ENABLING PROFITABLE GROWTH THROUGH PROCUREMENT ...

ENABLING PROFITABLE GROWTH THROUGH PROCUREMENT::TRANSFORMING THE SOURCING AND PROCUREMENT ORGANIZATION

An ASUG/SAP Collaboration

SAP INSIGHT

Table of Contents

Executive Notes 1

The Impact of Sourcing and Procurement on Profitability 2

Driving Sourcing and Procurement Performance 3

Transforming the Sourcing and Procurement Organization 5

Conclusion 12

About the Sources 13

ENABLING PROFITABLE GROWTH THROUGH PROCUREMENT:TRANSFORMING THE SOURCING AND PROCUREMENT ORGANIZATION

An ASUG/SAP Collaboration

by Vanessa C. Smith, Shruti Goel, and Tushar Gulhane

SAP Insight| 1

EXECUTIVE NOTESIt is no secret that growing profitability and delivering value to owners and shareholders are key business objectives, and focusing on top-line growth strategies to attain these goals remains sound policy. Historically, sourcing and procurement organizations have been concerned mainly with reducing costs and ensuring supply availability and quality. However, this perspective is changing. Savvy businesses are moving beyond traditional sourcing and procurement goals, looking to the procurement organization to drive competitive advantage and deliver value across the enterprise.

Forward-looking executives recognize that procurement organizations have the potential to contribute beyond cost savings and can create value for the enterprise by improving profitability, increasing supplier collaboration, and supporting new product development – all of which foster competitive differentiation. This outlook on the role of sourcing and procurement is gaining acceptance, but many companies have neglected to make comprehensive changes in personnel, processes, and technology to enable procurement to contribute to the highest level of corporate objectives – increasing profitability and shareholder value. The most successful procurement organiza-tions have embarked on comprehensive strategic sourcing and spend management programs. These programs internally promote the value that the procurement organization can add by developing processes and policies that support overall corporate goals.

This SAP Insight proposes answers to three key questions regarding how procurement can enable profitable enterprise growth:

To what extent can the strategic goals of an enterprise be positively influenced by the sourcing and procurement organization?

What are the levers that affect an enterprise’s profitability and the associated performance drivers that the sourcing and procurement organization can impact?

How can enterprises embark on comprehensive procurement programs to attain their goals?

The findings of an ASUG/SAP study illuminate these questions and demonstrate why cutting-edge companies are focusing attention on the sourcing and procurement organization and how they are transforming sourcing and procurement to make a comprehensive impact on the enterprise. The study results include the following:

The effectiveness of procurement organizations can be measured largely by their ability to achieve year-over-year savings for the business; the sourcing and procurement organizations that generated the most savings helped their enterprises achieve higher operating income growth.

Sourcing and procurement organizations had several controllable performance drivers, including organizational structure, technology, and best-practices adoption, which can increase the effectiveness and efficiency of the organization.

Leading companies created a formal spend program through which they brought maximum spend under management, recruited experienced purchasing professionals, and standardized on an enterprise-wide sourcing and procurement application.

Leading procurement organizations invested for the long term, focusing on the broader impact they create on the financial and physical supply chains.

THE IMPACT OF SOURCING AND PROCUREMENT ON PROFITABILITYIt is no surprise that reducing costs and expenses has a positive effect on the bottom line and can have an impact faster than increasing revenues. It is a fact of business: it’s just easier to save money than to make money. For example, a company with annual revenues of US$1 billion would add US$28 million to its bottom line by decreasing external spend by 5%. By directing their efforts toward cost reductions, companies can significantly impact profitability. (See Figure 1.)

This is backed up by the findings of an ASUG/SAP study. (See the sidebar for more information on how the study was conducted.)

The study revealed a clear relationship between cost reduction achieved by the procurement organization and the company’s overall operating income growth. Leading companies had 1.7 times the savings and operating income growth compared to all other companies. (See Figure 2.)

