Eastman's Efficiency Plan Yields Savings

ByTonya Vinas Eastman Chemical Co., a $5.4 billion manufacturer of chemicals, fibers and plastics, is focusing on its relationship with small and midsized suppliers to squeeze savings out of the buying process. In 2001 the company invested in Yantra Supply, a Web-based program that allows suppliers without direct connections to Eastman's SAP ERP system to have an electronic link to the system. "We want to try to have some kind of connection with everyone," says Kendra Harrold, e-procurement manager for the Kingsport, Tenn., company. Harrold could not say how much Eastman spent on Yantra Supply, but she described it as a "moderate" IT investment. Eastman started piloting the program in December 2001 and launched it full scale this July. Harrold says the company doesn't yet have solid numbers on savings, but there is anecdotal evidence of it. Yantra says Eastman could save as much as 50% on the cost of transacting business with the 1,000 suppliers that will eventually be linked. Prior to Yantra, purchase orders were faxed to suppliers that lacked an electronic connection. "We feel there's efficiency gained by taking away routine day-to-day tasks that our buyers are doing, like calling in an order," Harrold says. "This allows our buyers to work on more value-added items such as negotiating a price on a product or providing information on a market that an engineer may need." Harrold says the suppliers using Yantra Supply comprise about $500 million of the company's annual direct spending. Eastman paid for the implementation and trained the suppliers. The system works as a portal -- suppliers receive an e-mail from Eastman and then log on to a secure Internet site to respond to the purchase request. Harrold stresses that a key to supplier buy-in is the ease of the program and the fact that the suppliers didn't need IT expertise or expenditure. "Eastman has found that we're ahead in that game and we're having to educate people along the way."