SAP Procurement Process
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Transcript of SAP Procurement Process
© 2013 SAP AG. All rights reserved. 1Customer
Moving to an Efficient and Integrated Procurement Process …its all in the cloud !
© 2013 SAP AG. All rights reserved. 2Customer
Topics
• Introduction – SAP Ariba
• Strategic Issues facing procurement
• How ECO companies are using technology to …..– Improve Spend Visibility / Reduce Costs – Identify new suppliers and manage the registration / prequalification process– Improve Supplier Collaboration using Business network– Manage Contracts to improve compliance – Introduce Self Service Procurement for Indirect Materials using Catalogs
Customer Case Studies
© 2013 SAP AG. All rights reserved. 3Customer
Introduction – SAP acquired Ariba in 2012
33
Global Locations 25 locations in 21 countries
on 5 continents including UAE
2,400+ employees
Technology Coverage $340B+ passed last FY 4M+ desktops using Ariba applications 500+ categories sourced through Ariba Top companies plugging leakages
Multiple Languages Speak over 35 languages Global support centers in US
Europe and India
Largest Suppliers Database 1M + registered suppliers covering
over 120 countries One of every three projects involves
global supply base 400 billion USD PO on ASN 210 billion USD Invoices on ASN
Dubai
© 2012 Ariba, Inc. All rights reserved.
© 2013 SAP AG. All rights reserved. 4
Retail
ElectronicsTechnology
LifeSciences
Software
ConsumerGoods
FinancialServices
Manufacturing
Energy
Telecom/ Infrastructure
Global Companies leverage SAP - Ariba to achieve Sustainable savings
© 2013 SAP AG. All rights reserved. 5
SAP – Ariba- Customers in Projects, Real Estate & EPC
Strategic Issues facing procurement
© 2013 SAP AG. All rights reserved. 7
Strategic issues facing procurement / Construction Industry
Difficult economy ( = fewer Opportunities ) and the growing volatility of prices
Greater Competition : Prices are driven down as companies bid lower in an attempt to secure the work
Cash flow is becoming more problematic as companies hold on to cash for as long as possible before making payment
Growing importance of supplier risk from the extended global supply base
Declining budget as well as availability of skilled resources
Greater global and regional regulatory pressures
© 2013 SAP AG. All rights reserved. 8
Typical CPO Challenges
How do we most effectively manage and reduce costs?
How to we identify and source from the right suppliers ?
How to we ensure that suppliers deliver on time and as per the project deadlines ?
How do we increase spend under management?
How do we respond to increasingly rapid demand changes?
How do we manage suppliers performance and risk?
How do we improve our procurement processes?
How do we measure compliance – regulatory and savings?
“Costs Savings, Efficiencies, and Impact”
© 2013 SAP AG. All rights reserved. 9Customer
Ineffective & Inflexible Source to Pay ProcessResult in Inability to Deliver Cost Savings
None to Limited Spend Visibility Inability to extract and aggregate spend data Difficulty to measure and manage spend data Lack of insight into savings opportunities, trends
Poor Ability to Deliver Negotiated Cost Savings Lack of formalized sourcing practices Limited sourcing tools or analysis capabilities Long, poorly managed cycle times
Ineffective Strategic Supplier Management Distributed supplier information across multiple systems Limited supplier performance and management process Lack of ability to identify or manage risk
High Transaction Costs, Inability to Deliver Savings Many disparate systems that generate spend Non-standardized processes, compliance to rules and policies Poor user adoption
Ineffective Contract Management Lack of centralized management leads to savings leakage Difficult to ensure contract compliance No single process for contract management
CPO
LegalLegal
Sourcing Professionals
Sourcing Professionals
Key CategoryStakeholders
Procurement Management
© 2013 SAP AG. All rights reserved. 10Customer
Effective and Flexible Source to Pay ProcessResults in Maximum Cost Savings
CPO
AB
C
AB
C
Sourcing Professionals
Sourcing Professionals
Procurement Management
LegalLegal
Key CategoryStakeholders
CPO
Deliver Insightful Spend Performance Management Enables spend data extraction & aggregation from back-ends Provides Spend data normalization and classification Quickly identifies savings opportunities
Ensures Sustainable Sourcing Processes Delivers maximized negotiable savings Manages the strategic and operating sourcing processes Provides analysis, project management, RFx, auction
Effective Strategic Supplier Management Enables the centralization of supplier information Provides supplier end to end lifecycle management Minimizes supplier risk
Efficient, Streamlined Operational Procurement Reduces operational costs and maximize realizable savings Automates the entire procure to pay process Delivers compliance, supplier collaboration, and adoption
Optimize Contract Lifecycle Management Delivers efficiency, visibility & control of contracts Automates the contract creation and management cycles Enables full contract compliance
© 2013 SAP AG. All rights reserved. 11Customer11
• A UK based leading commercial organization was tendering its requirements for property contractors for various ad-hoc projects to be conducted in a two-year time frame.
