BMP summit 2014: Master Class: Best-in class procurement operations - Marcus Fischer, SAP Pte Ltd.

Procurement Operations –

Best in ClassMarcus Fischer, Director Professional Services Industry, SAP Asia Pacific & Japan

September, 2014

© 2014 SAP SE or an SAP affiliate company. All rights reserved. 2Public

CPO and CFO objectives…

Improve Complianceand Control

Drive process efficiency

Optimize Working Capital

Deliver added Valueto the business

(Risk Mgt., Innovation,Time2Market,…)

Constantly changing economical environment, business dynamics and

technology innovations


…and challenges

Improve Complianceand Control





“15% of invoices have exceptions adding 6.6 days to the cycle.”

“On average companies have 66% of spend under management.”

“50% of pre-negotiated discounts are never captured.”

“Nearly 77% of all incoming invoices are still paper based.”


CPO and CFO objectives and challenges

Improve Compliance and Control



% Spend under Management

89%

66%

Incremental revenue from supplier innovations

8,3%

3%

Average cost to process an invoice from receipt to settlement:

7,78$

10$

% POs compliant with contracts

85%

41%

Best in class

% of invoices paid early enough to secure early payment discounts

60%

10%



Average


How to become best-in class






Better understand your spend


Spend Analytics - The Situation

Multiple Procurement Systems

Inconsistent Data Sources

Poor Data Quality

Manual, Effort Intensive Processes

Limited Access to Market Information

What are we buying? From whom? How often? How much?

At what cost?Could we negotiate

better to safe money? With whom? Where would we have the

biggest impact?

Are we compliant with our policies and

contracts?

Are we facing supplier risk?

Many questions A lot of challengesin getting the answer


New solutions leveraging new big data technologies:Spend Visibility

Enrich

Supplier data from D&B Business Insights Database

Intelligent mapping & classification using Big Data Technologies

Blend of automation and a manual QA process

validate, map, classify,

refine

Flexible, role based analytics leveraging the power of Big Data Technologies

Benchmark datafrom other buyers

(opt-in model)

Complement


Supplier Consolidation Opportunities

Significant spend with three different

companies based on enterprise

resource planning (ERP) data


Big Impact Sourcing Opportunities

Identify which commodities in your supply base account for a relatively large percentage of invoice spend with varying prices across multiple suppliers. Make an impact on spend by creating competitive sourcing projects for a relatively small number of parts.


Benefits

Leading Security

Systems

Company

$1B savings within 2 years by integrating spend data from 200+ sources

Over $100M in new savings opportunities attributable to improved spend visibility

97% of the annual spend classified and enriched over 98% of the supplier base thus resulting 20% supplier reduction

$27.3M savings in 2.5year period and 18% average savings across all spend categories

$30M in sourcing savings achieved year-on-year

Consolidated view of data – single source of truth

Increased savings and improved service

Ability to focus on analysis and planning, not gathering and processing data

Supplier visibility for risk, diversity, and other supplier enrichment attributes

Reduced maverick spending

Best practices spend analysis






Put more spend under management –manage more

categories




Relevance of Service Spend

30-60% of total spend 20-50% of total workforce

Direct & IndirectMaterialSpend

Contractors

Outsourced

SOW

Temps

ServiceSpend

ExternalWorkforce

InternalWorkforce


The challenge

where

who

what

how much

HRIS

Internal

full-time +

part-time

on the

payroll

External

contractors

outsourced

SoW

temps

many suppliers

inefficient

quality?

compliance?

1-5% of revenue!


The solution – a VMS designed for the specifics of service procurement

From a mess… … to a VMS!hiringmgrs

suppliers hiringmgrs

VMSsuppliers

fewer

no visibility

inefficiencies

too highrates + costs

qualityIssues

complianceissues


VMS for the contingent workforceCost savings, efficiency, consistency and compliance

1 Create RFx

2 Collaborate & Approve

3 Distribute RFx

4 Submit Responses

5 Evaluate & Select Vendor

6 Create & Negotiate SOWOn-board Workers 7

Complete Deliverables 8Submit T&E

Approve 9

Off-board Workers 10

Prepare Invoice 11

Evaluate Supplier 12


Single View Across the Enterprise for All External Workers / Service Providers


Proven Value of a VMS for the contingent workforce

visibility ↑ efficiency ↑time2market ↓

costs ↓ quality ↑ compliance ↑

100%visibility!

-$33Min 1st yr!

quality ↑retention ↑

health + safetyincidents ↓

approvals 2wks → 2days!

-9.9%in 1st yr!

competitivebidding ↑

compliantw/ TARP etc.

time-to-fill -20%

contractorconversion ↑








(Fully) Leverage the Potential of Networks


The challenges and limitations

>60% manual, paper-based communication/transactions

or

Point to Point EDI, Portals & Single Process Solutions

Manual or semi-automated data entry => Error prone

Insufficient information for effective reconciliation => slow, inefficient

Process status intransparent

Limited market transparency

Buyers Suppliers

Focus of optimization

so far


The opportunity – convergence of networks, enabling the networked economy

Mobile Networks

SocialNetworks

BusinessNetworks

CorporateNetworks

AutomationAcceleration Efficiency Transparency

Collaboration ComplianceKnowledgeInnovation

New business models

ConsumerNetworks

Buyers Suppliers


Benefits of the networked economy for procurement

Buyers Suppliers

Efficiency & Acceleration

Easy Catalog management

RFx & Bid Collaboration

PO & Invoice Automation

Business Growth

Global reach

Time2Market

Innovation

Compliance

Contract Collaboration

Process & document transparency &

traceability

Complete Audit trail

Knowledge & Decision support

Supplier matching, discovery & information

Supplier performance & risk management

Peer benchmarking


Measurable benefits realized by networked companies

>4,500 global suppliers

networked enabled

98%+ touchless invoicing --

integrated with 8 SAP systems worldwide

96%+ on-time payments –

and enhanced discount capture

75% reduction in AP costs

>4,000 suppliers

network enabled

>500,000 electronic

invoices/yr. – integrated with 7 SAP systems globally

70% global invoice volumes moved

from paper to electronic – incl. non-PO

>30% reduction in BPO costs


Summary

Leverage Solutions and Services based on big data technologies

Saving potential identification

Leverage VMS designed for contingent workforce management

Cost and risk Efficiency and quality

Connect to Business/Supplier Networks

Efficiency Compliance Risk Value added services

for the business

(Fully) Leverage the Potential of Networks

Put more spend under management –manage more

categories

Better understand your spend

+ free up time and effort from managing transactions to focus on high value activities

© 2014 SAP SE or an SAP affiliate company. All rights reserved.

Thank you

Contact information:

Marcus Fischer

Director Professional Services Industry

Industry Business Solutions APJ

30 Pasir Panjang Road, #03-32 Mapletree Business City

Singapore 117440

+65 9751 4816

[email protected]

mailto:[email protected]

BMP summit 2014: Master Class: Best-in class procurement operations - Marcus Fischer, SAP Pte Ltd.

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Transcript of BMP summit 2014: Master Class: Best-in class procurement operations - Marcus Fischer, SAP Pte Ltd.