A R I B A K N OW L E D G E N U G G E T S GAINING COMPLIANCE IN YOUR ECOMMERCE PROGRAM When we talk to many of our customers what we find is that the procurement organization is hearing a lot of negativity from their suppliers and they simply dump it off on management, etc., without rectifying the issue. The core issue is -- your company is moving forward with your eCommerce program and compliance around eCommerce readiness by your suppliers will need to become more stringent over time. You know this will cut costs on both sides and the Ariba network is uniquely positioned to help you cut those costs and drive your revenue. Do you currently have a Buyer Compliance Program? A successful program should have the following: • The foundation for Collaborative Commerce communication is the Compliance Policy • The Compliance Policy has a direct effect on the effectiveness of supplier enablement efforts Components of a % Targeted Suppliers Transacting on the Network Compliance Policy 20% 40% 60% 80%• Establish an edict• Internal communication• Supplier communication Strength of Policy• Supplier Enablement NCE Best In Class: Weak Policy: Moderate Policy: Process* • No Internal • Internal Awareness • Internal Buy-In Communication • Expectation Set • Expectation Embedded • Optional Participation • Deadline • Mandatory• Ongoing NCE Process • No Deadline • Incentive • Deadline • No Consequence • No Consequence • NCE Process in place • Inconsistent • Incentive/Consequence Net 60 $25 paper fee No paper
INCENTIVES/CONSEQUENCES What is one of the single most important components of a compliance policy that you can do…. Issue an Edict!Expectation — Inform suppliers of the project and what you want them to doDeadline — Set a deadline date for enablementIncentive — Provide an incentive for participationConsequence — Establish realistic and executable consequences for Non-ComplianceTogetherness — Assure your suppliers that these changes are mutually beneficial; You are in this togetherDEADLINES — MAKE SURE YOU SET THESE!Buyers should set a date for the cessation of transactions outside of the Make sure thatAriba Network (Paper, Email, Fax, other systems, etc.) everyone involved is clear on all the Deadlines can be set in many ways: terms of deadline. • Overall Corporate deadline for paper transactions This measure is • Specific allotted time post registration important to • Deadline for each enablement wave protect your business from Deadlines can be layered: potential • ACME Corp will no longer accept paper transactions after December damages. 31st • All suppliers must register on the Ariba network within 4 weeks of Relationship Request letter • PO Flip suppliers must begin transacting within 2 weeks of registration • Integrated suppliers must begin transact ting within 6 weeks of registration • All suppliers targeted on January 1st must be transacting by March 15th
INTERNAL INCENTIVES/CONSEQUENCES COMMUNICATIONS CAN YOU HEAR ME NOW??Incentives and or Consequences are often one of the The largest deterrent to ensuringmost overlooked or under-valued components of the supplier compliance isCompliance Policy conflicting buyer messages!Incentives and/or consequences give “teeth” to theenablement request Your Internal Communication should Examples of Incentives: include: • Ability to do business with Customer • Initiative Announcement letter • Favorable Payment terms to Internal Resources from • Preferred supplier designation Executive Sponsor Examples of Consequences: • Training for Key Stakeholders • Extended Payment Terms • FAQs/Talking Points for Key Stakeholders • Paper Processing Fee • Periodic reminders of Initiative • Discontinuation of paper delivery/receipt (desk drops, buyer Intranet posting, Email, performance reviews) Key Internal Communication Messages Strategic Business strategy, expected value and benefits Program timeline and measures of success Critical success factors Operational Specific operational changes resulting from the initiative Process, technology and people objectives Consideration of local operations and impact Team accountability and involvement, particularly as it relates to compliance Actions to be taken to prepare stakeholders Individual Impact on individual & team goals and objectives Individual job and career benefits: “what’s in it for me?” Specific job requirement changes/impact on roles & responsibilities Activities and preparation for change resulting from program
