esourcing

Supplier Relationship Management ‘Contract Lifecycle Management’

Kieran O’Doherty – Head of SRM SAP UK

Customer Information Day18th October, 2004

SAP AG 2002, mySAP SRM, 2

Supplier Relationship Management

Strategic Level

PerformanceReporting

OperationalProcurement

ContractManagement

Supplier Selection

SourcingProcess

SupplierQualification

CategoryManagement

InvoiceReceiptTrackChangeOrderAuthorizeRequisition Pay

Operational Level


CONTRACT PREPARATION

Contract Lifecycle Management / Information Availability

CONTRACT NEGOTIATION

CONTRACTCREATION

CONTRACT ANALYTICS

CentralContract

Repository

CONTRACT DISTRIBUTION

CONTRACT MONITORING

SAP - MM

Key Areas:

Document Repository

Contract Distribution

Contract Monitoring


The OJEU Process

1. Business Case2. OJEU Preparation3. Pre Posting Audit

DocumentRepository

OJEUProcess

4. Posting OJEU Notice5. OJEU Notice

6. Expression of Interest7. EOI Replies Evaluation8. Pre Qualification Quest-nre9. Approval Process & Report

SupplierQualification

10. Invitation to Tender11. Tender Evaluation12. eNegotiation13. Decision

14. Award Letter15. Unsuccessful Suppliers16. OJEU Award Notice

Docmt Mngmentincl Public Prcmt Dirctvs

Tender & Auctions

17. Contract Management(SAP)


Contract Repository –Structured Document Repository (which can be easily searched)


Structured Portal

Application (SRM)

Functionality

Category Management


Category Management Process

• Establish team governance

• Gather category data & segment categoryspend

• Reviewbusiness requirements and identify opportunities

• Identify industry structure

• Identify levers in supply market

• Assess current,new and non traditionalsuppliers

• Summarise improvement opportunities

• Build supply chain process map/Prioritise opportunities

• Build cost models

• Identify cost and value drivers/Prioritise opportunities

• Develop category strategy

• Document category strategy

• Developcontract draft

• Execute “go to market”approach

• Evaluate and award contract

• Develop and implement transition plan

Within a Category

• Contract Start up

•Performance & Relationship Management

• Close Out

• Manage Learning

• Manage Opportunities

• Maintain Specifications and Catalogues

Business Needs

Market Analysis

CategoryStrategySelection

Sourcing &ContractingExecution

SupplyChainCost

Modelling

ContractMgmt

Sustainable Value



Contract Lifecycle Management


CONTRACTCREATION

CONTRACT ANALYTICS

CentralContract

Repository


CONTRACT MONITORING

SAP - MM

Key Areas:

Document Repository


Contract Monitoring


RFx / Tendering


Supplier Registration


Weighting & Ranking


eAuction


Live Auction Cockpit


eSourcing – ASP Model

SAP Hosted Services

mySAP SRM Stage 3

Behind Firewall

MovementMovement of of functionalityfunctionality

Stage 2

Hosted EnvironmentStage 1

POC

85%+ - SAP Customer Base


Methodology - Knowledge Transfer

Time line

S e

r v i

c e

Pilot Negotiations

Project Support

Everyday Process

Spend Analysis

Roll Out Project Management

Fully Supported

Commodity Expertise

Integration

Commodity Expertise





CONTRACTCREATION

CONTRACT ANALYTICS

CentralContract

Repository


CONTRACT MONITORING

SAP - MM

Key Areas:

Document Repository


Contract Monitoring


Create Contract





CONTRACTCREATION

CONTRACT ANALYTICS

CentralContract

Repository


CONTRACT MONITORING

SAP - MM

Key Areas:

Document Repository


Contract Monitoring


Application Platform (Web AS)

People Integration (Portal)Information Integration (BI, MDM)

Process Integration (XI)

SAP NetWeaver

PLM SCM

CRMSRMFinancials

HR

Materials ManagementCorporate Services


ERP System -

Procurement Backbone:

Supplier & Product Data

Contract Detail

SRM Reporting


Contracts – 3x Different Deployment Options

Local Contracts

Global Outline Agreement

‘Sourcing Hub’

1

2

3

Local ContractSupplier selection in SRMContract creation in SRMCall-off in SRM

Central ContractSupplier selection in SRMDistribution to Backend‘Leading‘ contract in SRM