2 | Enabling Profitable Growth Through Procurement

Figure 1

Impact of External Spend Reduction on the Bottom Line

INCOME STATEMENT ($ MILLIONS)

DECREASING EXTERNAL SPEND

BY 5%($ MILLIONS)

INCREASING REVENUES BY

5%($ MILLIONS)

Revenues $1,000 $1,000 $1,050

Cost of Revenue $700 $677.50 $735

Gross Margin 30% 32% 30%

Selling General and Administrative $200 $178 $210

Operating Margin 10% 15% 10%

Operating Income $100 $145 $105

Taxes at 38% $38 $55 $40

Net Income $62 $90 $65

CHANGE IN NET INCOME $28 $3CHANGE IN NET INCOME % 45% 5%

ASUG/SAP ONGOING BENCHMARKING STUDY ON PROCUREMENT

To understand the changes and momentum in sourcing and procurement organizations, the Americas’ SAP Users’ Group (ASUG®) and SAP established an ongoing benchmarking study (begun in 2005) to analyze key factors in how companies deploy their procurement organizations. This unique survey created a forum for participants to exchange metrics and best practices and to track new trends in sourcing and procurement performance. Companies in the chemical, consumer products, utilities, high tech, insurance, telecommunications, and other industries have taken part in the study.

The study analyzed the sourcing and procurement performance of participants based on key performance indicators (KPIs) in a number of different areas, including spend management, supplier management, staffing levels, costs, organizational structure, and IT implementation. The survey also covered the level of best-practices adoption across the full range of sourcing and procurement functions. Companies provided a self-evaluation on a scale from one (for no coverage) to five (for full coverage) for each best practice. The study calculated first quartile (top 25%), average, and fourth quartile (bottom 25%) for each KPI. Key findings and insights about the drivers of top performance are derived through an analysis of both quantitative and qualitative measures of effectiveness and efficiency.

DRIVING SOURCING AND PROCUREMENT PERFORMANCEOrganizations that consider increasing profitability a strategic goal must also strive to achieve operational excellence. A number of drivers, both controllable and uncontrollable, affect a company’s efforts in this endeavor. Successful organizations can strike a balance between operating with efficiency and delivering effective results, and the study showed that leading companies performed at above-average levels in both effectiveness and efficiency.

SAP Insight| 3

Study Definitions of Effectiveness and Efficiency

Efficiency:Staffing levels and costs associated with running the supplier relationship management and procurement operation.

Effectiveness:Impact on company performance – ability to reduce purchased cost (average annual savings percentage)

Figure 2

Leading Companies Have Higher Savings and Operating Income Growth

Leading All Others0%

30%

6.41%

28%

3.7%

13%

Savings

Operating Income Growth

IMPROVING EFFECTIVENESS AND EFFICIENCY

Figure 3 shows that 22% of companies analyzed were considered leading companies based on their ability to balance the effectiveness and efficiency of their procurement organizations. Most companies, however, fell into the bare bones category. These organizations have low staffing levels, but do not achieve above-average savings levels, indicating the need for a greater focus on procurement to make an impact.

Companies can improve effectiveness and achieve year-over-year savings with hard-dollar cost reductions as well as cost-avoidance measures. The study found that companies typically achieved savings by implementing strategic sourcing strategies such as spend aggregation, supplier rationalization, and demand management.

Businesses can improve efficiency by reducing the sourcing and procurement organization’s headcount required to mange spending. The study showed that, on average, 90% of the cost of running a procurement organization can be attributed to its staffing levels.

Leading companies in the study had 49% higher savings, 43% lower staffing levels, and 51% less costs than average companies. (See Figures 4, 5, and 6.)

Perhaps even more important, leading companies were not just effective and efficient – they also achieved higher levels of profitable growth than their peers. Our study found that operating income growth for leading companies was 28% compared to only 13% for all other companies.

