SAP Procurement Process

© 2013 SAP AG. All rights reserved. 1Customer

Moving to an Efficient and Integrated Procurement Process …its all in the cloud !


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


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

http://www.limitedbrands.com/index.jsp?refresh=yes

http://www.vw.com/index.htm

http://www.lexmark.com/US/us_home.html

http://www.sunocoinc.com/

http://www2.shell.com/home/ExitPage?URL=http://www.shell.com

http://www.total.com/en/home_page/


SAP – Ariba- Customers in Projects, Real Estate & EPC

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http://www.supremeinfra.com/index.html

Strategic Issues facing procurement


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


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”


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


Key CategoryStakeholders

Procurement Management


Effective and Flexible Source to Pay ProcessResults in Maximum Cost Savings

CPO

AB

C

AB

C



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


• 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


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?


Executive Dashboard

SupplierPerformance

Sourcing Activity

Purchasing Activity

Productivity Measures

Contracting Activity


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


Using the technology to generate Executive InsightAutomated , quality data to drive performance ( on mobile devices )


Cost reduction


Recorded Event of an Online Negotiation


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


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


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.


Savings Potential across various Indirect Categories using

How does SAP – Ariba Business Network help to …

Find new and capable suppliers / Supplier Collaboration


“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

Email

HTML

cXML

AS2

Paper

Smart PDF

CSV

xCBL


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


Supplier Information and Performance Management


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


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)


Supplier Registration Key Features


Supplier Portfolio ManagementKey Features


Contract Management


SAP Contract Lifecycle Management Supports the Entire Contract Lifecycle


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


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


Enable Self Service Procurement using Catalogs

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


Indentified Savings of over 10% Infrastructure Contract

15 participating suppliers placed 231 bids in the event

Thank you

SAP Procurement Process

Technology

Transcript of SAP Procurement Process