At $14 billion in annual revenue, Las Vegas Sands Corp. bills itself as the world’s biggest integrated resort company, the owner of such famous casino hotels as The Venetian and The Palazzo on the Las Vegas Strip.
But there are two areas of business where Sands, headquartered in Paradise, Nev., doesn’t gamble or take on high risk. Those areas are B2B ecommerce and e-procurement, Sands senior vice president and chief procurement officer Norbert Riezler told attendees last week at the SAP Ariba annual conference in Austin, Texas. SAP Ariba is the electronic networking arm of business operations software company SAP SE.
Each year as the company grows and expands internationally, more of Sands’ corporate purchase contracts are flowing through e-procurement and the SAP Ariba network.
$2.4 billion in purchases
Last year Sands, which operates resort, hotel and gaming properties in Macao (China), Singapore and Las Vegas, processed $2.4 billion worth of business transactions through SAP Ariba.
One competitive edge in e-procurement Sands claims to have over other resort and gaming companies is the integration of the SAP Ariba network with its warehouse management system from HighJump Software. “I think we are the only company I am aware of in the hospitality, gaming or integrated resort business that has figured out how to use all of the spend in one solution,” Riezler told attendees.
But in order to use advanced electronic networking integrated with ecommerce and e-procurement applications, it took Sands about 30 months to complete all of the needed integration work, he says. “You need to have an unwavering support from your senior leadership—inevitably there will be a divisional president typically that thinks the system isn’t for them and tries to do a run around so you have top support.”
Sands also learned other key implementation lessons while launching an integrated business and technology approach to e-procurement. Among them: one leader needs to be in charge and be prepared to spend lots of time making decisions; and that new business processes must be part of the launch.
“You need to be heavily involved both as a procurement or finance leader in launching the system—there are literally hundreds of decisions that have to be made as you are launching it and even post-launch,” Riezler told attendees. “You also really have to start over with your processes—these people that developed the system are really smart, and if you have the system flow the way it was designed and change your processes, you will be much better off launching the system that way.”
The Sands’ e-procurement network through SAP Ariba today is utilized by about 6,000 internal users and another 6,000 users that link to the network as suppliers and receive purchase orders or submit invoices, Riezler says. The network, which handles 800,000 purchase orders annually, is used by Sands to negotiate 8,000 contracts each year.
Busy chickens for busy casinos
“In the last 12 months we put $2.9 billion worth of spend through the system,” he says. “We buy 23 million pounds of beef, 22 million eggs per year from some really busy chickens and we buy six million-rolls of toilet paper—the most important thing is we need it fast.”
Over time, Sands has built its e-procurement system to resemble the just-in-time supply chain methods used by major vehicle manufacturers. “When our chefs come in in the morning and they prepare the dim sum, their orders need to go out that time in the morning, he said.”When we have big conventions with 15,000 guests that you feed three times a day, and when you only have 72 hours to confirm the orders, they need to go out real-time,” Riezler says. “I used to work for Ford Motor Co. and we have introduced many of the just-in-time principles to our industry.”
A major e-procurement network undergoes a lot of stress and, if systems fail, business operations face immediate headaches, he told attendees. “When orders are raised and they don’t go out right away, and our buyers come in early in the morning and realize they haven’t gone out, it is pure hell for them,” he said. “They have to then go and download the order, PDF them, e-mail them out and then typically follow up with a phone call to make sure the suppliers have gotten the orders—so when SAP Ariba does infrastructure upgrades that have system outages, we feel it.”
Networks and systems need to work because Sands does virtually all of its corporate buying and spending, and even contract negotiations, online, Riezler told attendees. “Other than the taxes we pay, I can’t think of anything that doesn’t run through the system, he says.
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