Case Study: Buying Into Procurement Software

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Any company with 300 facilities across North America represents a lot of
purchasing power — and a challenge to coordinate it all. Smurfit-Stone
Container Corp., the world’s largest integrated producer of paperboard and
paper-based packaging products, faced just such a challenge following the
1998 merger of Jefferson Smurfit and Stone Container which (along with last year’s purchase of St. Laurent Paperboard Inc.) created the
current packaging giant.

“A key for us was leveraging the savings opportunities in buying power,”
says John Haudrich, director of eProcurement at Smurfit-Stone.

Until the recent implementation of an IT solution, all of Smurfit-Stone’s
three divisions (Containers, such as corrugated boxes; Consumer, such as
detergent and cereal boxes; and Specialty, such as yard waste bags), used
time-intensive, manual ordering systems. The system worked and streamlining
“just wasn’t a priority,” recalls Haudrich.

But as Smurfit-Stone grew, Haudrich says the opportunity and competitive
necessity to coordinate procurement systems became apparent. Enter Clarus
Corp.’s eProcurement, a Web-based enterprise application designed
to expand the purchasing process to everyone in the organization (while
including the necessary budget and authorization controls).

Smurfit-Stone deployed Clarus eProcurement in the middle of last year,
going live with the system in just 25 days. Building on that successful
implementation, Smurfit-Stone added Clarus Content, which helped in the
management of large and complex vendor catalogs. In fact, Smurfit-Stone uses
Clarus to reach 80% of the catalog items (covering some 85,000 items) it
uses in its indirect procurement process. “Clarus Content allows our plant
personnel to rapidly find the items they need and facilitates the approval
of purchase orders,” says Haudrich.

Accessed via the corporate intranet, Clarus’ point-and-click interface lets
users quickly see if an item meets the business rules (e.g. purchasing
criteria and cost limits) entered by Smurfit-Stone.

“You might want something for a particular project that requires the bosses’
approval and the system can be set up to account for that,” explains Lorie
O’Neill, director of product marketing at Clarus. “A lot of companies have
back office purchasing in their ERP systems from SAP or Oracle. Frankly,
those are designed for the buyers, not the requisitioners. Our eProcurement
plugs into an ERP system. It doesn’t duplicate it, rather we let you
automate or augment what you already have.”

Managing Complex Content

eProcurement is a licensed application that is also available on a
subscription basis. Clarus offers “rapid deployment” and other services
including management of content. For an additional fee, Clarus Content
essentially organizes the content from a customer’s suppliers to make it
more accessible.

If, for example, a company wanted to order quarter-inch
ball bearings, they would be readily available from different suppliers
using one criteria even though the suppliers might have distinct ways of
classification.

Spreading more purchasing power throughout the organization means less grunt
work for procurement managers who, ideally, will be freed up to take on more
important tasks like analyzing trends, strategic sourcing, and negotiating
contracts. And while Clarus’ feature set, streamlining, cost-saving and a
slick Web-based training tool were key selling points for Smurfit-Stone,
Haudrich adds a few more competitive advantages.

“We looked at Commerce One, Ariba, and others two years ago, but being a
conservative company we liked Clarus because the licensing cost was a known
model (versus others that charge per transaction),” says Haudrich.

“Also, Clarus lets us keep the data within our four walls. We own the data
and no one has access we don’t want to. We also like the road map of where
Clarus is going with its product line and full-bodied services.”