Post on 27-Mar-2018
© 2010 Ariba, Inc. All rights reserved. © 2010 Ariba, Inc. All rights reserved.
Supplier Enablement &
Management
Presented By: Catherine Hills
© 2010 Ariba, Inc., All Rights Reserved. The contents of this document are confidential and proprietary information of Ariba, Inc.
CIPS Southern Africa Pan African Conference
20% or less of the supplier base is likely
to be electronically enabled
© 2010 Ariba, Inc. All rights reserved. 2
High administrative costs on non-
value add activities:
•data entries
•chasing approvals
•correcting paperwork errors
•finding missing paperwork
•solving invoicing unknowns
•taking phone calls
•expediting orders / payments
An enterprise often maintains
another set of processes to
support the rest (80% of the
supplier base) = time, money,
resources
What does this
mean?
© 2010 Ariba, Inc. All rights reserved. 3
Key Message: Business As Usual Is No
Longer an Option
How Enterprises Plan to Communicate with Sellers*
% o
f R
espondents
Today’s communication methods
Planned methods
0%
20%
40%
60%
80%
EDI Supplier
networks
XML & other Web-
based protocols
LessEDI
PhoneFax
Less manual
B2B Channel
N=1,400
• 30% of buyers are tasked to
reduce costs in the source to
pay process
• 72% of buyers rate supplier
enablement as a top priority
• Electronic sourcing, ordering
and invoicing has become the
preferred means of buyer-
seller communication
*SOURCE: Aberdeen Group and Ariba survey of 1,400 suppliers
© 2008 The Aberdeen Group
© 2010 Ariba, Inc. All rights reserved. 4
Collaborative Business Commerce Is More
Complex Across An Entire Supplier Base…..
Buyer 1
Sourcing
Procurement
Finance
Seller 1
Sales
OrderMgmt
Finance
Seller 2
Sales
OrderMgmt
Finance
Seller 3
Sales
OrderMgmt
Finance
© 2010 Ariba, Inc. All rights reserved. 5
…. Or Customer Base
Buyer 1
Sourcing
Procurement
Finance
Buyer 2
Sourcing
Procurement
Finance
Buyer 3
Sourcing
Procurement
Finance
Seller 1
Sales
OrderMgmt
Finance
Seller 2
Sales
OrderMgmt
Finance
Seller 3
Sales
OrderMgmt
Finance
5/31/2011©
20
01-
Communication
The Business Problem in Supply Management
Buyers' and Suppliers' systems are designed to optimize their own
processes
Every system is different; no connectivity
The problem is multiplied for every
Buyer and Supplier connection
What is Supplier Enablement?
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The process of electronically
connecting suppliers (or other trading
partners) to a Buyer Enterprise’s
Supply Chain environment
A properly developed Supplier
Enablement initiative will …
© 2010 Ariba, Inc. All rights reserved. 8
•Produce a higher % of supplier participation
• More effectively reduce costs
• Yield fewer transaction errors
• Shorten the time period for measurable ROI
• Provide Suppliers with full technical capability without the usual
high technical barriers, a minimal start up fee, low cost of ownership
& ability to use solution with multiple customers
# of suppliers enabled – BIC vs. ERP
71%
18%14%
92%
8%0%
0 to 100 101 to 1k Over 1k
BIC ERP
“ERP automation is confined
to the top 20% of suppliers,
and that’s only if you’re lucky.”
Source: Aberdeen Group, Supplier Networks, Supplier enablement strategies for ERP Customers by Vance Checketts, February 2007.
This approach integrates 80% of
transactions by value but fails to address
the remaining 80% by volume
Despite being
the most
challenging to
achieve,
participation of
the 80% of
suppliers by
volume must be
achieved to
realise
the full ROI &
benefits
© 2010 Ariba, Inc. All rights reserved. 10
How Suppliers are Defined
Goods OnlyGlobal IntegratedHigh Volume
115/31/2011 © 2001-2009 Quadrem International, Ltd.
12
Differentiator - Connecting the Entire Supply Base
Integrated
Hosted / Email /Fax
Key SuppliersStrategic, high-dollar/high-volume
Infrequent / Low VolumeLow-dollar/low-volume, company-
specific
Mid-Tier SuppliersHigh-volume, high-dollar, high-
‘maintenance’ suppliers used by
many other buyers in community
Integrated / Hosted
Potential Value to Supplier From Engagement
Reduced
Cost of
Sales
Increased
Customer
Intimacy
Buyer Contract
Compliance
Reduced Manual
ProcessingInventory
Reduction
Order
Accuracy
Invoice
Accuracy
Reduced
DSO
Shorter Sales
Cycles
135/31/2011 © 2001-2009 Quadrem International, Ltd.
Alignment to
Customer Process
Improved
Responsiveness
Visibility into Buyer
systems
Increased Vendor
Ratings
SME’s perceived hurdles
© 2010 Ariba, Inc. All rights reserved. 14
1. Limited Funding• Investment in EDI or XML technology is
expensive & unjustified for small volumes
2. Change• Overcoming change – psychological hurdle
(similar to postal to faxed POs)
3. Connectivity• Complexity to connectivity needs to be reduced
4. Limited Resources• With required level of expertise to accomplish
integration
• Complexity in integrating with multiple
customers
5. Business Benefits • Misperception that it is only the Buyer who
benefits
• Suppliers can eliminate costly manual
intervention, streamline processes & receive
quicker payment
5/31/2011©
20
01-
• Rapid deployment = Accelerated Benefit
Value
Internal
Effort
Time
“Do it yourself”
Most initiatives stall at less than 300 suppliers
Your program with outsourced supplier enablement & management
Untapped
potential
What makes us different?
