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The Client

ALFA is a major Mexican industrial conglomerate made up of five businesses: Alpek (petrochemical and synthetic fibers), Hylsamex (steel), Sigma Alimentos (processed foods), Versax (auto parts), and Onexa (telecommunications). ALFA, which has alliances with more than 20 companies around the world, recorded revenues of US$4.56 billion and employed 35,832 people worldwide in 2000.

The Challenge

To enhance its competitiveness across all businesses, ALFA explored the efficiencies and potential savings offered by a centralized on-line procurement system for indirect goods and services. Across the organization, purchases for indirect goods and services—approximately US$600 million per year—were highly fragmented and handled independently by each business unit.

ALFA’s challenge was to deploy a single procurement system that would connect seamlessly with the different SAP ERP implementations used throughout the corporation. ALFA selected BearingPoint—because of its extensive implementation experience and alliance with Ariba¾to implement Ariba Buyer as ALFA’s eProcurement solution.

By standardizing and centralizing the procurement process, BearingPoint helped ALFA achieve the following benefits:

• Greater ability to fully leverage volume discounts
• Better control of maverick buying
• Improved spend management

The Solution

Our team worked closely with ALFA executives and process owners to develop a detailed map of the organization’s technology infrastructure, existing purchasing processes, and supporting business processes. In addition to the Ariba Buyer implementation, we also developed a strategic sourcing strategy to help ALFA negotiate savings in selected product lines.

Our Strategic Sourcing solution included a thorough analysis of all indirect purchases and the creation of a structured process. Since ALFA’s on-line procurement was among the first major effort of its kind in Mexico, most domestic suppliers were unfamiliar with their role in the new procurement process. Therefore, the team conducted strategic sourcing and procurement methodology training, provided supplier on-boarding, and jointly developed electronic catalogs.

The team implemented Ariba Buyer 7.0 (and the patch updates) and integrated the application into ALFA’s different SAP back-end systems in five pilot locations. To enhance its functionality, our team also developed custom coding to handle products in inventory, products on consignment, and purchase orders created automatically by SAP’s MRP (Material Requirements Planning) modules.

The six-month effort included a communications and training plan, a detailed organizational structure, and workforce transition plan to help ALFA adapt to the new technology and business environment. In the final project phase, BearingPoint helped launch the new on-line procurement application to users, which included training ALFA’s team to continue the rollout and implementation enterprise-wide. A smooth, successful knowledge transfer helped ALFA achieve its rapid deployment goals.

The Benefits

With a single, enterprise-wide Strategic Sourcing and on-line procurement system, ALFA can fully aggregate and leverage the spend on common items across their five business units, leverage technology to automate and streamline the purchasing process, and benefit from significant time and cost savings. For example, savings from the strategic sourcing effort of indirect commodities have ranged from 10 to 50 percent. Annualized cost savings of several million dollars were realized in a matter of months.

ALFA has continued the supplier base consolidation and standardization of indirect procurement processes enabled by the on-line procurement tool and is currently expanding its benefits to all business units.

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