Embraer: Reaching new heights and navigating challenges with global supply chain operations from source to pay
Setting a course for ‘Supply Chain 4.0’
Every 10 seconds on average, an aircraft manufactured by Embraer S.A. takes off from somewhere on the planet. The supply chain underpinning these global operations is massively complex. That’s why Embraer chose SAP Business Network to help it connect processes, manage volatility, and reach its destination with suppliers fully on board.
| Industry | Region | Company Size |
| Aerospace and defense | São Paulo, Brazil | >19,000 employees |
reduction in hours spent on supply chain operations.
hours saved annually on procurement tasks.
of full-time equivalents redirected to value-added work.
Executive Vice President of Global Procurement and Supply Chain, Embraer S.A.
Developing a resilient supply chain with a source-to-pay approach
A global leader in the aerospace industry, Embraer S.A. designs, develops, manufactures, and markets aircraft and systems that deliver solutions to bring excellence and performance to each of its customers and partners.
In these operations, Embraer believes the work of one contributes to the success of the other within a chain that unites everyone. This is particularly true in the aerospace and defense industry, where supply chain disruptions caused by events such as natural disasters or geopolitical unrest can have critical impacts. These impacts can include production delays, components shortages, increased costs, diminished customer satisfaction, and reduced profitability. With this in mind, and demand for its craft growing, Embraer saw it needed to adopt a holistic approach to aligning procurement with corporate strategy and deftly managing around 2,100 suppliers and trading partners in more than 60 countries.
Through a strategic initiative called the “ONEChain Program,” Embraer set out to unite diverse lines of business, suppliers, and trading partners to achieve measurable results across operational efficiency, supply chain collaboration, inventory reduction, and cost savings. It wanted to enhance supplier monitoring, streamline processes, and establish additional sources for certain supplies.
To support what would become the company’s largest digital transformation initiative in two decades, Embraer needed software that would help it embrace robust source-to-pay processes and the best practices of “Supply Chain 4.0,” the next-generation digital supply chain.
Executive Vice President of Global Procurement and Supply Chain, Embraer S.A.
Reinventing procurement with a diverse range of solutions
Having divided its ONEChain Program into seven phases, Embraer saw that SAP software including SAP Business Network and SAP Ariba solutions offered the comprehensive functionality it needed for its transformation.
The first phase involved adopting SAP Ariba Strategic Sourcing Suite to support direct and indirect procurement, sourcing projects, contracts, and risk management. Using the SAP Ariba Supplier Lifecycle and Performance solution, Embraer automated and unified processes from supplier qualification and onboarding to integration and master data management, empowering suppliers to maintain their own information. With the guided sourcing capability for the SAP Ariba Sourcing solution, the company streamlined supplier negotiations by conducting requests for quotation and supplier search and selection on the same source-to-pay platform. Meanwhile, through the SAP Ariba Contracts solution, Embraer enhanced transparency in the negotiation and administration of contracts and supplier amendments. And the SAP Business Network Commerce Automation solution let it automate document exchange and purchase-order processes between it and suppliers.
In phase two, Embraer used the SAP Ariba Buying solution to further streamline procurement by enabling purchases through corporate catalogs. The solution lets users generate their own quotations and facilitates invoice registration that helps logistics and global finance teams.
Phase three involved using the SAP Business Network Supply Chain Collaboration solution to integrate supplier operations with Embraer’s supply chain planning and execution in real time. This helped enhance collaboration with suppliers, automate supply transactions, and consolidate processes on a single platform.
A fourth phase saw the company developing a supplier experience management platform supported by solutions from SAP and Qualtrics. This enabled it to improve contract evaluations with suppliers and convert supplier feedback into real-time information to enable prompt action.
Next, Embraer deployed the SAP Integrated Business Planning for Supply Chain (SAP IBP for Supply Chain) solution to harmonize financial and operational planning and aid informed decisions based on enhanced collaboration, forecasting, predictive modeling, and inventory alignment.
In a sixth phase, a new financial portal enabled efficient tracking and communication of invoicing discrepancies and supplier issues, encompassing both accounts payable and accounts receivable.
And, finally, in an inventory planning phase, Embraer set out to mitigate supply chain risks arising from economic uncertainty, increasing customer expectations, demand issues, and supply variability. Through multistage inventory optimization and modeling techniques, including using AI functionalities within SAP IBP for Supply Chain, the company established inventory targets that help it not only meet or surpass customer demand requirements but also effectively manage working capital.
Enhancing visibility and control and optimizing procurement processes
Embraer and its broader ecosystem have experienced multiple benefits since the company has been using SAP Business Network to unite its source-to-pay capabilities. Costs are down; global product traceability is improved; inventory management is enhanced; and supplier management is faster and more transparent. The aircraft manufacturer has reduced its working capital, streamlined purchasing processes, and seen significant gains in internal productivity.
For example, tasks that used to consume significant time, such as sending purchase orders to suppliers, changing order details, and producing forecasts and procurement plans, can now be accomplished at the click of a button. By automating contract creation alone, the company has eliminated 21,000 hours of work each year, while improved sourcing processes account for savings of more than 19,000 hours.
Key business units can develop initiatives based on real-time insights into the supply chain to make better, more-informed planning decisions and more-strategic contributions to the organization.
By modernizing and simplifying its processes and offering optimized, interconnected systems, Embraer has also strengthened its bond with suppliers. A new supplier portal provides a single integrated view of the supply chain and includes tutorials and support materials, enhancing communication and collaboration. All of this has improved supplier relationships, supplier performance, and negotiation outcomes. And Embraer can better support suppliers’ own digital transformations thanks to process standardization, the use of best market practices, and the development of new business models.
The network’s supplier management capabilities also help Embraer’s teams comply with regulatory requirements, mitigating supply chain risks.
What’s more, by integrating SAP Business Network with the SAP Analytics Cloud solution, procurement professionals can better monitor key performance indicators, track supplier performance, align with company-wide goals and objectives, and generate actionable insights. With these insights, Embraer can continuously improve procurement processes to the benefit of the business, suppliers and trading partners, customers, and passengers around the world.
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