Getting your procurement strategy right is the key to almost every successful business. The past few years have highlighted this as never before given the multiple and ongoing disruption caused by the Covid-19 pandemic, the Sino-US de-coupling, the climate crisis and most recently the war in Ukraine.
At THP, we have risen to this challenge by undertaking a major upgrade of our procurement operations utilising SAP Ariba. The new operating system officially went live on April 7 after 157 days of testing with more than 2,000 suppliers.
Its successful implementation represents one of the landmark projects of our five-year digitalisation strategy, running from 2021 to 2026. It was a huge effort, pulled off by a large and dedicated team and we learned many valuable lessons along the way.
SAP Ariba is a business-to-business (B2B) e-procurement and supply chain cloud solution that provides a closed eco-system for registered buyers and sellers. It has some similarities with consumer facing e-commerce sites such as Alibaba, or Amazon.
The company’s global network spans more than 4.2 million business across 190 countries and territories. It provides them with a single integrated interface to connect, collaborate and manage their dealings with each other.
THP has integrated a number of modules – Sourcing, Contracts, Supplier Lifecycle and Performance Manager – into our existing SAP ERP (Enterprise Resource Planning) System. Our procurement operations have been fully digitalized and integrated into the wider group, which uses SAP for finance, warehouse management, production planning and other key activities.
As a result, SAP Ariba is now providing us with a single source of truth that will help us to improve the visibility, control and the overall relationships we have with our many suppliers. It will help us to discover new ones too.
Getting rid of the last remaining manual processes means that we also have much more confidence in the data being generated. Better data analytics will enable our procurement lead Mr. Vu and his team to make smarter decisions.
They will have the kind of edge and flexibility that procurement departments require in the fast-changing current environment. It will help them with spend management and provide additional levels of reassurance about the transparency of THP’s whole tendering and contracting process.
SAP Ariba underscores THP’s reputation as a leader in implementing state-of-the-art digital solutions. We pride ourselves in being ahead of most domestic companies because we are always looking to the future and always aim to be the best.
We began the digitalization process in 2002 when we implemented ERP, before upgrading it in 2006. We then moved to SAP in 2011.
The German multi-national group went on to purchase Ariba the following year, but it wasn’t the right time for us to implement it at that point. We were a much smaller company then and the payback was hard to justify.
It would also have been too challenging to attempt two enormous IT projects at the same time. Just getting SAP right was demanding enough and we ended up making a film noir about the experience after uncovering a major fraud.
We began to realize that something was wrong shortly after implementation, when our CFO noticed some strange numbers turning up. On further investigation, it turned out that our internal ERP implementation team had been bypassing the steering committee and been asking the external implementation company to make certain changes without anyone knowing.
They hoped this would allow them to continue defrauding the company. They were wrong.
It is very rare that big projects run without into hiccups. At THP we expect them and view them as an opportunity to learn.
This time round, the most important lesson related to our choice of external implementation company. THP’s second core value is all about International Quality Standards: be committed to providing product and service quality to international standards.
We certainly adhered to this in choosing SAP Ariba but we made a mistake selecting a local implementation company even though they were on an official suppliers’ list.
We soon realized that they were not up to the task. Fortunately, our steering committee are very good at spotting a potential sunk cost and acted decisively to rectify the situation.
We decided to bring in SAP Ariba itself to implement the project. This prompted an instant step-change in terms of calibre of people and project management expertise.
As it is their system, the SAP Ariba team knew it inside out. They were consequently able to put together a very clear blueprint, marshal all the necessary personnel and hit every single deadline.
We also made a second change and appointed two internal leads: our procurement head Mr. Vu who is SAP Ariba’s main customer and Ms. Hang from our IT department, plus Ms. Ha who works for me as a project co-ordinator. Their ability to work together made a big difference to the project’s execution.
Our experience with SAP Ariba has also led us to make some changes to the way that we evaluate external contractors. We have a new scoring system that attributes price to a maximum 20% of the total.
We want to make sure that in future, price will not dictate the result, but will still be a swing factor when all other things are equal.
We are immensely proud of the team that brought SAP Ariba to bear. As my father said during the opening ceremony – he created THP, but today it led by team of people, striving make us one of the leading companies in Asia. SAP Ariba will help us to achieve that goal much quicker and in a more transparent and efficient way.
