Supplier Relationship Management

Steve OestreicherDirector, Quality, Purchasing & Tolling OperationsAventis CropScience USA

Aventis CropScience

• Aventis CropScience• Aventis Animal Nutrition• Merial

RP Agro Pharma Pharma AgrEvo IndustrialChemicals

IndustrialChemicals

Where we came from

AventisAventis Agriculture Aventis Pharmaceuticals

Rhône-Poulenc Hoechst

Aventis CropScience

2000 sales of 4+ billion ¤

14,400 employees

Presence in 120 countries

11 percent of turnover devoted to R&D

* based on 1998 pro-forma sales

Who Aventis CropScience is worldwide

Aventis CropScience

Aventis CropScience

Merger of Rhône-Poulenc and AgrEvo

2000 sales of $674 million

2,600 employees in U.S. and Canada

Headquarters in RTP

Who we are in North America

Aventis CropScience

Aventis CropScienceWhat we do

Crop Protection Products for:

corn wheat

canola horticulture

cotton

Crop Production

Combines traditional crop protectionwith biotechnologyand seed/plant breeding

Aventis CropScience

Purchasing dimensionsAventis CropScience USA:

Approximate Spend

$350 million (390 M Euro)

Purchasing

~16 000 suppliers

~49 000 SAP Materials

Procurement

~ 20 000 PO Items

~ 140 000 Invoices

Aventis CropScience

Our challenges in 1999 & 2000:

Formation of Aventis CropScience

SAP implementation

Purchasing trends - shift to strategic sourcing

Aventis CropScience

Challenge 1: Aventis Formation

Merger of Rhône-Poulenc Ag & AgrEvo

Urgency - time to savings

Disparate systems

Different standards

Manual data collection

Data gaps

Aventis CropScience

Challenge 2: SAP Implementation

Increased transactional efficiency more data

Lack of accessibility

Lack of consistency (reports)

Lack of value-added information

Suppliers

Materials

Aventis CropScience

Multiple systems - SAP, p-cards, T&E, …

Need “one view of the truth”

What do we buy?

How much do we buy?

From whom do we buy?

For whom was it bought?

How was it bought?

Systems & Tools were internally focused

Challenge 3: Strategic Purchasing

Aventis CropScience

Integrated Approach

Strategy

Analysis

DataCollection

Transaction

Process

esPeo

ple / S

kills

System

sOrg

aniza

tion

•Process Design•Commodity

Strategies

•Marketforecast •Centralized

(regional/ global)

•Outline Agr.•Spend

Analysis•Negot.

strategies

Value-AddedTransactional

•Negotiation•Analytical•Project Mgmt

•SRM•Centralized

(regional/ country)

•Centralized (regional)

•SRM•External

sources

•IT•Business

intelligence

•SAP•SRM•P-Card•T&E

•SAP•P-Card•e-procure.

•Decentral. (site / plant)

Negotiation/

•Customer Service•Office

productivity•Order entry

•Prod. Mat’ls•Operating

resources•Stock/maint.

materials

•SRM

Aventis CropScience

Requisitioning, ordering, receipt, invoice & payment processes

(SAP, P-Cards, C-Cards, Gelco, e-Procurement, EDI/XML, etc.)

Spend Forecast

Commodity Segmentation

Generic Strategies & Opportunity Analyses

Commodity Specific Strategies

Execution

Negotiation / Sourcing

Transactional processes & systems

Monitoring Evaluation

Improvement

Purchasing Process Flowchart

Aventis CropScience

Solution - SRM

Single database EnterprizeDataWarehouse

Consolidated view of suppliers

Monitor compliance to preferred suppliers

Monitor compliance to processes (p-card, Policies, ERP…)

Monitor supplier risk

Integration external data (indices, financial information, …)

Efficient – multi-level data collection and analysis without consultants and manual effort

Supplier Relationship Management is an essential tool for any proactive, strategy driven Purchasing Organization

Aventis CropScience

Purchasing Process Flowchart

Requisitioning, ordering, receipt, invoice & payment processes

(SAP, P-Cards, C-Cards, Gelco, e-Procurement, EDI/XML, etc.)

Spend Forecast

Commodity Segmentation

Generic Strategies & Opportunity Analyses

Commodity Specific Strategies

Execution

Negotiation / Sourcing

Transactional processes & systems

Monitoring Evaluation

Improvement

SRM

Aventis CropScience

Scope of ProjectNorth American – Canadian & US currencyIntegration of 5 data sources

SAP r3Visa – purchase cardAMEX – Corporate CardBureau of Labor Statistics (BLS)D&B – vendor data

UNSPSC* standard for commodity codes / material groupsDUNS coding standard for vendor identificationSAP r3 interface to D&B module

* UNiversal Standard Products and Services Classification

Aventis CropScience

SRM Schematic

Access to S AP R 3W ith

B usiness Tem plates

S AP U S B ank V IS A AM E X

S R M S erver

F lat F ile F lat F ile

P V C lien t P V C lien t

D&B Enhanced

Data

External Data (PPI, etc.)

Aventis CropScience

Project Status

✔ Started January 10th, 2001

✔ Completed requirements & design

✔ Implementation in-progress

✔ Excellent project management

on-schedule for completion (June, 2001)

no scope reductions

on Budget !

Aventis CropScience

Expected Results

Rapid payback (1-2 years)

Reduced consulting costsAcceleration & retention of savings for current initiativesIncreased complianceIncreased savings opportunities

Increased efficiency

Increased effectiveness

Better focus & priority setting

Enabling existing initiatives (totaling $15 million over the next three years)

Aventis CropScience

SAP - NA

Cost Reduction Projects

E-Procurement

SRM

Time

Val

ue

Spend EvolutionFeedback cycle

Purchasing Savings

Aventis CropScience

Are your best resources (people, systems,etc.)focused on sales & marketing

orpurchasing?

What about your suppliers?

Whom do you think has the advantage? Are you maximizing value?

What can you do to balance the situation?