Sonae Arauco: Building a sustainable procurement system for future growth
Explore Sonae Arauco’s journey with SAP
When two top companies in sustainable wood solutions came together to form Sonae Arauco, there was no doubt about its quality products and mission-driven future. However, to take on the joint venture’s sudden purchasing expansion, it needed comprehensive procurement management capabilities. Sonae Arauco turned to SAP Ariba solutions.
| Industry | Region | Company Size | Partner |
| Mill products—wood-based panels | Maia, Portugal | 2,600 employees | Softinsa |
of spend managed using SAP Ariba solutions.
for contract approval, down from 2 weeks.
of its >5,000 active suppliers are registered in SAP Ariba Supplier Lifecycle and Performance.
Regional Procurement Manager, Sonae Arauco
Unlocking growth opportunities while realizing procurement growing pains
In 2016, Sonae Arauco became one of the world’s leading sustainable wood-based solutions companies after Sonae Indústria and Arauco formed a joint venture. The new company has 23 business units and a presence in nine countries, and it exports products to 70 countries.
As an industry powerhouse, Sonae Arauco also significantly increased the number of procurement services it handled across every aspect of the business, including materials, repairs, production, maintenance, regulatory concerns, and more. This meant managing around €100 million in services and capital expenditure from 2,000 vendors across 15,000 purchase orders annually for its combined industrial indirect procurement operations.
Managed by local procurement teams and stakeholders from several of the company’s departments, including maintenance, production, and health, safety, and environment (HSE), this amount of procurement business was difficult to sustain for the long term. Without a centralized ERP system, most procurement tasks, from sourcing to awarding contracts, were managed through Microsoft Excel spreadsheets, e-mails, meetings, and other manual methods. Each country, region, and even division ran its procurement function differently. As a result, there was no process standardization nor were there any standardized global procurement policies in place.
A comprehensive global audit confirmed that Sonae Arauco needed a procurement technology transformation to modernize operations and provide a foundation to manage and grow the business efficiently and cost-effectively.
Procurement Specialist, Sonae Arauco
Carving out an IT procurement landscape that is future-ready
Sonae Arauco’s challenge was to take on a complete digital transformation for its procurement system, with the goal of maximizing “no-touch” operations, enabling more-efficient processes, and helping ensure compliance.
The first step was hiring a specialized procurement team to standardize processes across all regions and develop KPIs to measure and correct issues.
The next critical phase was selecting the spend management solutions to meet the company’s four key requirements for prepurchase and post-purchase procurement. This included sourcing, from creating and sending the request for proposal (RFP) to integrating the vendor into the ordering system. It also required support for collaboration internally and externally to enable timely contracts and supplier communication. The solution would need to excel at helping optimize productivity and resources while minimizing manual work, and it also needed to support compliance with standardized global procurement policies.
The evaluation had a running start since Arauco was already successfully using the SAP Ariba Sourcing and SAP Ariba Contracts solutions prior to the joint venture. With the cloud-based SAP solutions centralized at its global IT organization, it was an easier process to integrate additional SAP solutions for new locations as each one came on board.
With this in mind, and after evaluating ROI and other factors, Sonae Arauco selected SAP Ariba solutions. Using a phased approach, the company integrated other SAP Ariba solutions to support more of its supply chain procurement tasks. This included using the SAP Ariba Snap program, which offers preconfigured solutions to automate buying and invoicing processes, and the SAP Ariba Supplier Lifecycle and Performance solution to support unified and comprehensive vendor management. The company also incorporated the guided sourcing capability for SAP Ariba Sourcing, as well as the SAP Signature Management application by DocuSign to enable electronic signatures and management of documents online.
In addition Sonae Arauco was also taking another big step toward modernizing its business: implementing a new cloud ERP solution. The company chose SAP Ariba solutions for their ability to integrate more seamlessly with SAP Cloud ERP Private solutions. With a private cloud ERP solution, Sonae Arauco could upgrade from the SAP ERP application and increase the impact of SAP Ariba solutions.
Sonae Arauco partnered with Softinsa, an IBM subsidiary, for its technical expertise to help the company implement SAP solutions, modernize its business practices, improve functional designs to encourage user adoption, and adopt best practices.
Adding up the advantages of spend management solutions that continue to pay off
SAP Ariba solutions have transformed procurement at Sonae Arauco, with nearly all of the company’s strategic sourcing and procurement projects managed using SAP Ariba solutions. The most notable impact is that spend management under its centralized platform increased from 70% to 95% during the first two years after go-live.
Using the guided sourcing capability, procurement now has customizable standard templates and collaboration features that streamline many workflows for sourcing and contract processes, making it faster and easier to move projects to approval. The company also integrated a more transparent supplier request-for-proposal process, with improvements in sourcing methods, structure, and collaboration.
With the automated supplier registration process, vendor information can now integrate directly into SAP Cloud ERP Private. Integration between SAP Ariba solutions and cloud ERP will set the stage for more efficient, effective, and compliant ways of working at Sonae Arauco.
Contract negotiations now align with company policy, helping secure approvals with managers in the right order at the right time through SAP Signature Management. Contracts are also centrally managed in the system.
Process optimization in its buying and supplier network has driven productivity gains, including the ability to integrate compliance on its procurement platform. Procurement teams have more time to take on higher-value-added work, with less purchasing-related meetings, e-mails, and manual tasks.
SAP solutions have also helped the company save on nonfixed procurement costs, with benchmarking improvements and other metrics linked to a savings percentage. These insights are helping set expectations for future savings.
Administrative time for smaller orders has been significantly cut using the PunchOut feature used for catalogs such as Amazon Business and Wurth. Built-in compliance support and automation help speed the process, from purchase requisitions to purchase orders. For example, contract compliance functionality in the PunchOut feature has helped increase procurement productivity by 25%.
Group Procurement Director, Sonae Arauco
Future plans
To continue streamlining business processes and improving efficiency and compliance, Sonae Arauco is focused on strengthening the integration between SAP Ariba solutions and SAP Cloud ERP Private.
The company also aims to leverage other SAP Ariba solutions to help consolidate sourcing activities within category management and strategic negotiation processes. Additionally, it plans to increase user adoption of the new procurement solutions by adding more intuitive and user-friendly features.
Looking ahead, the company will also explore integrating AI-driven capabilities to further optimize procurement operations, enhance decision-making, and drive automation across its processes.
Featured partner
Softinsa, an IBM subsidiary, is specialized in consulting and application management services. With 27 years of history and experience in the Portuguese market, it currently has a team of more than 700 professionals distributed across Lisbon and the Innovation Centers in Tomar, Viseu, Fundão, Portalegre, and Vila Real. As an SAP partner, Softinsa has deep expertise in developing, implementing, and managing SAP solutions for its clients.