In my SAP Spend Connect 2024 review, I explained why I've given SAP Business Network a rethink. As I later said on LinkedIn:
The biggest difference on the Business Networks side is the strategy, volume, and most important: customer impact I can document and see for myself now beyond acquired point solutions.
I don't get on planes to listen to keynotes - though the keynote positioning is always worth a look. I get on planes to meet customers like Tony Gainsford of Molex, and hear their candid stories.
I've argued that vendors are over-hyping AI agents this fall at the expense of showcasing customers - customers that are getting big results now. SAP did a better job of this than most at Spend Connect, but still...
And then, in walks Gainsford to illustrate exactly what I'm talking about. Gainsford, who is Molex's Supply Chain Director, is currently leading his team through a global supply chain transformation.
How Molex is transforming its supplier network
Getting the platform fundamentals right is Molex's purview - and, by the way, it's the key to applying relevant AI down the road. "What, a customer story with no AI? That's so 2023." Some might say that, but how about this:
Molex is now running $200 million a month through their supplier network, growing as they go along. 70% of their transactions now flow through the SAP Business Network. Why does that matter? Start with this - as Gainsford told analyst Josh Greenbaum and me:
It's all about the transaction and getting the confirmation. Our confirmation rate was 30 percent before. Imagine that - only 30, and now we are 90 percent with the Business Network.
Add in this bit via SAP:
Molex digitalized its discrete PO, consignment PO, subcontracting PO, quality, and invoice processes. It enabled 1,000 suppliers and $1 billion in transactions in 18 months, driving a clear-to-build process and thereby improving customer service.
I asked Gainsford about that blurb: is that how you would put it? Not quite. As Gainsford told us, Molex is now up to $1.6 billion in transactions. Along the way, cumbersome processes are getting automated. Such as? Gainsford brought up purchase orders:
You wouldn't believe we were emailing them out before this. That was a long, painful process. Now, the PO goes out instantly when you save it in SAP. So there's just value, value, value as you step through, from the req(uisition) all the way to through to the invoice. By mining the process and monitoring it very closely, you can put your finger on it.
But successful projects like this don't start with task automation, or even process mining: they start via a strategy with buy-in. As a manufacturer of electronic and fiber optic connectivity systems, Molex relies on a globalized supply chain to produce over 100,000 products. As Gainsford told us, any legacy process in that network exacts a cost. He had a different vision:
It started probably six years ago, with a vision of of having a more connected supply chain. The idea was to start with the rebirth the upstream solutions and onboard suppliers with SLP (supply lifecycle and performance). And the subsequent step would then be transactional.
From a legacy supplier portal to the SAP Business Network
The next move? Go from a legacy supplier portal to the SAP Business Network. Gainsford was watching SAP's SNC solution, but it seemed too complicated at the time. Then, with the emergence of SCC (Ariba Supply Chain Collaboration), things looked more promising. Momentum was building:
One or two things happened at Molex. We decided it was time to pull the trigger, as this fit into our whole bigger digital strategy of having a connected, end-to-end supply chain.
But this wasn't a top-down decision - Gainsford wasn't going to pick a tool his stakeholders didn't want:
We didn't jump straight into SCC. We evaluated four or five products along the way, and we got our stakeholders, because they need to use it. They needed to make the decision, rather than me. It was my mission to get a new solution, but to get the stakeholders to participate. So we did an extensive evaluation with 100 stakeholders, between procurement, quality and finance, and they helped us select the right [solution]. It was an extensive journey; we wanted to make sure it stuck.
Back to that improved confirmation rate - how did Molex get external suppliers on board?
It's the enabling the suppliers and getting them engaged, with buyers taking ownership for the relationship. They're getting involved and making clear to the suppliers that we've got to get these things confirmed. We can't do this anymore the old way, you know, like WeChat and WhatsApp and email and all that. It's a journey of building knowledge internally in Molex that drives adoption. The buyers and the materials managers need to understand the concept and the value in it. Once you've built them up, then you they can help you get the suppliers on board.
This is not a minor transition: Molex has around 4,900 suppliers.