• The total estimated value was 60 million GBP spread over two years and over some 120 projects varying in size
• Client goals were to achieve cost savings and consolidate supply base by selecting a panel of preferred contractors.
• Long term goals included improvement and standardization of service.
• 45 pre-qualified suppliers were invited to bid.
Strategy• Aggregate bidding• Event was structured in nine lots; the first 8 split by region
and by project size. Lot 9 was an aggregate lot
Result
• 407 bids submitted• 20% savings ( GBP 12 M )
Case Study : UK Property Contractors
© 2013 SAP AG. All rights reserved. 12
• Transparency into the
negotiation process
• Focus on laying out
comparative criteria
clearly before bidding /
negotiations / responses
are received
• Category management
to define sourcing
process
• Over 48 auctioning
formats
SAP Ariba offers streamlining of Source to Pay Process
ElectronicInvoicing
Visibility ProcurementSourcing
• Monitor Performance & Compliance
• Transparency into ‘buyer’ performance
• Visibility by Commodity • Strategic decision
making information by Purchasing Behavior
• Identify opportunities and prioritize spend
• Can work on top of existing ERP or Ariba system
• Enable Catalog and non catalog based buying
• Ensure purchasing of Punchout, Dynamic, rate card and contract catalogs
• Ensure contract compliance
• Reduce Maverick buying
• Leakages plugged on volume discounts
• Drive policy compliance and consumption control
• Reduce invoicing errors• Reduce cycle time for
invoice processing• Compliance against
contracts for non-PO spend
• Ensure Transparent approval and payment process
Spend Management
Supplier NetworkSupplier Discovery
Contracts
• Clause Library
• Electronic Work
flow for approvals
• Electronic
Repository
• Seamless transfer
and communication
with outside parties
• Achieve global
contract visibility
• All Types of
contracts
How does technology help to …
Improve Spend Visibility
© 2013 SAP AG. All rights reserved. 14Customer
Spend VisibilityThree Key Components
IdentifyOpportunity
DevelopStrategy
Source &Negotiate
Implement Contract & Execute
Monitor &Manage
Invoice& Pay
Spend Visibility1 Process Visibility
2 Performance Visibility
3
WHAT is our spend?by whomwhich suppliersWhich categories Which projects ?
HOW do we spend?which processesare they efficient WHO is performing?
what are the goalsare they being met?
