OVERALL WINNER AND MOST IMPROVED PROCUREMENT OPERATION - STEP CHANGE
PROJECT: PROCUREMENT DIGITALIZATION PROGRAM
Headquartered in Riyadh, Saudi Arabia, petrochemicals firm SABIC historically managed procurement activities in a labour-intensive manner with very little automation.
However, all this changed when a broader transformation plan to support future growth was implemented. SABIC has now automated 1 million core procure- to-pay transactions for around 180,000 low-value spot buy items. It has introduced automation with complex algorithms to transform procurement, bringing greater efficiency and compliance, while maintaining business agility.
To secure best practice in its cross functional teams, the transformation project used the ‘project butterfly model’, which mirrors a business team with a dedicated IT support team to form an integrated work stream delivering solutions together. While the initial introduction involved regional resources from the USA, Europe and Asia, digital deployment began in Saudi Arabia, then rolled out in phases. By putting effort into teambuilding, SABIC created an atmosphere for collaboration and innovation.
Digitalisation has resulted an 8% saving on competitive bidding and a reduced lapsed time of 73%. It has changed the role of buyers too, who have moved from creating purchase orders manually to working on maintenance, repair and operations (MRO) category management and exception handling. Greater efficiencies will ultimately free up buyers to review newly qualified suppliers, manage distributor/agent relationships, and drive innovation and local business development.
Digitalisation also means that material requirements planning is now reviewed automatically for MRO items using 11 different scenarios to ensure that only the materials required are ordered. The new system has also ushered in automated supplier shortlisting, using category and material mapping to confirm that the right qualified supplier for the material is chosen. Further automated processes ensure materials are bought at the right place in the supply chain and tender bids are scrutinised and quotes compared. SABIC has achieved multiple benefits with its complex, bespoke automation and algorithms, that mimics buyers’ decision- making processes and sourcing logic. The organisation said the ‘robotization’ of many processes has “truly changed the way SABIC handles spot buy purchasing for materials”. Now, more than 80% of the purchase orders for MRO use an automated process rather than being handled by a person, eliminating low-value transactional work and freeing up time for buyers to work on more tactical procurement and category management. While manual intervention for pending transaction is possible if needed, the automation has enabled the same amount of transactions to be handled by just half the original team size.