A Better Path for Buying

As a leading global manufacturing solutions provider, developing and building products for some of the world’s biggest brands across automotive, renewable energy, healthcare, AI, cloud data centers, and beyond, Jabil takes supply chains seriously. “We are uniquely positioned to have supply chain visibility across multiple global markets. It is a key differentiator for our procurement and supply chain team,” says Heidi Banks, senior director and engagement partner, source-to-pay services, at Jabil. “We use this experience as supply chain and procurement practitioners to ensure we’re delivering best-in-class service to our customers and the overall business enterprise.”

Responsible for more than 250,000 employees across 50 million square feet of manufacturing space in 30 countries, Jabil must also meet its own needs around indirect procurement. Managing over $6 billion in indirect spend across that many regions and users represents a major challenge.

“As a procurement organization, we had to develop a clear and transparent methodology that would effectively communicate to our business consumers about the efforts undertaken to achieve competitive pricing,” Banks explains. “The goal was not only to direct spending toward our strategic partners but also to ensure policy controls and compliance were upheld efficiently.”

A major need, she notes, was bringing data-driven visibility and structure to tail spend management—buying processes that were too often opaque and disjointed.

Digital integration driving improvements

Enterprises typically employ a variety of tools and solutions intended to promote digital transformation. Developing an architecture in which those solutions work effectively together, though, can be difficult. As part of its transformation strategy, Jabil onboarded Coupa’s Business Spend Management (BSM) solution as a foundational component of its procurement infrastructure. Subsequent capabilities, then, had to integrate seamlessly with Coupa in order to maximize the potential benefits.

That led Jabil to Amazon Business, Banks says.

“Amazon Business was one of our first major deployments of a punchout catalog,” she says. “Connecting into Coupa’s BSM platform, Amazon Business also became the first supplier that we used with Coupa’s Open Buy functionality, enabling cross-catalog searching without leaving Coupa. This simplifies the user experience and creates competitive price transparency.”

Jabil’s procurement teams could then curate the vast scope of the Amazon Business catalog, setting purchasing parameters and highlighting preferred vendors, all within Coupa. Employees, meanwhile, could move through purchasing processes quickly, without sacrificing choice or having to exit Coupa.

“It was a really big efficiency gain,” Banks says. “The end users love it, because it takes less clicks to get what they need, which is always helpful. The procurement team loves it because the open transparency keeps partners competitive. With Amazon Business’ vast selection, Business Prime membership and business-only pricing, Open Buy enabled them to win more and strengthen the partnership.”

The before-and-after value proposition for Jabil through the Amazon Business punchout with Coupa was clear, particularly in tail spend, where purchasing levels on individual products might not be as large. Consolidating small purchases to one supplier simplified order management and automated invoicing, leading to a better user experience and overall reduction in the cost of doing business.

Once requests to purchase are approved, Banks says 95% of Jabil’s purchase orders are automatically routed, without the need for a buyer to manually intervene. The invoices are also automatically integrated without human interaction, generating efficiency gains for both parties. “Those things all happen in an automated way, reducing tactical work and enabling procurement to focus on strategic activities, such as sourcing and negotiating,” she says. “So our people get to skip a lot of nonvalue-added steps and gain the benefit of better price points because we consolidated our spend through strategic partners like Amazon Business.”

But Jabil noticed that even though the seamless integration of Amazon Business’ capabilities were reducing maverick spend, there were still opportunities to drive spend to Amazon Business.

“If we see something in the spend data from Amazon Business, or spend outside Amazon Business that shouldn’t be happening, we can correct those processes either through change management or Guided Buying, a Business Prime benefit,” Banks says. “The analytics we receive from Amazon Business help us determine where we should make those plays.”

Top-line collaboration, bottom-line benefits

The ability to use its digital stack to influence purchasing decisions was clear almost instantly, Banks says. Once Jabil started using Amazon Business’ integration and Guided Buying, which highlights products badged as preferred by the customer administrator to help guide purchasing choices, Jabil leaders noted a 4% uptick in purchasing transactions moving to preferred catalogs rather than freeform or nonstrategic suppliers. “Since then, we’ve driven more than 40% improvement in our spend to catalog and to strategic partners,” she says.

Banks believes the downstream impacts of integrating Amazon Business have been significant for Jabil. “As we drive spend into the right channels, it drives cost leadership. It makes us more cost competitive as a manufacturing partner for our customers,” she says. Moreover, Jabil has been able to take its tremendous depth of knowledge in procurement, informed by Amazon Business, and transform purchasing into a profit center. “We provide procurement and supply chain services to other companies. The collaboration with Amazon Business has given us great insight to be able to do that. We’re in the market, talking about our successes with Guided Buying, communicating the critical foundation of innovative partners such as Amazon Business and how to drive catalogs, ultimately capturing the tail and reducing maverick spend.”

Taken as a whole, these outcomes reflect the high quality of Jabil’s relationship with Amazon Business.

“Without collaboration, we wouldn’t be successful,” Banks says. “We have to know we’re with strategic allies that are executing every single day, that we can turn to and will walk lockstep with us to help us deliver our return on investment.”

Originally published on the Wall Street Journal.