Buyer
Buyer
Buyer
3rd Part Services
(e.g. qualification)
Buyer Network Supplier Network
16
Buyer
Effective Supplier Enablement
Buyers’ point of view
© 2010 Ariba, Inc. All rights reserved. 17
1. Concern about imposing a cost on
the supplier• Integration & connectivity needs to be
accomplished simply & affordably
2. Shear number of suppliers• When hundreds of suppliers are involved,
enablement can be measured in years &
therefore unachievable without adding
significant resources
3. Lack of understanding about the
supplier community• Little is usually known about the 80% of
suppliers doing smaller volumes of transactions
• Supplier management is critical
4. Internal commitment• The importance of supplier enablement &
management is to be understood & embraced
by the Buyers that interface with suppliers to
achieve common, shared goals for the
Enterprise across all Depts
Best Practices for Supplier Enablement
… to maximize supplier participation & minimize supplier
disruption
• Take a supplier orientated approach Recognize that every supplier is an independent business
Suppliers are capable of making decisions that make best sense for them
Structure the campaign so suppliers can choose the best connectivity & integration
approach for their business – avoid one size fits all
Maximize supplier participation – communication strategy
• Create a broad range of non-exclusive technology solutions
Suppliers have a wide divergence in deployment of technology
– Some at an advanced stage
– Others adverse to using technology
Suppliers need to a range of non-exclusive technology solutions
to accommodate different levels of technological sophistications
185/31/2011 © 2001-2009 Quadrem International, Ltd.
Case Study: Anglo American
Enterprise Development Hubs
© 2010 Ariba, Inc. All rights reserved. 19
Anglo ED Hubs
Anglo ED Hubs
Small hub PC
Hubs
connected
via Internet
Buyers use Source Centre to
generate RFP & adjudicate winning
quote
Hub Servers
Hub
Servers
Suppliers access SupplyCentre in the
ED Hubs3
3
Local Community access via Anglo Enterprise Development hubs Supplier Benefits:
Increased Sales
Enhanced Customer
Satisfaction
Improved Competitive
Position
Reduction of costs
Streamlined efficiencies –
quicker payment
Best Practices for Supplier Enablement
… to maximize supplier participation & minimize supplier
disruption
• Develop a planned, orchestrated communication process A Communication Strategy is key
Internal communication - garner internal commitment– One common message to suppliers
– Identify a Business Champion - to be fully engaged & fully endorse the initiative
– IT participation – integrations standards
– Accounts Payable participation – eInvoice is key to ROI
– Supplier enablement targets linked to internal KPIs
External communication– Communiqué – details on e-procurement programme, electronic document roll out, compliance dates etc
– Strong written message from the Buyer, supported by webcasts, supplier days, follow up calls, escalation
point etc.
© 2010 Ariba, Inc. All rights reserved. 20
Best Practices for Supplier Enablement
… to maximize supplier participation & minimize supplier
disruption
• Use a Phased Implementation Approach for example:
Phase 1 - MRO purchasing– POs to 80% of the supplier community based on supplier invoices received
Phase 2 – MRO Purchasing– Migrate suppliers to eInvoicing
Phase 3 – MRO Purchasing– Add additional documents e.g. Invoice Response, Remittance Advice
A phased approach provides an opportunity to measure the actual ROI
returned in each phase
The learning curve for each phase will produce refinements in the overall
process to be realized in subsequent phases
© 2010 Ariba, Inc. All rights reserved. 21
Best Practices for Supplier Enablement
… to maximize supplier participation & minimize supplier
disruption
• Provide ongoing dedicated support
Resources are needed to keep the programme going & move it forward when the next
challenge in the journey arises
Suppliers need help staying informed of the Buying Enterprise’s requirements as well
as answering their day-to-day technology & process questions
© 2010 Ariba, Inc. All rights reserved. 22
© 2010 Ariba, Inc. All rights reserved. 23
Supplier ROI
Benefits Suppliers Are Realizing Today
• 20% year over year growth in the business
Even during the economic downturn
• 15-20% reduction in days sales outstanding
6 to 25 days shaved off the cycle
• 10-20% productivity gains in invoice and order processing
60-75% gains for sellers using cXML and PunchOut
• 10-15% increase in customer retention
• 45-60% reduction in error rates and error reconciliation costs through cXML
• Increased accuracy of customer orders through catalog-driven orders
10%+ increase through CIF catalogs
60-80% increase through PunchOut catalogs
• Higher revenue by increasing wallet share 26-32% through increased buyer compliance
• Greater visibility into catalogue usage, orders/change orders, and invoice/payment status
Roll-Out Lessons Learned / Direct Feedback /
Results
Supplier on-boarding isn’t complete until Training is finished
• Recorded materials improving speed of training
Annual Updates / Refresher Important – supplier maintenance
e-Procurement is a journey that results in constant improvement in
the breadth & depth of electronic integration between a buyer
enterprise & its suppliers
Extend the depth of supplier enablement from 20% to 90% participation
Extend breadth of supplier enablement to include a new set of electronic
business transactions
Measure the extensions through KPIs
245/31/2011 © 2001-2009 Quadrem International, Ltd.
Thank you for your time!
© 2010 Ariba, Inc. All rights reserved. 25