© 2013 SAP AG. All rights reserved. 15Customer
© 2013 SAP AG. All rights reserved. 16Customer
Executive Dashboard
SupplierPerformance
Sourcing Activity
Purchasing Activity
Productivity Measures
Contracting Activity
© 2013 SAP AG. All rights reserved. 17Customer
Spend volume with suppliers at risk
Analyze category and item exposure to risk
Quantify spend volume and buying locations at risk
Visibility into supplier performance
© 2013 SAP AG. All rights reserved. 18Customer
Using the technology to generate Executive InsightAutomated , quality data to drive performance ( on mobile devices )
How does technology help to …
Cost reduction
© 2013 SAP AG. All rights reserved. 20Customer
Recorded Event of an Online Negotiation
© 2013 SAP AG. All rights reserved. 21Customer
Search, Report,And Analyze
-Graphical Role Based Dashboards-All Fields are Searchable & Reportable
-Ad-Hoc & Scheduling Features
RFx Events(Sealed Bid, Reverse Auction, RFP/RFQ, Negotiation)
- Gathering Bids from Simple to Complex- Bid console, audit, messaging
- Scoring, Grading, Total Cost Modeling- Bid Protection and Market Feedback rules
Supplier Qualification And Identification
(Supplier Search)- Identify Acceptable Suppliers
- Determine Supplier Capabilities- Supplier Profile Analysis
- Ariba Network Discovery
Project Creation
-Identify Key Stakeholders-Setup Project Milestones
-Create Timelines
Decision Analysis(Optimization and Award)
-Constraint-based Optimization-Evaluate Price and Performance
- Explore Potential Award Scenarios- Generate Award & Create Contract
Sourcing Overview
© 2013 SAP AG. All rights reserved. 22
Customers use SAP - Ariba in managing the key construction related categories
0 1000 2000 3000 4000 5000 6000
In Mn USD
Site Services
Demolition
Waste Disposal
Design Services
Equipments
DG Sets
Mechanical Sub contracts
Electrical Sub Contracts
Equipment Installation
Steel
Piping
Scaffolding
HVAC Contracts
AsiaGlobal
© 2013 SAP AG. All rights reserved. 23Customer
Delivering significant benefits across categories
Savings are shown in bracketsIllustrative Categories
© 2013 Ariba an SAP Company
A Sourcing Dashboard
Measure and analyse the company spend
= Reduce costs, improve quality,
mitigate risks and drive continuous improvements
Enabled by common, consistent set of processes that focus resources, engage
company stakeholders, and determine the total cost of ownership of supply
relationships, products, and entire supply chains.
© 2013 SAP AG. All rights reserved. 25Customer
Savings Potential across various Indirect Categories using
How does SAP – Ariba Business Network help to …
Find new and capable suppliers / Supplier Collaboration
© 2013 SAP AG. All rights reserved. 27Customer
“Other”
Buyers Suppliers
The SAP - Ariba Business Network is the leading Business NetworkNearly 1 Million partners use the Ariba Network for ~$400 billion spend
Partner and Ecosystem Solutions
An SAP Company
Ariba Network~1 million trading partners across all industries40+ million Purchase Orders60+ million Invoices~$400 billion in spend142 countries72 currencies40 Invoice compliant countries
EDI
HTML
cXML
AS2
Paper
Smart PDF
CSV
xCBL
© 2013 SAP AG. All rights reserved. 28Customer
Create a summary of your need
Publish on Ariba Discovery
Relevant suppliers will be notified
Review & Select new suppliers
Invite them to your SOURCING project
Find new Suppliers and Post & Search to the ENTIRE network – Welcome to SAP Ariba Discovery !
12k lightbulbs for week 56
Ariba Sourcing
Check it out! http://discovery.ariba.com
SAP Ariba Discovery
HOT
© 2013 SAP AG. All rights reserved. 29Customer© 2010 Ariba, Inc. All rights reserved.
