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Sourcing— Art or Science? Ariba Knowledge Nuggets Although strategic sourcing can be defined in a number of ways, a good start to understanding it is to first identify what it is not. Strategic sourcing is not the purchase of materials and services on an as-needed, day-to-day, hand-to- mouth basis. This is largely transactional buying. Instead, strategic buying is the opposite: A systematic process that directs purchasing and supply managers to plan, manage, and develop the supply base in line with the organization’s strategic objectives—and in a manner, that optimizes the contribution of the supply base to the organization. Strategic sourcing is a process driven by an identified goal or need and consists of: • Evaluating current and potential sourcing opportunities and relationships. • Assessing their value and relevance according to long-term goals and overall business and supply management objectives. • Formulating and applying actions plans and processes for critical commodities or supply networks. Ultimately, strategic sourcing is knowing what kind of relationship to develop based on market knowledge, the commodity, and the long-term businessARIBA, INC. objectives. It is a sourcing process whereby organizations choose suppliers in a deliberate, calculated fashion. Selection decisions are determined based on factors such as a supplier’s new product development capabilities and capacity to share information electronically, or the ability for a supplier’s component to differentiate the final product. With strategic sourcing, organizations analyze and decide on suppliers based on the strategic impact of potential suppliers and commodities on the organization or supply chain, instead of simply awarding supply contracts to suppliers with a narrow focus on lowest bid. Key to strategic sourcing is gaining an Ariba Discovery understanding regarding the supplier Buyer Value for New Supplier Discovery landscape in order to determine the following: •Achieve incremental product and service cost savings of 15% on average by making • Who are the suppliers? purchasing events more competitive • How are they related? • What is the customer buying? • Who are they buying from? •Reduce the process cost of seller identification and qualification of up to 50-75% • What are the risks? • How much is spent with each supplier? • What is the quality of goods purchased? •Access to rich seller information to make better, informed decisions •Save time (up to 90%) with an easy 3-step discovery process
Secrets to Using the Supplier Profile QuestionnaireWhat the Profile Questionnaire is:• The profile questionnaire is a document that contains sections and questions. Ariba provides one master copy ofthe profile questionnaire. You can also add your own questions to the default questionnaire to collect information thatcan help you choose appropriate suppliers.• The profile questionnaire is a type of document that is contained in a knowledge project.• The profile questionnaire is a draft document until you publish it. Once published, the updated profile question-naire is available to organizations the next time they edit their profiles. • Ariba recommends that you publish updates to the profile questionnaire during a period of low activity for your site, such as a weeknight or a weekend, to allow the system to update supplier records with new profile questionnaire data in a regulated way. If you publish the profile questionnaire during a time of high activity and a user creates a supplier search that includes profile questionnaire answers and returns a large number of results, the system must update all of the supplier records for those results at once, which can impact the performance of your site.• The profile questionnaire is a great way to obtain additional information from Suppliers. Suppliers might requestto provide information on their capabilities and commodities, or you might encounter a supplier whose data you need.Suppliers can update their profile, or you can provide a URL that allows suppliers to directly access the supplier pro-file.• Configurable profile with predefined out- of-the-box fields• Ability to search on extended supplier profile fields• Supplier Self-Registration• Supplier Organizational Hierarchy• Ability to score profile elements• Supplier Discovery Postings• Questions from the SPQ can be added to events, and the supplier’s answers from the SPQ will be pre-populated, and if they modify the answer, they SPQ is updated. ARIBA KNOWLEDGE NUGGETS
Secrets to Using the Supplier Profile QuestionnaireYou need information about your suppliers in order to know what capabilities and characteristics they have, and whatcommodities they can provide. You use a profile questionnaire to collect this data. You can also use the profile question-naire to collect information internally from other users in your company.Profile questionnaire responses might come any or all of the following sources:• Internal users in the Supplier/Customer Manager or Supplier/Customer Agent group creating a supplier organization.• Suppliers providing profile information when they self-register using the Register as New Supplier link.• Suppliers filling out the profile questionnaire from the My Profile link when they log into Ariba Spend Management.• Suppliers or internal users providing responses to profile questionnaire content that has been included in Ariba Sourcing events, quick surveys, or Supplier Performance Management surveys. Responses to profile questionnaire content are automatically moved to the supplier’s profile questionnaire when the event or survey closes. For details on adding profile questionnaire or library content to Ariba Sourcing events, see the Ariba Event Management Guide; for details on adding library content to quick surveys and SPM surveys, see the Ariba Sourcing Process Manage- ment Guide or the Ariba Supplier Management Guide.• Import of extended supplier profile data, including data from third-party Enterprise Resource Planning (ERP) sys- tems.A Word About Supplier Self-RegistrationAriba allows suppliers to register themselves for consideration as participants in future Ariba Sourcing events. This selfregistration enables buyers to collect supplier information with minimal effort, and gives them a place to refer new suppli-ers that are asking for consideration as approved suppliers. Administrators configure supplier self-registration at the sitelevel, and it must be enabled to allow suppliers to register. The Register as New Supplier link is available to a supplieron the login page if supplier self registration is enabled. When the supplier clicks the Register as New Supplier link, theSupplier Registration page displays. On this page, the supplier provides organization information, supplier user informa-tion, and can fill out the profile questionnaire. Upon completing the Supplier Registration page, the supplier receives con-firmation that the request has been sent to the Supplier/Customer Manager for approval, and that login information isprovided upon approval. Suppliers sometimes request to register. You can send them a URL to give them access to thesupplier self registration page.Searching for Suppliers on Ariba DiscoveryYou can search for suppliers before creating a posting or to increase your supplier base. For example, you can search accord-ing to commodities or location, such as a state or country. While you are searching for suppliers in Ariba Sourcing, you accessthe Ariba Discovery directory. You can add suppliers to your favorites and also import them into Ariba Sourcing.To search for suppliers, mark suppliers as favorites, and import profile data into Ariba Sourcing: Click the Home tab. Choose Suppliers and Customers from the Search menu. The Search Suppliers and Customers page appears. Click Search Network Discovery to access Ariba Discovery Click Preview Suppliers* Note —Ariba has close to 600K+ suppliers currently on the Ariba Network. ARIBA KNOWLEDGE NUGGETS
SAMPLE Letter for Supplier Registration Using Ariba DiscoveryPotential Supplier,Thank you for your interest in becoming a strategic partner in helping support <Insert Company Name> supply chainmanagement needs.<Company> aligns itself with best-in-class organizations to help drive the success of our sourcing needs throughdynamic partnerships that focus on driving process and cost excellence while delivering flawless service andperformance from our supply chain. To successfully align partners with the right need, <Company> utilizes AribaDiscovery as our pool of potential suppliers. If your organization has an interest in being considered as a potentialsupplier, you’ll need to self register with Ariba as follows:Please direct your browser to http://discovery.ariba.com. As a supplier you must first click on the “I’m Selling” tab andthen complete the “Register Now” section as shown below. You will need to be registered in Ariba Discovery to beconsidered for our business.Ariba Assistance:If you have any questions or difficulties with registering in the Ariba system, please contact the AribaCustomer Service team at (866) 218-2155 for all technical assistance.Based on the accuracy of your self registration, we will be able to search and identify potential suppliersfor new opportunities. There is no need for you to follow up with <Company Name> after you’ve completedyour registration as will proactively reach out to you as we see a potential fit for a specific opportunity.Thank you again for your interest and registering with <Company Name> Strategic Sourcing Team.,Sincerely,<Insert Company Name> ARIBA KNOWLEDGE NUGGETS