I read a fascinating article about Las Vegas Sands last week that talked about an interesting concept, just-in-time purchasing. We’re all familiar with JIT for the manufacturing industry, which has been critical in the supply chain efficiency gains we’ve seen over the past twenty years, but until recently has not been applied to the procurement world.
Most organizations start implementing e-Procurement systems to control and manage spend, but what if you could architect a system that allowed your company to gain the efficiencies of a manufacturing supply chain? If you think about a large casino, there are lots of things they need, from casino chips to table displays, cards and probably most of all…..food. Casinos feed thousands of people every day, not to mention multiple conventions on a weekly basis. Pair that with an organization with over a dozen of the largest casino properties in the world and you’ve got the potential for a JIT system.
Having an organization embrace e-Procurement can be a challenge at times – but how do you get your suppliers onboard with this process? Sands figured out that they order 23,000,000 pounds of beef and 22,000,000 eggs on an annual basis. Knowing that information allows them to negotiate 8000 contracts and issue 800,000 purchase orders annually. Armed with that data they can make sure all their suppliers are able to keep up with demand with strategic forecasting. Making sure the suppliers punchout catalog can support real time inventory or estimated delivery times is critical. Sands knows that if 15,000 IT professionals are coming to the Las Vegas Sands for a convention next week — they need to make sure their suppliers can deliver all the paper products, pens, food and other convention-related suppliers on time and on budget.
As an organization that services suppliers, we wonder how does the supplier keep up with such a fast pace of ordering? The buyer may have the best forecasting tools in Ariba, but the supplier may not have access to that same data or powerful software.
This may be another case where e-Procurement does a great job of focusing on the buy side, but the supplier may be left to figure how to handle 150 orders per day. How does the supplier get those orders into their order fulfillment or ERP system to maximize efficiencies on the supply side? If buyers start bringing the suppliers into the conversation as they implement e-Procurement systems, we believe even further efficiencies can be gained.