Lucent Technologies
A Fortune 100 company, Lucent Technologies designs and delivers the systems, services
and software that drive next-generation communications networks.
In early 2001, as a result of the downturn in the telecom market, Lucent faced heavy market and
operating cost pressures. As a result of having many autonomous business units and regions across the
globe, Lucent’s procurement organization was highly decentralized. In addition, multiple incompatible
legacy systems existed as did manual sourcing and procurement processes which exacerbated the
pressure on Lucent’s Supply Chain Networks organization ("SCN").
Improving Net Income by Reducing Selling,
General & Administrative ("SG&A") Expenses
Undergoing significant market and organizational change was the catalyst that led Lucent executives to
commence top-down cost and spend management initiatives across the company. The visionary leadership
recognized the strategic bottom-line impact of indirect procurement and was looking to lower its costs
while increasing value in non-core spend categories.
In order to achieve such improvements, the executive team realized that it needed to transfer the
responsibility for spend management of non-core, non-critical SG&A expense categories to a third party
to enable SCN to focus on core business. SCN also wanted to rapidly shift its fixed costs to variable
costs. SCN sought a procurement BPO provider that could gain control over indirect spend, bring best
practices in the complete procurement lifecycle, and be fully accountable for planning, execution and
driving bottom-line results.
Comprehensive Procurement BPO for Non-Core Categories and Processes
Lucent chose Ariba
®
to manage 14 indirect spend categories for the company-including advertising,
print and marketing, IT, capital equipment and leasing, energy, environmental health and safety, HR
benefits and services, telecom, travel, temporary labor, post-sales support, industrial supplies and
equipment, and agricultural supplies and equipment-in North America, Europe and Asia-Pacific regions.
Ariba manages all functions for Lucent, including spending analysis, category sourcing, supplier
negotiations, spend compliance, requisition management, invoice services, catalog and supplier
enablement services, procurement help desk, as well as application hosting. Lucent has also
deployed Ariba Buyer
™
to 900 locations across 30 countries over a period of eleven months.
Achieving Significant Bottom-line Savings and Industry Excellence
Decreased maverick spending, increased purchasing from preferred suppliers, and operational
efficiencies have enabled Lucent to achieve such significant bottom-line savings.
In addition to achieving its savings goals, Lucent was also able to decrease its number of
transaction centers from 16 to two-one in Europe and one in the United States-and increase its
“
These outstanding suppliers delivered
quality products quickly and presented
creative solutions to challenging problems.
In a highly competitive marketplace,
that kind of support is critical.
”
Jose Mejia,
President of Supply Chain Networks
Ariba Spotlight