It's not a small effort; these things take time to get the adoption we've got. It's a long journey, so we decided to build a foundation as well. We built a foundation with basic purchase order, collaboration and consignment. The easier use cases - get those rolled out. It allows us to retire our legacy portal, and now we come back, adding the more complicated, more sophisticated use cases like multi-tier and scheduling agreements and forecasting and things like that. So we've got the base built out. It'll be finished at the end of the year, and we're now focusing on more complicated [scenarios].
Getting external suppliers on board
So far, with the suppliers Molex has engaged, they have a 90 percent adoption rate of the new network, instead of the old portal. In situations like this, I always ask: what's in it for the suppliers? Because too often, it seems like these procurement shifts are mandated without a true supplier benefit. Gainsford says that improved visibility benefits all sides:
As much as we want visibility, they've got the visibility of what's coming at them. When we make a change, they know about it in real-time; they get an alert.
Gainsford says as the network scales, they've also seen a "network effect":
They don't have to go to four or five different places. They go to one place, and they've got a bunch of their customers already. They just change the customer, as they're busy processing their confirmations.
Real-time tracking of invoices and POs is always a good thing:
Suppliers can check the status of the invoices, because everybody wants their money tomorrow. These are often smaller parties who are very cash hungry. Now, they can check their remittance - there's no need to to phone Molex.
What about helping suppliers with compliance details? Gainsford says as the compliance information flows through the SAP system system into the Business Network, "It digitizes some of the painful compliancy stuff that they would normally have to email out."
One of my burning questions for this show was: Can SAP further prove the value of Business Networks via ERP integration benefits? Turns out Gainsford is a fan of CIG, the gateway middleware between SAP and the Business Network:
In all the years I've been doing SAP, CIG is the most amazing piece of software we were able to integrate... I'm on the business side; we did the integration ourselves, with a little bit of help from our IT folks. It's just an amazing product. It's codeless; it's rock solid. We've had very few issues with it. You have a large quantity of data moving back and forth every day, and you've got to have rock solid integration. If you miss one single purchase order, I'm history; I'm toast.
So we were cautious in the beginning, and monitored the integration very closely. We came to the point where we were confident that it's robust. We've got a small little team that, now, on an ongoing game basis, monitors any integration needs. But I tell you, it's a great piece of software.
My take - Molex puts a twist on managing change, and AI readiness
No matter how techno-brilliant the software is, it still comes down to managing change. But Gainsford has some tricks up his sleeve here too. Molex has a distributed team, including a center of excellence in Bangalore, and a big team in Chicago. As he told us:
This is all about change management, both for buyers and suppliers. It's getting everybody, all the documentation, the help files - getting help available for both buyers and suppliers; it's a long journey.
Change management is a constant, but we need to move off of stale approaches to training. Gainsford found a way:
We trained 2,000 people, between the buyers and suppliers - without a single training class.
How did Molex pull this off? Through snackable video content:
We used a TikTok and YouTube approach. We took 25 videos, three or four minutes long. We put them on our Learning Management System, both for buyers and suppliers. We assigned them to buyers and suppliers, and we monitored completions. We've trained 2000 people. We've moved that knowledge from zero, to the level where it needs to be - and we sustain it.
We didn't talk much about AI in this story, but that doesn't mean analytics and AI don't factor into Gainsford's approach. But there is work to do first. This work has its own payoff, tracked and measured by Molex's internal KPIs. But there is also an "AI readiness" factor. Gainsford:
We're setting ourselves up. You need good quality data to be good at AI. If you ever want to launch and be successful with AI, you need data - and good quality data. So part of this end-to-end transformation is getting our master data in good shape. MRP gives the right messages to the buyers, and we buy the stuff on time and then, trust the message and act upon the message. If not, there's a problem with setup somewhere along the line. So get everything out, and get everything cleaned up. One Molex, one standard global process.
AI might be grabbing the keynote time, but this is the kind of customer story that gets my attention. Frankly, vendors should make more of this type of story when keynote time rolls around. Sexy new functionality might be shipping soon, but we live in a results kind of world.
End note: Molex won an award for this project. At the time of our interview, Gainsford was waiting on his team for a team award photo. If I can get one, I'll swap out the photos or add the team pic, since Gainsforce rightfully views this project as a team effort.