EFFE

CTI

VEN

ESS

Ave

rage

Ann

ual S

avin

gs (%

)

Supplier Relationship Management and Procurement Staffing Levels

EFFICIENCY

LowHighLow

High

Leading companies balance efficiency and effectiveness, achieving better than average savings and better thanaverage staffing levels Leading

(22%)

Bare Bones(37%)

Struggling(21%)

Investors(20%)

Figure 3

Configuration of Companies in the ASUG/SAP Study


SAP Insight| 5

Figure 4

Purchased Cost Reductions in Savings

Figure 5

Full-Time Equivalents (FTEs) per Billion of Spend

Figure 6

Costs as a Percentage of Spend

TRANSFORMING THE SOURCING AND PROCUREMENT ORGANIZATIONThe most effective sourcing and procurement organizations constantly try to streamline processes, increase profitability, and improve the organization – and the overall enterprise. Today the role and the perception of the sourcing and procurement organization are undergoing an important transformation.

Study findings indicated that the prominence of the sourcing and procurement organization is on the rise in the corporate structure. In the ASUG/SAP study, 98% of participants believed sourcing and procurement will become strategic business partners in the next three years – as opposed to the 62% of organizations that considered sourcing and procurement to be back-office functions today.

It is crucial that other stakeholders in the company understand the potential of the sourcing and

procurement organization to contribute to the business. Raising the profile of sourcing and procurement helps other parts of the enterprise take advantage of the expertise of sourcing and procurement personnel to manage total costs and negotiate better contracts. Adopting best practices is integral to implementing these methods. The study found several emerging best practices that leading organizations implement to achieve gains in these areas:

Align the sourcing and procurement organizational model to meet business needs.

Manage spend and suppliers strategically.

Focus on employees.

Implement cutting-edge technology.

Q1 Leading0%

10%8.37%

6.41%

Purc

hase

d C

ost R

educ

tion

(Ann

ual S

avin

gs)

Average

4.31%

Q4

1.27%

Q1 Leading0

210

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62

Full-

Tim

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s (F

TEs)

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r B

illio

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nd

Average

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Q1 Leading0%

3%

2.24%

.5%Cos

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% o

f Spe

nd

Average

1.03%

Q4

.33%

Figure 8

Increasing Spend Under Management


ALIGN THE SOURCING AND PROCUREMENT ORGANIZATIONAL MODEL TO MEET BUSINESS NEEDS

Leading companies in the study aligned sourcing and procurement functions with business needs, and they developed processes and best practices to match strategic enterprise goals. Generally speaking, sourcing and procurement organizations can be aligned by function, by spend category, or as a hybrid of the two.

In a functional-alignment model, procurement professionals spend most of their time performing one or two key processes such as order processing or supplier performance management for all suppliers. In a spend-category aligned model, each procurement professional is assigned a spend category or set of spend categories and manages that category end to end – from supplier selection to supplier enablement. Some companies have implemented a hybrid model that combines characteristics of both. The study found that companies implementing a category-aligned organizational approach were more efficient in terms of full-time equivalents (FTEs) per billion in spend. (See Figure 7.)

The level of centralization also plays a pivotal role in the decision making of the sourcing and procurement organization. The extent to which to centralize procurement functions is an open question, with each model presenting distinct advantages and disadvantages. A key finding of the study was that most companies adopted some level of decentralization, allowing some decisions by the business units. The average company has centralized about 69% of its sourcing and procurement functions.

MANAGE SPEND AND SUPPLIERS STRATEGICALLY

Most companies recognize that using a single approach for all spend categories and suppliers is not feasible, so they develop unique strategies for each spend category and each supplier. An important differentiator in procurement performance was the amount of spend that the procurement organization can bring under management. (See Figure 8.)

Leading companies in the study managed more of both their direct and indirect spend strategically. They ensured that business departments adhere to contracts by implementing automated

Figure 7

Organizational Alignment Impacts Efficiency

Category Functional0

150 133

Alig

nmen

t Wis

e FT

E Le

vel

Hybrid

107100

Direct Materials0%

10%

% S

pend

U

nder

Man

agem

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5.65%

Indirect Materials

>80% <80%

5.41%

>60%

4.20%

<60%

4.08%

requisitioning tools and establishing blanket contracts. Leading companies therefore reported lower levels of maverick, off-contract spend. (See Figure 9.) The study revealed the following key findings regarding managing spend and supplier strategically:

Companies that have less than 5% maverick spend achieved 54.7% higher savings than companies with greater than 5% maverick spend.

