As it streamlines its software systems for managing its procurement of supplies, Verizon is also learning to treat its suppliers more like strategic partners, chief supply chain officer John Vazquez says.

At Verizon Communications Inc., digital transformation isn’t just about bringing about 5G communications nationwide.

Beginning with rollouts in Minneapolis and Chicago, Verizon has earmarked nearly $35 billion in spending over two years to bring about 5G wireless technology, which will power faster consumer and business access to cloud computing and rapidly speed up the rollout of internet of things (IoT) applications, driverless self-driving cars, virtual reality, smart cities and networked robots, among other technology.

But at the same time that Verizon is speeding up the rollout of new wireless communications to customers, the company also is overhauling its B2B ecommerce, supply chain and procurement technology for its vendors and suppliers, says John Vazquez, senior vice president and chief supply chain officer.

Treating suppliers more like partners

Verizon is a big user of ecommerce and supply chain technology, Vazquez told attendees earlier this month at the at the SAP Ariba annual conference in Austin, Texas. SAP Ariba is the electronic procurement technology and network services arm of business operations software company SAP SE.

Each year Verizon sends nearly $20 billion in procurement transactions across its SAP Ariba platform and network, he says. “Today about 1.25 million invoices run through that platform,” he says.

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Verizon, which generated 2018 consolidated revenue of $130.90 billion, is rolling out a five-point plan known as “One ERP” to consolidate three disparate enterprise resource planning (ERP) systems as well as other back-end business software to a single SAP platform and network. “We will upload and integrate SAP Ariba into more of our spend categories,” Vazquez told attendees. “The business disruption we are looking forward to, is: How do you get speed-to-market with a new growth model?”

Better supply change and ecommerce management begins with treating suppliers as partners, he said. “We have to tell our suppliers in segments what our strategy is,” he said.

Shrinking 14 software systems down to three

Verizon operates a significant supply chain that involves 1,500 employees and 55,000 product SKUs. As part of its back-end systems overhaul, Verizon is getting rid of 14 outdated systems and business processes. “All of these things are now coalescing into one supply chain management system, where before we had 14 diverse processes and now we will probably get those down to three,” Vazquez told attendees. “All of that requires management, orchestration, data management and integrity; it also requires that we embrace the new technology around blockchain and bots for automated procurement.”

Better supply chain and e-procurement technology is helping Verizon control expenses by helping to get rid of inefficiency, he says. “Last year we were able to recapture almost $1 billion of inventory sitting in warehouses that was purchased for projects,” Vazquez said. “When you spend $17 billion a year on your network, you really want to make sure you are only putting out the dollars that you need to do, to make that build actually happen. With 55,000 SKUs, that will not happen in an Excel spreadsheet.”

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