During the ongoing coronavirus, or COVID-19 pandemic, SAP, the global leader in enterprise application management software, has taken measured steps to enable shippers and suppliers hustle to respond to urgent fulfillment requests.
Last month, in response to the uncertainty of coronavirus, the company formally opened access to SAP Ariba Discovery, a business-to-business e-commerce offering designed to connect buyers and suppliers on a single network. SAP Ariba Discovery allows any buyer to post immediate sourcing needs and to enable any of the four million suppliers on the Ariba Network to respond with their ability to deliver the goods and services required. These services are currently available for free through June 30, with SAP noting this initiative is part of a larger commitment to maintain reliable and transparent supply chains in a time of such uncertainty.
Chris Haydon, President of SAP Procurement Solutions, told LM that when SAP made the decision to open up SAP Ariba Discovery the emerging supply chain challenges related to coronavirus had yet to hit the United States and Europe in the same way in which it had already hit Asia.
“We have made a proactive approach to open the Ariba network up to get supply in line with demand….with Asia at the forefront of the pandemic,” said Haydon.
“That was really the synthesis there of how we needed to get in front and realizing very early that traditional sources of supply were already close to being tapped out. So the notion of traditional procurement and logistics channels that follow the procurement channel with the supply base were not necessarily going to step up, which is why we wanted to make it open in the spirit of connecting suppliers with buyers—there were a couple of topical outcomes we were able to deliver.”
What’s more, Haydon noted that another driver for this move came with the context that, because of coronavirus, the delivery of contracted items was essentially under assault.
That was evident with SAP seeing a dramatic decrease in output coming out of Asia, in the form of a 50% drop-off in advanced shipping notices, as supply availability diminished, according to Haydon.
“The ability to cover supply is tapped out, and there is a very slight correlation of a stocking out level across suppliers,” he said. “The macro trend is that this is such a dramatic drop, and it is also about order sourcing volume drying out a little bit, coupled with its logistics impact.”
In recent weeks, as New York City started to see its number of new coronavirus cases increase by the day, SAP said that Heath Layfield, chief digital officer of Ram Tool and Supply, was seeking 500 beds for a temporary hospital, to treat coronavirus patients, that the Alabama- based construction company was helping to build outside New York City to treat patients stricken with the coronavirus. Through the SAP Ariba Network, Layfield’s group was able to secure 500 beds from Joerns Healthcare in 30 minutes.
SAP also said that the open network drove a 24-hour turnaround on Personal Protective Equipment (PPE) orders for nurses via the SAP Ariba Spot Buy in the Premikati Marketplace, an offering on the SAP Ariba Network that simplifies procurement processes and acts as a subset of the marketplace that hosts and manages supplies on behalf of the supplier community.
While it is hard to compare the coronavirus pandemic to other situations, Haydon said that while things now are clearly different when compared to the global financial crisis in 2008, there are some similarities to at least the recessionary impact, with some of the same behaviors, including temporary labor levels dropping off, a slowing of new orders, contingent workers laid off early, a drop off in sourcing events, and a month-long lag or more for advanced shipping notices.
“We are seeing many of these same patterns now as the magnitude and scope continues to unfold,” said Haydon.
Going forward, Haydon said there are many emerging schools of thought, as things relate to procurement and logistics.
“Will we see more of a focus on local supply chains or more micro supply chains, as companies may not want to concentrate on geographies, whether that means local or international,” he observed. “There are some analyses and questions focused on how to provide supply chain insights on a regional basis. The trend will probably accelerate as there is no doubt that some of the tariff and trade enactments over the last 18-to-24 months have also willfully made corporations look at how they source within their logistics infrastructure in a different way. It is also a question of how you move some portions from higher-risk impact to total landing cost restrictions. There is a megatrend to that.”