More than half – 55% – of the leading companies managed more than 80% of their direct material spend strategically.

Leading companies used blanket contracts for direct materials 65.3% of the time, compared to 53.7% for all other companies in the study.

Maverick spending for leading companies for indirect materials was significantly less – just 6.89% – compared to 12.44% for other companies in the study.

In addition, leading companies in our survey adopted the following emerging best practices at a much higher rate than other survey participants:

Contract compliance was directed or even mandated by controls built into the software, and stakeholders had access to accurate and timely reports of contract compliance to catch maverick activity.

Regular spend reviews were conducted at an enterprise level, and longer-term contracts were managed for strategic spend.

Companies balanced the focus between price and performance, with total cost of ownership (TCO) always an important factor.

Buyers and commodity managers regularly analyzed supply strategy and performed portfolio analysis for key commodities, focusing on sourcing cycle time reduction.

The supply base was reviewed on a regular basis against key performance indicators (KPIs), and weighting and scoring matrices were used to analyze and award bids.

Accounts payable and purchasing departments worked closely together with clearly delineated roles and responsibilities to manage vendor relationships and resolve disputes.

SAP Insight| 7

Figure 9

Reducing Maverick Spend

SPEND MANAGEMENT AND E-SOURCING DELIVER SAVINGS

Managing spend can significantly affect savings, as shown by the experience of one of the world’s largest makers of office furnishings. The company needed to add new components to its product line, while cutting costs. Inconsistent business data across locations and maverick buying in subsidiaries hampered its efforts, so the company implemented a strategic sourcing program and new IT solutions to bring spending under control and to eliminate maverick spending.

As a result of its efforts, the company brought more than 80% of direct materials spend under management. Implementing best practices in supplier evaluation and negotiation helped the company achieve US$5 million savings in the first year. The company reduced inventory by 60% and eliminated out-of-stock situations. The company also increased the percentage of invoices processed electronically from 38% to 62%, and it cut its sourcing cycle by two months.

0%

70%65.33%

53.69%

Blanket Contracts Optimization(Direct Materials)

6.89%12.44%

Maverick Spend(Indirect Materials)

Leading

All Others

FOCUS ON EMPLOYEES

Successful procurement organizations recognize their employees are among their most valuable assets and they must hire knowledgeable people with the right skills and experience – for example, financial acumen as well as analytical and negotiating skills. After acquiring the right people, top-performing organizations train and nurture their employees, offering educational and certificate programs for employees to enhance their skills. This builds the company’s assets, increases job satisfaction, and raises morale throughout the organization. The best sourcing and procurement organizations then take this one step further, making sure they take full advantage of their employees’ skills to perform value-added functions. (See Figure 10.)

The study showed that leading organizations focused on employee acquisition and advancement. Almost 54% of employees had five or more years of strategic sourcing experience, compared to 43% for other companies. In addition, almost 62% of sourcing and procurement employees had formal training in negotiations, compared to 45% for other companies.

IMPLEMENT CUTTING-EDGE TECHNOLOGY

The study found that technology was crucial in operating sourcing and procurement organizations. State-of-the-art technology enabled successful organizations to reduce resources for transactional

activities by automating processes and gaining efficiency. It also facilitated strategic processes such as supplier collaboration.

The use of tools for monitoring and managing spend and supplier relationships have become an important differentiating factor between leading and average companies. The study revealed the following key findings regarding implementing technology in sourcing and procurement organizations:

Companies with a single, enterprise-wide system were more effective (with 1.2 times more savings) than those with fragmented IT landscapes.

Running more recent software releases contributed to 1.8 times higher savings.

