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Transforming procurement: A case study

Datacentre business Equinix has replaced manual, time-consuming procurement processes with a much more automated set-up and a pre-approved marketplace of product suppliers is central to the change

For many organisations, working with a long tail of smaller suppliers is time consuming and inefficient. Keeping on top of such a wide array of business relationships is near impossible. In addition, lack of data limits opportunities to negotiate better deals with preferred suppliers.

Given what Equinix does – helping businesses get the most out of digital solutions – it was important for the company to become best in class in all its internal operations. It pulled together a digital vision for procurement leadership, beginning by shifting focus from transactional purchase management towards the lifecycle value of end-to-end source-to-pay (S2P). The fresh approach went live in May for its Europe, Middle East and Africa operations, ahead of a mirrored change this year in its America and Asia-Pacific locations.

“Even though we used one P2P system globally, we had very decentralised procurement, so we’ve completely changed how we manage it,” explains Chris Ayscough, director of regional procurement at Equinix. “We were not getting the benefits we needed.”

The company implemented a Coupa S2P platform covering all external goods and services, and a new marketplace from Mercateo, giving it access to approved suppliers of millions of goods, from stationery and computing accessories right through to industrial consumable products.

The move to the new marketplace is vastly improving its efficiency in simultaneously working with myriad suppliers representing small to mid-sized activity. And as many of Equinix’s clients have strict regulatory requirements, having a large marketplace of pre-approved suppliers helps limit risk exposure and compliance tasks.

Using the Mercateo marketplace gives us much more control of the tail end of suppliers, representing 50 per cent of supplier base

“We’ve changed our entire S2P, so it’s not simply making transactions; instead we look upstream at how we create value and manage suppliers. This means having a strategic capability with a user-friendly, end-to-end automated process across sourcing, contracting, procurement and payment,” says Mr Ayscough.

Equinix is targeting the automation of 70 per cent of its procurement back-end procedures, with ordering, approval, purchase order, invoice acceptance and payment made digital and automatic in most cases, with a full audit trail of each step. This is particularly easy for the suppliers within Mercateo, as they already fully integrate with its platform and ways of working.

Until recently, Equinix’s steps had been much more manual. Using the new marketplace, rather than sourcing multiple low-value quotes, the company’s staff can find relevant products, and recommendations on price, delivery cost and timing, and they can place orders based on their business priorities.

“Using the Mercateo marketplace gives us much more control of the tail end of suppliers, representing 50 per cent of supplier base,” says Mr Ayscough. “The portal has a simple feel; intuitive so that anyone can use it. This frees up time for our category managers so they can focus on strategic suppliers.”

By starting from scratch with a holistic view, Equinix has avoided a common pitfall of introducing different systems and trying to link them together. And having gone live with the new systems in Europe, the Middle East and Africa, any new lessons learnt from early adoption will inform changes before switching on the technology in the Americas and Asia-Pacific later this year.

Equinix is aiming for global standardisation and, by taking an international approach from the start, 95 per cent of its processes will be the same in every country of operation. “We’ve focused on ensuring that our change management team goes right across our business functions and regions, so that each area’s needs are served,” Mr Ayscough concludes.

To find out more about transforming procurement with an efficient and accessible supplier marketplace please visit mercateo.co.uk

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