Overview

Vestas is a market leader in the North American wind industry with 42,000 MW installed and 38,000+ MW under service in the U.S. and Canada. Vestas employs more than 6,000 people in the manufacturing, installation, and service of onshore and offshore wind turbines. In 2021, Vestas spent $1.7 billion across the U.S. supply chain with 1,300+ suppliers and $60 million across 172 suppliers in Canada. In January 2022, Vestas was named the most sustainable company in the world in the 18th annual Global 100 ranking published by Corporate Knights. As part of Vestas’ sustainability strategy, Sustainability in Everything We Do, the company is committed to reduce carbon emissions from its supply chain by 45% per MWh generated by 2030, and to produce zero-waste turbines by 2040. 

Supernova Award Category

ESG & Sustainability

The Problem

Vestas set a zero-emissions goal, so the company needed to ensure all of its products – and by extension, its suppliers – were complying with their standards and adhering to Vestas’ code of conduct. With 50% of manufacturing managed through suppliers, a core piece of this is procurement, which needed to be unified in order to speed up product cycles and increase volume for the company – particularly as it increased focus on expanding the supplier base across new and complex global markets. 

Vestas needed to gain total visibility and transparency while simplifying and standardizing the way it works with suppliers, moving from communicating to sharing data – and ultimately converting this data into business insights. It became crucial for the company to identify how Vestas could simplify and standardize supplier management, engagement, and collaboration.   

The Solution

To achieve decarbonization, Vestas must meet new demands as both onshore and offshore operations grow by relying on global manufacturing, advanced supply chain capabilities, and a vast network of suppliers. Vestas set out to find the right technology to automate core source-to-pay processes and help simplify supplier relationships, looking for the journey to result in unified procurement, enhanced quality and compliance, lower costs, and better supplier collaboration. 

Based on these needs, Vestas selected Ariba Network, the largest supplier network worldwide, to manage all of its spend – direct and indirect, which is what made Ariba stand out from the other solutions considered.  

The results

Before, Vestas struggled with various siloed procurement systems, which created a lot of manual work and lacked efficiency. Now, the company is able to orchestrate its full supply chain and better engage suppliers so that the company can operate and maneuver with insights, speed, and quality while optimizing cash flow.  

With qualification questionnaires built right into the solutions, compliance is automatically enabled in the onboarding process. And with everything on the same platform, people have to follow the process. POs and invoices are automatically matched, and there are fewer delays with POs and parked or blocked invoices. Each of these successes contribute to the company’s sustainability and business goals, but as a direct impact of this initiative, digitalized processes, such as the use of digital signatures, are reducing Vestas’ paper use.  

Since deploying SAP Ariba solutions, Vestas is seeing better supplier compliance, more advantageous contracts, and streamlined buying. All in all, SAP Ariba solutions are dramatically reducing Vestas’ time to market and helping the company to keep pace with the push for new products, new suppliers and sustainability goals.  

Metrics

Vestas has roughly 2,000 users with SAP Ariba solutions installed on their devices, and thousands of new and existing suppliers have been onboarded. Procure-to-pay management and exception handling have also been drastically improved, with a 7x decrease in parked and blocked (P&B) invoices and a 75% reduction in P&B invoice handling time. Furthermore, a savings of 7% was delivered through e-auctions across categories. 

Vestas estimates over 20 million euros in savings over the next five years, as a direct result of supply chain collaboration and enablement of end-to-end transparency.  

Furthermore, SAP Ariba solutions enabled Vestas to improve lead times not only in procurement but also in supply chain, planning, logistics, and more by boosting collaboration across lines of business. Its holistic supply chain suite integrated with the SAP ERP application, and Vestas also deployed the SAP Signature Management application by DocuSign to enable electronic signing and online management of documents from any device, further improving transparency and processing time.  

The Technology

Vestas chose SAP Ariba solutions to unify procurement and offer on-the-go access from any device, the SAP Signature Management application by DocuSign for digital document management, and the SAP ERP application for integration.

Disruptive Factor

To a large extent, Vestas’ manufacturing happens in partnership with its suppliers. The company needed help building a single platform to share data and insights with its outsourced manufacturing footprint so that it could achieve total supply chain transparency and supplier engagement from engineering through production. This means full traceability of components and complete stock visibility for suppliers so that Vestas can improve planning, optimize spend, and ensure it has the materials its team needs right when they need them – all in the same platform where they manage supplier contracts. Ultimately, it’s about supply chain collaboration, and the automation and integration enabled by SAP Ariba solutions are lowering costs and increasing efficiency – ultimately helping Vestas to operate in more-complex markets and mitigate trade barriers so it can produce faster while ensuring quality products. 

Shining Moment

Vestas looks forward to its continued expansion, with a particular focus on entering new markets and promoting aftermarket services. The company is proud to be the number-one player in the wind energy sector by almost any measure. As Vestas is now looking for new digital revenue streams and new ways to engage with customers on things like energy management, storage, and even trading, the company has an even greater number of potential future breakthrough developments on the horizon.