Companies with ERP solutions already in place planned to implement or upgrade to solutions that facilitate expertise-level activities such as spend analytics and supplier collaboration, qualification, and negotiation.

Basic sourcing and supplier collaboration technologies have had limited adoption. Only about 38% of companies sourced their materials through electronic auctions and requests for proposals and bids and only 28% manage a supplier portal.

In addition to these findings, leading companies adopted emerging best practices at a much higher rate than other companies in the study.

Figure 10

Experience and Training of Procurement Professionals


>80% of Employees0%

10%

Ave

rage

Ann

ual S

avin

gs

% of Sourcing and Procurement FTEs with Formal Training in Negotiations

<80% of Employees

5.08%

3.54%

Strategic best practices include the following:

The organization operated a single, integrated procurement solution.

IT solutions supported spend analysis and reports to monitor purchasing operations through aggregating, cleansing, classifying, and analyzing corporate spending data.

Software enabled organizations to aggregate purchases across all business units for accurate global analysis of supplier spend data.

Expertise and transactional best practices included the following:

Order collaboration was facilitated with a supplier portal for order acknowledgements, advanced shipping notifications, and confirmations and inventory-level checks.

Organizations used real-time reverse auction processes to achieve accurate market prices for commodity spend.

IT solutions tracked quantitative and qualitative KPIs such as supplier performance, and these results were regularly shared with suppliers.

IT solutions supported XML industry extensions and electronic data interchange (EDI) interfaces.

ADOPT BEST PRACTICES

The study examined best practices related to staff management, spend management, and the use of technology. It showed that leading companies used more recognized best practices for all sourcing and procurement subprocesses. What’s more, they developed a balanced approach, implementing best practices for both strategic and transactional activities.

Best practice adoption was highest in order-processing functions; it was weakest in supplier collaboration, supplier performance management, and supplier enablement. Going forward, leading procurement organizations will look to more deeply integrate their physical and financial supply chains in order to drive competitive differentiation. (See Figure 11.)

SAP Insight| 9

Figure 11

Best Practice Scores of Strategic, Expertise-Based, and Transactional Activities

Strategy and Compliance Leading

All Other

Supplier Relationship Management/Procurement Strategy and Leadership

Compliance

3.11

2.90

3.10

2.68

Expertise-Based Activities Leading

All Other

Sourcing: Category ManagementSourcing: Supplier Evaluation and NegotiationSupplier Performance ManagementContract ManagementSupplier Collaboration

3.16

3.01

2.16

2.312.25

2.72

2.57

2.00

1.831.80

Transactional Activities LeadingAll

Other

RequisitioningOrder ProcessingMaterial ReceiptFinancial SettlementSupplier Data ManagementSupplier Enablement

2.683.302.723.033.261.90

2.403.032.642.692.801.75

Strategy,ComplianceManagement

Expertise-Based Activities

TransactionalActivities

DRIVING COMPETITIVE DIFFERENTIATION

Delivering differentiated products and services is crucial for companies striving to succeed and remain relevant in the marketplace. If the product cost structure does not support the price the market will bear, the product will not sell – and margins and profitability will suffer. If suppliers cannot keep up with demand and meet quality expectations, competitiveness will suffer. Involving the sourcing organization earlier in the new product development stage and leveraging it to enhance supplier collaboration can help gain significant competitive advantage.

SUPPLIER COLLABORATION: THE PHYSICAL AND FINANCIAL SUPPLY CHAIN

As enterprises focus more on sourcing from low-cost regions, they need better visibility into supply chain movements to manage longer lead times and achieve customer expectations for on-time delivery performance. The procurement organization can play an important role in enabling tools that give the organization visibility into physical inventory as it flows from suppliers through warehouses and distribution centers and to customers, helping the enterprise reduce working capital requirements and maintain liquidity.

Procurement is also playing a bigger role in developing supplier-managed inventory (SMI) programs. Collaboration with suppliers through SMI agreements, in which suppliers determine when to build, ship, and deliver supplies and carry the inventory on their books, can provide financial relief to enterprises that allocate large amounts of cash to raw materials inventory. Procurement solutions that can integrate with supplier and inventory management solutions help organizations maintain optimum inventory levels.