SUPPLIER COMMUNICATIONS CAN YOU HEAR US NOW??The Compliance Policy should be pervasive in all supplier communications:• Relationship Request Letter• PO Terms & Conditions• RFXs• Business Awards/Contracts• Payment (Remittance Notes)• Supplier Intranets, Extranets, etc.Key Stakeholders should emphasize the Compliance Policy during supplier interaction Supplier Relationship Request Letter• The Relationship Request letter should issue an “EDICT” Togetherness Expectation Incentive Deadline Consequence
NON-COMPLIANCE ESCALATIONNon-Compliance Escalation (NCE) is a key component of the Supplier Enablement process. For buyers withSupplier Enablement Services, NCE is a joint process that can maximize enablement successTo be effective, the Supplier Enablement Non-Compliance Escalation process must incorporate theconsequences outlined in your “EDICT” . As is the case with software adoption, it would be nice to think thateveryone will just do it because you asked. However, that is usually not the case and having a process inplace to enforce your policy will help your suppliers know exactly what will happen if they do not comply andgive you the authority to follow through with the established policy. SE Services NCE Process On Hold Report Buyer NCE Contact Action 1 Reject supplier for Resolve NCE and participation in Ariba Supplier Collaborative Enablement resumes Action 2 Commerce initiative progress with supplier Execute appropriate Action 3 consequenceKey Collaborative Commerce Policy Questions ....Is participation in this initiative mandatory?Do we have a desired deadline date for suppliers to convert from paperPOs/invoices to the Ariba Network?Should we provide incentive for the supplier to participate? If so, what in-centives are we comfortable and/or prepared to offer?Do we want to alter payment terms for suppliers participating in collaborative commerce?Will we allow a supplier to just receive electronic Purchase Orders? Or, will we only issue electronic Purchase Orders ifthe supplier also submits invoices electronically?Are there any suppliers that we do not want or cannot move to the Ariba Network?Do we want to incorporate mass recruitment techniques?
SUPPLIER ENABLEMENT NON-COMPLIANCE ESCALATION P R O C E S S (EXAMPLE)Enablement NCE Process Supplier Supplier resists Supplier enablement Yes Process complete registers? request No Ariba sets supplier Ariba escalates Ariba escalates Yes Ariba status to “Closed” supplier to NCE supplier to NCE and assigns Process complete contact, with contact, with No appropriate Status reason code reason code reason Buyer Is supplier still Active?NCE Contact NCE Contact sends NCE Contact NCE contact Buyer appropriate escalates to key shares result of response based on Procurement/SC interaction with reason code and resource for Ariba copies Ariba supportStakeholders Procurement/SC Buyer Procurement/SC reports results of engages with supplier interaction supplier to NCE ContactIn addition to Supplier Enablement, Non-Compliance should also be monitored for: • Internal compliance by Key Stakeholders • Registered suppliers that do not transact • Transacting suppliers that revert back to paper • Registered suppliers that do not maintain their AN account in good standingConsequences should be defined for Non-Compliance: • Internal Non-Compliance – Escalation to Manager, impact on Performance Review, etc. • External Non-Compliance – Execution of defined consequences in EDICT (e.g. extended payment terms, paper processing fee, discontinuation of business, etc.)
NON-COMPLIANCE ESCALATIONS ONGOING PROCESS TIPS& BEST PRACTICES1. Executive buy in and support ***(this is the key to all successful policies)2. Designated Non Compliance Escalation Process owner3. Ability to flag Ariba Network suppliers in the ERP system4. ERP report on Ariba Network suppliers that states both paper and electronic transactions5. Defined Non Compliance Escalation process with consequences6. Policy Violation Tracking Process (e.g. spreadsheet, database, etc.)Key Collaborative Commerce Policy Questions …….Do we have a new supplier set-up process? How does it need to be modified to include supplier set-up on the AribaNetwork?How do we want to handle one-time vendors? Should they register on the AN?Should we return paper invoices received after a supplier has registered on the AN?Can we include supplier participation in collaborative commerceas a condition for the award or renewal of business with our com-pany?What communication channels do we have available to publicizeour collaborative commerce initiative to our suppliers?Do we have an effective way to communicate our collaborativecommerce policy to internal stakeholders?Do we have executive buy-in and support for implementing ourcollaborative commerce policy?