Backend ContractSupplier selection in SRMCreation in backendCall-off in backend

= Contract creation

SRM

SRM

SRM





CONTRACTCREATION

CONTRACT ANALYTICS

CentralContract

Repository


CONTRACT MONITORING

SAP - MM

Key Areas:

Document Repository


Contract Monitoring


Contract Monitoring / Spend Analysis


Contract Monitoring - Reporting





CONTRACTCREATION

CONTRACT ANALYTICS

CentralContract

Repository


CONTRACT MONITORING

SAP - MM

Key Areas:

Document Repository


Contract Monitoring


Contract Management – Structured Portal


Supply Base Management

•Supplier Profiles

•Supplier•Audit

•Supplier•KPIs

•Compliance Management

PreferredSuppliers

Key Suppliers

Base Suppliers

Discontinued

Suppliers

NicheSuppliers

•Supplier•Development

Plan

•Operational •Performance

NewSuppliers


DLA

US Influence / SAP Strategic Development Projects



New Contract Creation

Contract Storage &

Access

Contract Review & Approval

Contract Execution

Contract Negotiation

Contract Adjustments& Extensions

Renewal or Termination

Create Template &

Term Library

Set Negotiation Guidelines

Define Workflow

Identify Signatories

Create User Groups

Define Change & Participation

Guidelines

Establish System Alerts & Parameters

Notification & Contract Distribution

Define Distribution

Lists

Enterprise Contract

Repository

Lifecycle ProcessesAdministrative Processes

Legend

Source: Automating the Contract Lifecycle: Challenges & Solution Strategies, Sanjay Rajagopalan


Developing SRM Plan


Transaction

1 2 3 4 5 6

Commercial Purchasing Process Supply Chain Value Chain

SRM - Business Case

II. Procurement TransformationObjective: Realisation of Strategic Sourcing PhaseSponsor: CFO/CPO and CEODelivery focus:Focus on spend reductionIT infrastructure developmentSupport transactional processesDevelop procurement competence, content Savings: 1 to 5% + Strategic Sourcing

I. Strategic Sourcing Objective: High-impact spend reductionSponsor: CEO and CFO/CPODelivery focus: Spend visibilityIdentify savings opportunitiesSourcing strategy definitionExecution leading to new contractsPotential savings: 1 to 10%

III. SRM Objective:Sustainable effective processSponsor: CFO/CPO and CIO Delivery focus:Closed Loop SRM ProcessInnovationCost LeadershipSupply & Value Chain OptimisationROI: TBA


Example – Procurement / SRM Development Plan

StrategicStandalone Quick Wins

Longer TermEasy Extensions

Complexity

Tim

e

Forecasting and Planning

Supplier Portal(Supplier Evaluation)

Global TradeServices

Contract Management(Category Management)

CatalogueManagement(eProcurement)

Operational Procurement(Buyers Workplace)

Reporting(Range Performance)

Document Repository (Category Management)

RFx& Auctions

RangeManagement

PurchasingControlling

ASP RFx & Auctions(eNegotiation& Supplier Selection)

‘ Portal (Category Management)

‘ BW ‘(Reporting)

Operational ProcurementPlatform

Supplier Enablement


mySAP Supplier Relationship ManagementmySAP Supplier Relationship Management

mySAP SRM – ‘Statement of Direction’ 2004

See also: Master Data Management, XI

SourcingSourcing Supplier EvaluationSupplier Evaluation RFQ & AuctionRFQ & Auction Contract ManagementContract Management Catalog ManagementCatalog Management

Strategic Purchasing

Strategic Purchasing Forecasting & PlanningForecasting & Planning

Operational Procurement

Operational Procurement Self-Service ProcurementSelf-Service Procurement Plan-Driven ProcurementPlan-Driven Procurement Services ProcurementServices Procurement

Spend AnalysisSpend Analysis Purchasing Portfolio MgtPurchasing Portfolio Mgt Purchasing ControllingPurchasing Controlling

Supplier Collaboration

Supplier Collaboration Supplier Self RegistrationSupplier Self Registration Order ManagementOrder Management Collaborative

Replenishment

Collaborative Replenishment Supplier PortalSupplier Portal


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