Spend Analysis: It's What You Do With It That Matters
Transcript of Spend Analysis: It's What You Do With It That Matters
Spend Analysis: It’s What You Do With it That MattersSeptember, 2015
2© 2015 Ariba - an SAP company. All rights reserved.
Speakers
Eric O’BrienSolutions Consultant Ariba, an SAP Company
Keertan Rai Director, Solutions MarketingAriba, an SAP Company
Benjamin LandisStrategic Sourcing Manager, Oldcastle Materials, Inc.
Jon Ball Director of Global Data Insights & Analytics, Dun & Bradstreet
3© 2015 Ariba - an SAP company. All rights reserved.
Agenda• Need for Spend Analysis • Ariba Spend Visibility - How it Works • The Supplier Enrichment Value in Spend Analysis – D&B• Case Study: CRH • Ariba Spend Visibility Demo
4© 2015 Ariba - an SAP company. All rights reserved.
86% of companies say spend visibility is very important …
But only 40% of companies have
good visibility into their spending
5© 2015 Ariba - an SAP company. All rights reserved.
Aggregation and Reporting is Only the Tip of the IcebergTurning data into actionable intelligence requires more
Data aggregation
Dashboards and reporting
Commodity classifications
Supplier data enrichment
Market insights and benchmarks
6© 2015 Ariba - an SAP company. All rights reserved.
Aggregation and Reporting is Only the Tip of the IcebergTurning data into actionable intelligence requires more
Data aggregation
Dashboards and reporting
Commodity classifications
Supplier data enrichment
Market insights and benchmarks
7© 2015 Ariba - an SAP company. All rights reserved.
Ariba® Spend Visibility powered by SAP HANAA clear view of all your spend and suppliers in one place
Ariba Spend Visibility unified with D&B Business Insights and powered by HANA provides you the ability to make trusted and confident spending decisions by delivering comprehensive visibility on your spend data.
How much are we spending? What are we buying? Who are we buying from?
Improve sourcing pipeline Increase purchasing clout with suppliers Rationalize supplier & product portfolio Reduce inventory costs Increase spend under management Mitigate supplier risk Diversity and sustainability adherence
Insights Decisions
8© 2015 Ariba - an SAP company. All rights reserved.
Ariba Spend Visibility powered by SAP HANA Your on-ramp to effective spend management
Extraction
Classification
Supplier Data Enrichment
Market Benchmarks
Reporting
Key Enablers
• Unified D&B based enrichment
• In-depth commodity classifications
• Integrated Benchmarks
• SAP HANA based reporting
• Project management and • Best Practice Center(BPC)
Services
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Not a One-Hit WonderSpend Visibility Drives Sustainable Value in the Long Term
Sourcing Savings Opportunities
Supplier Negotiation Leverage
Maverick Spending Trends
Time to Value
Effort toDiscover
Contract Compliance Adherence
Quick Wins
High
High
Low
Low
10© 2015 Ariba - an SAP company. All rights reserved.
Not a One-Hit WonderSpend Visibility Drives Sustainable Value in the Long Term
Sourcing Savings Opportunities
Supplier Negotiation Leverage
Maverick Spending Trends
Time to Value
Effort toDiscover
Working Capital Leverage
Supplier Diversity Reporting
Green & SustainabilityInitiatives
Supplier Risk Analysis
Category Sourcing Insights
Spend Under Management Improvement
Contract Compliance Adherence
Quick Wins Mid/ Long Term Opportunities
High
High
Low
Low
11© 2015 Ariba - an SAP company. All rights reserved.
We Have Observed the Benefits from a Vantage Point Examples of real life use cases in spend visibility
Sourcing Savings USD 27.3 million savings in 2.5 year period and 18% average savings across all spend categories
Supplier Optimization 97% of the annual spend classified and enriched over 98% of the supplier base thus resulting 20% supplier reduction
Working Capital $2.5 Million in savings due to optimized Days Payable Outstanding ( DPO ) terms with suppliers
Procurement Efficiency Over 400,000+ goods and services categorized based on industry taxonomies at 99% accuracy resulting savings of over USD 3 million annually
12© 2015 Ariba - an SAP company. All rights reserved.
Polling Question
Which of the following do you see as the potential outcomes of leveraging Spend Analytics in your organization? (Select all that apply)
• Improving sourcing savings and pipeline
• Driving supplier sustainability and diversity initiatives
• Improving supplier negotiation clout
• Reducing contract compliance leakages
• Reducing supplier management costs
13© 2015 Ariba - an SAP company. All rights reserved.
