According to a company executive, Manila Water expects to realize 10 percent savings – equivalent to P50 million – on total procurement costs as a result of the agreement.
In deploying BayanTrade’s e-Sourcing Plus program, Manila Water will dramatically increase the value of its total procurement through BayanTrade – a whopping 425 percent – according to Manila Water capital works director Mario Suardi.
Last year, the company procured P85 million worth of supplies on BayanTrade and generated P17 million in overall procurement savings. The company realized these savings primarily through electronic bidding, a process wherein multiple sellers compete for a bid requirement via the Internet.
"Our positive experience with BayanTrade encouraged us to sign up for e-Sourcing Plus. From last year’s 26 bidding events, we are targeting to conduct over 100 online auctions from April 2003 to March 2004," Suardi said
A component of e-Sourcing Plus is the installation of SAP’s Supplier Relationship Management (mySAP SRM) solution, according to Dante Briones, BayanTrade president and COO. "Manila Water deals with over 1,000 suppliers. This e-business solution will give them the capability to analyze supplier relationships to help them identify and select the best suppliers. By automating supplier transactions, Manila Water can efficiently monitor the demand and supply processes for all purchased goods, services, and its suppliers. As a result, the company can be more focused, and shorten its procurement cycle times."
At present, Manila Water is using an SAP system that integrates its customer contact center with its financial system. Briones explained that e-Sourcing Plus will incorporate mySAP SRM into Manila Water’s SAP backend office, thus "seamlessly connecting Manila Water’s enterprise, procurement, and supplier management systems."
The program will significantly enhance Manila Water’s processes, according to Suardi. "With a specific budget and procurement facility in place, we simply provide specifications for items, identify potential suppliers, and conduct the actual bidding event. BayanTrade assists the company and its suppliers in all stages of the bidding event, including supplier selection. This significantly enhances and standardizes our procurement methods and as a result, accelerates procurement cycles."
Manila Water delivers 1.6 billion liters of potable water to over 4.7 million residents and thousands of industries in the eastern zone of Metro Manila. At present, it is expanding its water distribution network, and established programs to repair leaks, replace malfunctioning meters, and convert illegal water connections to legal connections. As a result of these efforts, Manila Water’s procurement department must effectively address an ever-increasing demand for materials such as water meters, pipes, water pumps, and chlorine.
BayanTrade’s e-Sourcing Plus program helps Manila Water rapidly address these requirements, according to Briones. "Unlike traditional purchasing methods which generally take one to two months to complete, electronic bidding preparations can be conducted in just a week or two. This speeds up material availability and, therefore, enables Manila Water to deliver reliable service to its customers."
Carol E. Carreon, BayanTrade vice-chairman and CEO, said that the e-Sourcing program leverages both Manila Water’s procurement expertise and BayanTrade’s world-class procurement tools. "This is a collaborative effort that enables Manila Water to align and improve purchasing strategies with a technology derived from best, global business practices."
Sherisa Nuesa, MWC chief financial officer, explained that e-Sourcing Plus supports the company’s goal to save on costs and enhance operations. "Advancing our procurement system with the professional sourcing and procurement experience of BayanTrade and SAP technology allows us to create efficiencies in and standardize the company’s procurement practices. Well-planned procurement strategies eliminate unnecessary spending and helps us effectively control the company’s finances."
Manila Water is the third company to avail itself of BayanTrade’s e-Sourcing Plus program following Ayala Land Inc. (ALI) and Aboitiz Equity Ventures (AEV), according to Briones. It is also the first water utility and second local firm to deploy SAP’s SRM solution.