TECHNOLOGY ENABLES LEADING HIGH-TECH COMPANY

As the study showed, integrated IT solutions can help companies reduce costs and manage spend. A global leader in the design and manufacture of embedded semiconductors implemented SAP® software for enterprise resource planning, portal access, and supplier relationship management to ensure the smooth flow of products and timely vendor payment.

Since implementing the software, the company has obtained savings of 10.5%. The company has shortened the requisition-to-payment process, and the accounts payable department has fewer invoices to enter. The supply management group now distributes work globally and shares orders with other buyers in low-cost regions. Suppliers deal with a single type of purchase order, which has helped them to reduce their cycle time and costs. Suppliers access their payables information using a portal, so they no longer need to contact a buyer for routine tasks.

Using integrated solutions has improved data integrity and simplified reporting. With improved access to information, sourcing personnel can gather spend data daily to negotiate better prices.

The software has improved efficiency, allowing a reduction in headcount. The company also used its IT solution to implement catalogs of products from suppliers, which increased the productivity of buyers and sellers by 50%. The catalogs provide access to items available on the supplier’s Web site at prenegotiated prices. Additional benefits include reduced catalog maintenance by the buyer, reduced storage requirements (because the supplier stores the data), streamlined transaction processing, and improved reporting.

In addition to the physical supply chain, procurement can also play a role in delivering value through the financial supply chain. Study findings indicated that the function least likely to be handled by procurement organizations is financial settlement or accounts payable. Typically, the finance organization manages supplier invoices, but top-performing organizations were more likely to take a holistic view of the requisition-to-pay process, managing the process end to end – from needs identification to supplier delivery and payment. When organizations followed such a holistic approach, they improved cash flow with early payment discounts and reduced errors by using software to automatically match purchase orders, invoices, and delivery receipts.

PROCUREMENT AND NEW PRODUCT DEVELOPMENT

Sourcing and procurement functions are clearly critical to ensuring that product costs and supply risks are addressed early in new product development, helping design profitability into products. The present reality, however, is that despite such great potential benefits, procurement organizations are rarely engaged by the product or engineering teams in the design phase.

Implementing best practices and automating processes enable procurement organizations to play a more central role in new product development. The study revealed that companies were increasingly adopting the following best practices:

Procurement was involved early in the product development cycle and was an integral part of the product design team to help ensure a fast, smooth, product rollout.

Strategic suppliers were viewed as part of the team and collaborated with engineering and sourcing personnel to ensure components and finished products met expectations.

Suppliers were involved in product development at the design stage.

IT solutions enabled staff to work on product design and development data in virtual teams with external partners and suppliers.

Software supported the sharing of a variety of objects and documents and designers could view two- and three-dimensional objects.

SAP Insight| 11

FACING COMPETITION THROUGH SUPPLIER RELATIONSHIP MANAGEMENT

The ASUG/SAP study showed that leading companies actively manage their supplier relationships. A large, state-owned oil company improved performance by streamlining its procurement processes and improving its supplier relationships. To increase its competitiveness, the company wanted to improve visibility into demand, increase efficiency in sourcing and procurement processes, and reduce excessive inventory to support plant operations.

By better managing its supplier relationships, the company has reduced inventory of purchased items by 25% and decreased maintenance inventory costs by 9%. It also cut its average one-year contract prices by 6% and reduced the cycle time for supplier sales by 70%.

CONCLUSIONSourcing and procurement organizations have great potential to reduce costs, contribute to the bottom line, and deliver against enterprise strategic goals. By implementing strategic sourcing strategies and by implementing both strategic and tactical best practices, companies can improve effectiveness and achieve year-over-year savings in both lower hard- dollar costs and avoided costs. The companies that pursue this approach understand the potential of sourcing and procurement organizations and are transforming them from a back-office function into strategic business partners. These savvy companies will not only hold the line on costs, they will improve their enterprise’s chances of success in today’s highly competitive markets.