Agenda• Need for Spend Analysis • Ariba Spend Visibility - How it Works • The Supplier Enrichment Value in Spend Analysis – D&B• Case Study: CRH • Ariba Spend Visibility Demo
The Enterprise Need for Spend Visibility
*Aberdeen Group : Spend Analysis – Transforming Data Into Value , By Christopher .J. Dwyer
Factors Driving Enterprises to Focus on Spend Analysis *
Getting Insight Starts with Asking the Right Questions
• How can I get more detailed information on suppliers?
• How much am I spending with suppliers at a corporate family level?
• How diverse is my supply base? And how can I locate more diverse suppliers?
• Where are the greatest risks in my supply chain?
Inconsistent Data Quality
Disparate Data Sources
Manual Effort Intensive Processes
Limited Access to Market Information
Poor Visibility on Suppliers
Why is Gaining Visibility on Your Spending a Challenge ?
How often have you made decisions based on limited or missing information?
Spend Visibility, with D&B inside, provides clarity about your suppliers.
Supplier Data Enrichment Through Dun & Bradstreet
Supplier Data Enrichment Through Dun & Bradstreet
In-depth Insights on Your Suppliers with the World’s Largest Supplier Database
• Gain supply chain visibility with a consolidated, standardized view of suppliers
• Identify hidden paths for costs savings and risk exposure management
• Find sourcing opportunities within existing relationships globally
• Strategically leverage full negotiation advantage
• Benchmark supply base diversity and sustainability levels and how they meet organizational goals
How much are we Spending with them?
Is my supplier base diverse?
Are my suppliers at risk ?
Is my supply chain Green?
Who are ourSuppliers ?
Industry Codes
Parentage Information
Financials
Green Certifications*
Diversity Certifications*
Risk Ratings*
* Provided as an optional service
World’s largestcommercial database
More than 240 million company records
30,000 data sources
5 million updates per day
The largest, most accurate contact databases (Dun & Bradstreet NetProspex)
The patented DUNSRight™
data verfification process
Trusted by nearly 90% of the Fortune 500 to turn massivestreams of data into high-quality information and insight
Supplier Data Enrichment Through Dun & Bradstreet
Jon BallDirector of Global Data Insights & Analytics at Dun & [email protected]
Agenda• Need for Spend Analysis • Ariba Spend Visibility - How it Works • The Supplier Enrichment Value in Spend Analysis – D&B• Case Study: CRH • Ariba Spend Visibility Demo
CRH – Ariba Spend Visibility Case Study
Three product groups
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o Oldcastle Materials is one of three Oldcastle product groups:
• Building Products — No. 1 in building envelope solutions; No. 1 provider of precast concrete engineered solutions in North America; No. 1 in masonry and hardscapes
• Distribution — Leading building products distributor to specialty contractors in residential and commercial construction
• Materials
Oldcastle Materials
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• Oldcastle Materials is the leading vertically integrated supplier of aggregates, ready-mixed concrete and paving services in the United States.o No. 1 in asphalt productiono No. 1 in asphalt pavingo No. 2 in ready-mixed concrete productiono No. 3 in aggregates productiono Major provider of heavy highway construction services
Landscape - Stats• Over $19B in annual
spend, $5B in OMG
• 7.5MM invoices group wide
• Over 130K unique Supplier Global Parents
• 650 unique L3 categories
Procurement Landscape & Challenges
SOURCE: Oldcastle Materials | 24
Challenges• Various disparate ERP
systems across the globe
• Multiple currencies
• Internal resource allocation
• Increased coordination across groups, difficulty gathering spend and identifying opp.
Implementation Approach
• Using the tool must be easier than working around it
• Dedicated procurement resource per group
• Global core team coordinating
• Training early and often
Approach to Implementation & Lessons Learned
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Lessons Learned
• More frequent data refreshes
• Top-quality data for opportunity analysis
• Continuous Refinement & data enhancement
• Consistent customized training
• Creating an understanding & demand for the information
• Alignment with IT resources
Spend Visibility Example
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• Supplier Parentage hierarchy
• Unit Price info for direct materials
• Uncovering new opportunities
• Project Pipeline development
Materials
• Cement & Aggregates• Asphalt & Paving• Readymix Concrete
CRH plc
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Products Distribution
Products for Construction Solutions
General MerchantsRoofingSiding
Agenda• Need for Spend Analysis • Ariba Spend Visibility - How it Works • The Supplier Enrichment Value in Spend Analysis – D&B• Case Study: CRH • Ariba Spend Visibility Demo
29© 2015 Ariba - an SAP company. All rights reserved.
Thank You Contact Information:
Keertan Rai [email protected]
Eric O’[email protected]