Voice of Experience: Preaching to the BuyerBy Baselinemag | Posted 2004-08-01 Email Print
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Gary L. Evans, PNC Financial Services Group senior vice president, supply chain management, says an online purchasing system helped the company cut its annual expenditure on supplies by at least $120 million compared with what it spent in 1998.
Gary L. Evans
PNC Financial Services Group
SVP, Supply Chain Management
Manager's Profile: The 23-year company veteran is in charge of supplier relations and strategic sourcing initiatives for the financial services firm, which has $74 billion in assets and serves 2.1 million consumer and small-business customers.
Eyes on Supplies: PNC "got serious" about optimizing its supply-chain processes in 1999, Evans says. "We knew supply-chain management was very well developed in the manufacturing space, but we saw an opportunity to improve our sourcing," he says.
His Project: In 2001, the bank rolled out Ariba's Buyer software for online procurement. The system, called PNC Buys, now allows the company's 24,000 employees to book travel arrangements and order office supplies and other products through prenegotiated contracts with more than 1,500 suppliers. Last year, PNC Buys handled transactions totaling roughly $100 million of the bank's non-interest expenses.
No Mercy: PNC estimates it has cut annual spending by at least $120 million compared with 1998. How? Mainly, savings have come from forcing employees to buy products and services via corporatewide purchasing deals using Ariba Buyer. That meant sticking to an unforgiving policy: "We won't reimburse anything [purchased] outside the system. We said, 'This is how we do business now.'"
Right Tool for the Job: Evans hasn't considered using enterprise resource planning software for e-procurement. One reason: PNC would first have to consolidate multiple accounting packages used among its five operating units. Beyond that, Evans says he views online procurement as a different beast from such back-office functions as accounts payable. Supplier-relationship management software "allows you to understand where there are opportunities to get synergies in your spending," he says. "It's not related to managing the process of paying the bills."