How Smart Invoicing Works The best invoice solution is the one that is TOUCHLESS! Ariba Smart Invoicing drives auto post rates of 98% compared to
less than 60% with other solutions
Faster billing and receivables
processing at lower cost
~ 1 Million GLOBAL SUPPLIERS
Supplier
Supplier
Supplier
Supplier
Supplier
Invoice
Customer
P2P
AP
NetworkAdapter
98%... Touchless
Lower AP Cost Faster Cycles Lower Risk
AccountCoding
Contract & Receipt Match
Price & TaxCompliance
GST/VAT Compliance
PO & PO-Line Match
Buyer Match (non PO)
UOM & SKU Change
Currency Match
Sub Total& Total Amount
PO-Line Change
Line & Total ConsumptionThresholds
Shipping & Tax
Thresholds
InvoiceNumber
Bill To / Ship To
PO Number
Requestor(Non PO)
InvoiceDate
VAT / GSTIDs
PO
Pay
How does technology help to …
Supplier Information and Performance Management
© 2013 SAP AG. All rights reserved. 31Customer
Unified Best-in-Class Solution for ALL Aspects of Supplier and Customer Management
PartnerPartner Partner
Partner
Buyer
Buyer
Buyer
Buyer
Supplier
Customer
Supplier
Customer
Information Management• Profile/Certificate Mgmt• On-Boarding• Vendor Master Mgmt• Supplier Discovery
Performance Management• Scorecards• Data collection• Analytical Reporting• Process and Program Mgmt
Risk Management• Risk Assessment• Information Enrichment• Analytical Reporting• Diversity• CSR / Sustainability
According to the Analysts:• “Remarkable demonstration of market understanding and marketing execution in
2009 for this suite [Supply Base Management]” • - Gartner Research, Sourcing MQ, Feb. 2010
Supplier Info
Org hierarchyUCC filingsLiensLawsuitsFinancialsDiversityCSR / GreenRisk
Regulatory Info
OFAC / SDNDenied Party ListsEPA / OSHALawsuitsBusiness events
© 2013 SAP AG. All rights reserved. 32Customer
Supplier Lifecycle
Supplier Registration
Supplier Qualification
Supplier Evaluation
Supplier Portfolio & Risk
Supplier Order Collaboration (UI
Integration)
Supplier Development
Supplier Phase-out
Continuous innovation Registration/Qualification (e.g. additional question types)
Supplier Evaluation (event triggered and scheduled)
© 2013 SAP AG. All rights reserved. 33Customer
Supplier Registration Key Features
© 2013 SAP AG. All rights reserved. 34Customer
Supplier Portfolio ManagementKey Features
How does technology help to …
Contract Management
© 2013 SAP AG. All rights reserved. 36Customer
SAP Contract Lifecycle Management Supports the Entire Contract Lifecycle
© 2013 SAP AG. All rights reserved. 37Customer
Contract Performance Dashboard – Agreements Overview
Contract Visibility Intuitive contract dashboard
with powerful search functionality.
Delivered with preconfigured reports like ‘Top 10 Agreements by Agreement Value’ and ‘Top 10 Product Categories’
Search Result with header and line item information
© 2013 SAP AG. All rights reserved. 38Customer
Contract Performance Dashboard – Expiring Agreements
Contract Visibility Visibility into expiring
agreements to support workload capacity planning
Search Result with detailed header and line item information
How does technology help to …
Enable Self Service Procurement using Catalogs
© 2013 SAP AG. All rights reserved.
Enhanced Ergonomics
Configurable Smart Forms
In Catalogue Free Text
Services Forms
Contracts in Catalogue
What more do you get with the Cloud Catalogue?
Case Studies
© 2013 SAP AG. All rights reserved. 42Customer42
• Germany Based parking garage turn key construction project
• The budget was a round 11 million Euros.• 10 pre-qualified German based suppliers were invited
to bid. Supplier qualification was based on them being general contractors with garage construction experience.
• Key project objectives:•Reduce negotiation time•Reduce Costs
• Technical Advisory via an independent planning office of consulting engineers
• The buyer awarded the tender 72h following closure of the Competitive Online Event
Strategy• Face-to-Face clarification meetings were held with
every participating supplier prior to the Competitive Online Event
• Rank only transformation feedback
Result• 204 bids placed into the market• 10% savings against the lowest offline quote
Multi-Storey Car Park
© 2013 SAP AG. All rights reserved. 43Customer
Indentified Savings of over 10% Infrastructure Contract
15 participating suppliers placed 231 bids in the event
Thank you