products, handbags and tobacco in America. Procurement leaders on both sides of the fence were forced to wrestle with tariffs of 15% on aircraft and components, and 25% on non-aircraft related products.
Boeing-Airbus dispute by the numbers
- The dispute began in 2004
- Tariffs suspended for 5 years
- $11.5bn worth of goods affected by tariffs
- $3.3bn in duties paid by businesses to date
- 15% levy on aircraft and 25% on non-aircraft goods suspended
Both sides welcome end to tariffs
European Commission President Ursula von der Leyen branded the truce a “major step” in ending what is the longest running dispute in WTO history. It began in 2004.
“I am happy to see that after intensive work between the European Commission and the US administration, our transatlantic partnership is on its way to reaching cruising speed. This shows the new spirit of cooperation between the EU and the US and that we can solve the other issues to our mutual benefit,” she added.
Both aircraft manufacturers have welcomed the news. Airbus said in a statement that it will hopefully bring to an end the “lose-lose tariffs” that are affecting industries already facing “many challenges”. Boeing added that it will “fully support the U.S. Government’s efforts to ensure that the principles in this understanding are respected”.
The US aerospace firm added: "The understanding reached today commits the EU to addressing launch aid, and leaves in place the necessary rules to ensure that the EU and United States live up to that commitment, without requiring further WTO action."
This week’s decision expands upon a short-term tariff truce announced in March this year. The EC says it will work closely with the US to try and further resolve the dispute, establishing a Working Group on Large Civil Aircraft led by each side’s trade minister.
Airbus last month signalled to suppliers that post-pandemic recovery was on the horizon, telling them to scale up to meet a return to pre-COVID manufacturing levels. “The aviation sector is beginning to recover from the COVID-19 crisis,” said Airbus chief executive Guillaume Faury, adding that suppliers should prepare for a period of intensive production “when market conditions call for it.”