Supplier Enablement

Last month, the ISM awarded a number of individuals and organizations the R. Gene Richter Award for Leadership and Innovation in Supply Management. The recipients were primarily organizations that had demonstrated massive improvements in their sourcing and procurement functions which came about through concentrated improvement efforts. These improvements were the direct result of the adoption and consistent implementation of best practices across the sourcing and procurement functions in the organization. This week we are discussing the best practices that helped one or more of the recipients transform their organizations and win these coveted awards.

Today we are going to discuss how supplier enablement can significantly enhance your sourcing function, as it did for Rockwell Collins, as described in the article The Next Step in the latest issue of Inside Supply Management.

In 2005, Rockwell Collins launched an eRFQ/APO (electronic Request For Quote / Automated Purchase Order) system that extended the initial supplier portal that it released in 2003, This site is the primary communication tool between Rockwell Collins and its suppliers, providing a single process and methodology of doing business that is understood by all parties involved.

The system also supports Total Cost of Ownership (TCO) analysis, that allows the system to automatically select the winners of the eRFQ and generate APOs when the response deadline occurs. The system automates tactical pieces of procurement and frees up Rockwell Collin’s staff to concentrate on strategic issues and spend more time working with engineering and supply.

The system provided the following benefits to Rockwell Collins:

  • the volume of automated transactions has increased to 70%,
  • nearly 90% of direct materials are purchased through the system,
  • supplier visits have increased eightfold in a 2 year period, from 5,000 in January 2004 to 40,000 in January 2006,
  • over 1,400 suppliers use the system, and
  • the application has generated more than 70,000 eRFQs and more than 50,000 purchase orders.