Schneider Electric Streamlines SRM with SAS

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Schneider Electric is the world's largest manufacturer of electrical distribution systems and components. The company has a healthy growth rate; sales are up 15.7 percent to €9.7 billion (US$8.8 billion), with 70,000 employees in 130 countries. In such a large organization, there is an excellent chance of finding profitability in managing the supply chain. To this end, Schneider has invested in SAS SRM (supplier relationship management). The mission statement for the project is to "secure permanently the best match between Schneider's needs and the suppliers' offers."

A Vision of Consolidation

In December 1999 the company began the project on a worldwide basis. "It is necessary to explore all of Schneider's possibilities with regard to suppliers, as the market is very competitive," says Serge Vanborre, E.D.P. project manager at Schneider Electric's purchasing headquarters. "It is necessary for the company to be a key account for a principal market for raw materials worldwide," he explains. "We have three or four big manufacturers, and if each manufacturer buys the same component in its respective country, there are three or four different prices. But if we can make one negotiation for the component for all the subsidiaries, we can get a much better deal."

Schneider's purchasing organization has four leading markets, each worth US$1 billion -- raw materials and means of production, fabricated metallic and plastic components, electronic and electrical, and non-production. The global purchasing operation works with these four markets and a total of 33 commodity groups. The local purchasing countries have their own headquarters in Europe, North America and some international locations, and handle 29 local commodity groups.

"We want to know who is buying what from whom. We want to know the global purchases, be able to do an analysis in order to repartition our purchases, and verify if the supplier policies are followed," says Vanborre. Schneider organized its analyses along three axes: suppliers, buyers and what was purchased, each with its own hierarchy. The requirements specified for the new SRM system, called SMS (Supplier Monitoring System), were that it be able to react in line with new company needs, share unstructured information, give the users autonomy, be multi-lingual, handle multiple currencies and be deployed via the Web using thin clients.

"We had a good experience working with SAS on this project. SAS made an effort to really know our business and that helped very much with the implementation," says Gerard Vignaud, fellow E.D.P. project manager at Schneider Electric's purchasing headquarters. SAS Professional Services' role in this project included design, building, assisting during deployment and tuning and knowledge transfer.

Supplying the Connection

Schneider’s SMS takes advantage of the joint efforts of SAS and D&B data content that culminated in their SAS SRM solution, which makes transparent the affiliation of companies that have different names. Buyers might not know that some companies were linked in any way unless they looked in detail at these companies' financial reports. With SRM Spend Analysis, any time more than 50 percent of a company is owned by a parent company, Schneider buyers are flagged to take action. "This has undeniably already been very useful in establishing worldwide links that didn't exist before," says Vignaud.

All purchasing information from the various Schneider subsidiaries is extracted on a monthly basis, codified according to the D&B/SAS application, put through the validation and control engine, and consolidated. The information is then stored in a data warehouse, from which metadata and reports may be extracted. After being sorted by commodity, the information is then fed back to the subsidiaries so that they may track and compare their progress with the various suppliers.

SMS is available to more than 900 Schneider procurement and sourcing professionals worldwide. "It is a very user-friendly solution, and people who know nothing about SAS can use it. It has stimulated productivity in the purchasing department, because people can compare each other's performance with the supplier and how well they do in their negotiations and in certain markets. It has created more activity and a healthy level of competition," says Vignaud.

"The general manager of purchasing at Schneider was able to sit down in front of the SAS application and, without knowing anything about it, could find out the information he wanted within 10 minutes," says Vanborre. "The application speaks to the users in purchasing terms, which is what they can understand."

Full Speed Ahead

"Our SAS SRM system has enhanced our view of the business. Before now, we did not have a comprehensive worldwide view of purchasing. The whole purchasing function has gained much more focus and attention within the organization as a result," says Vanborre. "The perception of SRM's importance has increased."

SMS is an intrinsic part of Schneider's future plans. "Now we have the tool, we have the process, and we have a way to clean our data," says Vignaud. "This has been a major component of the global action plan. We want to be able to measure, and to act, and to evolve our strategy. If you can't measure, you can't act."