SAP Ariba LIVE Dispatch: First Day Main Stage (Part 2) — BASF and Supplier Management

Earlier Tuesday at SAP Ariba LIVE, Dr. Matthias Dohrn, CPO at BASF, outlined his organization’s approach to supplier management using SAP Ariba. He began his talk by sharing one of the best equations we’ve ever heard to refute the notion that technology alone benefits procurement: PP + NT = EPP.

Specifically, poor processes (PP) + new tech (NT) = expensive poor processes (EPP)!

Dohrn noted during his talk that BASF partnered with SAP Ariba to develop a supplier management capability suited to its needs and processes — which, you guessed it, came before the technology.

The scale of BASF’s supplier management efforts are important to consider, as are procurement’s goals and place in the organization. Today, BASF’s procurement organization manages 350 categories and views “procurement as an advantage” that has adopted a “customer service mindset.” He encourages his team to “embrace entrepreneurial behavior” that is simple, agile and looks at category managers as “little CPOs” managing targeted activities.

BASF has three legs to its procurement operating model:

  • Category management, where teams focus on strategy and source to contract enablement
  • Shared services centers, for back office capability
  • Local business teams

Supplier management maps to broader procurement strategy. And here, BASF’s approach using SAP Ariba “binds” a supplier to four dimensions from a management perspective: suppliers, regions, categories and business units (e.g., for a plant).

The idea is to incorporate supplier management into all other aspects of strategic procurement activities, including sourcing, initiative management and contracting. Detailed information, collected directly from suppliers and updated on a regular basis, is integrated in the workflow of the rest of the technology suite.

In other words, supplier management is not a discrete activity at BASF. It is part of the broader procurement and category lifecycle, an integrated process supported by technology and automation — rather than just technology for technology’s sake!

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