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."

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