Li Auto: Redefining the standard for automotive retail with a two-month overhaul of indirect procurement
Enhancing compliance and efficiency
With SAP Ariba solutions, Li Auto completed an indirect procurement digital transformation in just two months, building a comprehensive digital procurement process from sourcing to payment. This transformation marks a shift from scale expansion to lean operations, enhancing compliance across the automaker’s value chain and optimizing process efficiency.
| Industry | Region | Company Size |
| Automotive | Beijing, China | ¥144.5 billion (US$984 million) revenue (2024) |
increase in process standardization rate.
months for implementation.
Finance Product Manager, Li Auto Inc.
Addressing efficiency and compliance challenges in indirect procurement
As a representative of China’s new generation of automakers, Li Auto Inc. has rapidly risen to prominence with its direct sales model and extended-range technology. The expansion of its direct sales stores led to a surge in decentralized, nonproduction procurement demands, necessitating simultaneous upgrades in cost management, efficiency, and compliance.
Unlike traditional automakers, new-generation car manufacturers typically adopt a direct sales model, using the store experience as a key touchpoint to deeply connect with customers. In this model, the importance of indirect procurement is clear. Indirect procurement goes beyond conventional items such as office supplies and IT equipment: It also plays a crucial role in many aspects of store operations. This includes everything from store location selection and property leasing to store renovations, employee training, and marketing materials to support sales. The high frequency, wide variety, and nonstandard nature of these procurement demands increase the complexity of management within the indirect procurement department, raising the bar for procurement efficiency, cost control, and compliance management.
As the direct sales stores rapidly expanded, Li Auto recognized the need to simultaneously upgrade the standardization and compliance of its indirect procurement processes. In the past, each store had its own standards for key processes such as supplier onboarding and pricing, which increased compliance risks in indirect procurement. The lack of standardization also inadvertently slowed down the efficiency of the entire procurement process. For example, multiple approval steps were required for procurement requests, contract reviews, and payments, significantly extending the procurement cycle. Li Auto needed to build a standardized, highly integrated digital platform to centralize and manage the indirect procurement process online, enabling efficient collaboration and agile responses.
In the direct sales model, frontline stores require greater autonomy in decision-making to quickly respond to customer needs. Due to the inability to fully visualize the indirect procurement process, both store and corporate management lacked visibility into cost structures and return on investment. As a result, budget allocation, category spending optimization, and supplier performance evaluations lacked data support and were often based on experience. Enabling more detailed control and management had become a key issue in Li Auto’s indirect procurement transformation.
Finance Product Manager, Li Auto Inc.
Building a compliance foundation to enhance collaboration and efficiency
Li Auto chose to deploy SAP Ariba solutions, quickly establishing a standardized indirect procurement process, from sourcing to payment. As well as the SAP Ariba Buying and Invoicing solution and SAP Ariba Source-to-Contract Suite, the company implemented the SAP Process Control application.
Through the built-in compliance features in SAP Ariba solutions, the indirect procurement business underwent a transformation from “manual control” to “systematic control,” creating a solid compliance foundation for future process optimization and integrated management.
Building on this foundation, the Li Auto team further deepened integration. Internally, it smoothly connected SAP Ariba solutions with an SAP Cloud ERP Private Edition solution to enable automatic data flow and facilitate sharing with the corporate finance team. Externally, it strengthened collaboration through integration with SAP Business Network, enabling connectivity and process sharing with external suppliers. As the digital hub for indirect procurement, SAP Ariba solutions connect Li Auto to a vast supplier network, empowering collaboration and driving efficiency.
In addition, Li Auto worked with the SAP Preferred Success service for SAP Ariba solutions to help align the solutions with business needs and continuously optimize them. Experts for SAP Preferred Success provided initial research for indirect procurement. During implementation, they established an efficient issue-response mechanism, offering expert advice on system configuration and functionality. They also introduced valuable industry best practices to help Li Auto quickly deploy SAP Ariba solutions. SAP Preferred Success further provides industry adoption analysis reports for SAP Ariba solutions, allowing Li Auto to regularly track industry usage trends, such as the average sourcing cycle and category pricing levels among the top 25% of global companies. These real-world industry metrics help Li Auto fine-tune its indirect procurement operations, leading to continuous improvements in management and control.
Boosting efficiency across people, finance, and resources
After implementing SAP Ariba solutions, Li Auto achieved standardization and transparency across its indirect procurement process, with compliance rates soaring to 97%. The comprehensive integration of SAP Ariba solutions with upstream and downstream systems has enabled the procurement process to flow automatically on a digital platform, reducing manual intervention. For example, suppliers can now directly submit electronic invoices to SAP Ariba solutions and track approval status in real time. As a result, Li Auto’s efficiency in indirect procurement has significantly improved.
The analytical insights gained from digitalization provide valuable decision-making support for Li Auto’s frontline store managers and leadership. Stores can now visualize operating costs in real time based on system data and autonomously allocate indirect procurement budgets, thereby enhancing their budget management capabilities. Li Auto’s indirect procurement headquarters also gains better visibility into cost structures, enabling the development of targeted strategies to maximize the efficiency of people, finances, and resources. Additionally, with the industry analysis reports provided by SAP Preferred Success, Li Auto can compare its performance with industry benchmarks, further improving its decision-making processes.
From launch to implementation, Li Auto’s deployment of SAP Ariba solutions was completed in just two months. This implementation has set a new benchmark for digital transformation in the industry’s indirect procurement processes.