ABOUT THE SOURCESABOUT SAP

SAP is the world’s leading provider of business software.1 Today, more than 38,000 customers in more than 120 countries run SAP® applications – from distinct solutions addressing the needs of small businesses and midsize companies to enterprise offerings for global organizations.

With the SAP Supplier Relationship Management (SAP SRM) application, you can simplify and automate procurement. You can integrate strategic practices for supplier qualification, negotiation, and contract management more tightly and cost-effectively with other enterprise functions and their suppliers’ processes – through a single analytical framework and support for multichannel supplier enablement. With SAP SRM, you can achieve sustainable savings, value-generating supplier relationships, and faster business innovation.

Powered by the SAP NetWeaver® platform to drive innovation and enable business change, SAP software helps enterprises around the world improve customer relationships, enhance partner collaboration, and create efficiencies across their supply chains and business operations. SAP solution portfolios support the unique business processes of more than 25 industries, including high tech, retail, financial services, healthcare, and the public sector. With subsidiaries in more than 50 countries, the company is listed on several exchanges, including the Frankfurt stock exchange and the New York Stock Exchange under the symbol “SAP.” For more information, please visit www.sap.com.

ABOUT ASUG

The Americas’ SAP Users’ Group (ASUG) is an independent, volunteer-run organization that facilitates knowledge transfer among the community of SAP customers by providing user-driven educational opportunities, professional networking, and a forum that provides insight and influence to SAP. ASUG maintains a unique position within the SAP community through its combination of highly focused educational tools, access to subject matter experts and SAP executives, ability to influence SAP products and services, and personal networking opportunities with SAP customers. As a result, members from any sized organization continuously solve their SAP software–related business problems more efficiently and cost-effectively, realizing a significant return from their membership. For more information, please visit www.asug.com.

ABOUT THIS STUDY

The ASUG/SAP Benchmarking and Best Practices program is open to participants on an ongoing basis. Companies are encouraged to participate annually to track trends, share best practices, and measure value realization. In addition to supplier relationship management, benchmarking programs are also offered in several additional areas including finance; human capital management; governance, risk, and compliance (GRC); supply chain planning; manufacturing; new product development and introduction; customer contact centers; warehouse management; transportation management; business intelligence and analytics; and total cost of ownership.

If you are interested in participating in any of these efforts, or if you would like additional copies of the study, please e-mail the ASUG/SAP Benchmarking and Best Practices Program at [email protected].

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1. SAP defines business software as comprising enterprise resource planning and related applications such as supply chain management, customer relationship management, product life-cycle management, and supplier relationship management.

ABOUT THE AUTHORS

Vanessa C. Smith, a senior principal in SAP’s Value Engineering group based in Newtown Square, Pennsylvania, leads the joint ASUG/SAP Benchmarking initiative for supplier relationship management and procurement. A specialist in procure-to-pay processes, she has launched several global supplier portal applications and has led strategic vendor sourcing initiatives with FORTUNE 500 companies in a variety of industries.

Shruti Goel is a senior consultant in SAP’s Value Engineering group based in Gurgaon, India. She leads the joint ASUG/SAP Benchmarking initiative for supplier relationship management and procurement team in India. She has conducted more than 100 benchmarking studies with companies across different industries and contributed in many benchmarking-related deals.

Tushar Gulhane is a consultant in SAP’s Value Engineering group based in Gurgaon, India. A member of the ASUG/SAP SRM Benchmarking initiative, he has been involved in benchmarking studies across several industries.


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50 086 145 (07/09) Printed in USA.© 2007 by SAP AG. All rights reserved. SAP, R/3, mySAP, mySAP.com, xApps, xApp, SAP NetWeaver, Duet, PartnerEdge, and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AG in Germany and in several other countries all over the world. All other product and service names mentioned are the trademarks of their respective companies. Data contained in this document serves informational purposes only. National product specifications may vary.

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