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Beyond the SKU -  Driving Compliance Across Complex Categories
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  • We run the requisitioning process in the ERP (Oracle) and connect to suppliers through the Ariba Network We have approximately 300-400 catalog suppliers in our Oracle ERP system, with a total spend of about $300 million. We are currently transacting with about 250 of these suppliers. We have approximately 30,000 additional active suppliers that we buy from outside of a catalog process. These are suppliers that provide local services, 3rd Party Transportation for our UPS Freight and Logistics business units, and various other suppliers in service areas at our corporate level such as Advertising, consulting, large facility projects, I.T., etc.Exchange PO and invoice documents with the catalog suppliers. Current focus with the local service suppliers is Contract Invoicing. We require order acknowledgement from our catalog suppliers, as well as advance shipping notices We won’t accept invoice without an order acknowledgement – helps ensure price has been acknowledged Contract Invoicing is our primary method for Service suppliers. We further accommodate complex services by incorporating internal CIF catalogs when we have suppliers with large menus of service items (G&K), or we have an internal business need to capture and pass additional information (Medical Services, tires, etc.)
  • Streamline our local service process. Move away from a “Local Purchase Order” process to a “Contract Invoice” process. Moves UPS toward a totally paperless process. Enable our suppliers to self serve regarding their invoice/payment questions. Reduces support calls we need to handle today.Greater visibility of order status for our internal users.External compliance – for example with order acknowledgements. We can set rules in the Ariba Network that sellers can’t invoice against a PO unless they’ve acknowledged it. That ensures that they’ve acknowledged the price, which reduces exceptions and saves time

Beyond the SKU - Driving Compliance Across Complex Categories Presentation Transcript

  • 1. CC Beyond the SKU Driving Compliance across Complex Categories© 2012 Ariba, Inc. All rights reserved.
  • 2. Collaborative Business Commerce- E-Enabled Goods Versus Services Collaborative Business Commerce as a % of Overall Spend Business Collaboration on Goods 40.0% Business Collaboration on Services 30.0% 20.0% 10.0% 0.0% 2005 2006 2007 2008 Source: U.S. Dept of Census, E-Stats, May 20102 © 2012 Ariba, Inc. All rights reserved.
  • 3. An Additional Dimension in E-EnabledGoods: Catalog Versus Complex Goods Collaborative Business Commerce as a % of Overall Spend Business Collaboration on Catalog-Driven Goods 40.0% Business Collaboration on Services Business Collaboration on Complex Goods 30.0% 20.0% 10.0% 0.0% 2005 2006 2007 2008 Source: U.S. Dept of Census, E-Stats, May 20103 © 2012 Ariba, Inc. All rights reserved.
  • 4. Introductions • Ken Redler Chief Technology Officer • Robert Calvert B2Bi Program Manager • Mike Meiring P2P Supplier Enablement, Communications, and Change Management Coordinator4 © 2012 Ariba, Inc. All rights reserved.
  • 5. About cSubs • Subscription and Knowledge Resource Management: Managing the flow of information into the organization Books, Periodicals, Newspapers, Electronic Content, Site Licenses Purchase, Renewal, Cancellation, Transfer Reporting, Business Intelligence, Analytics Consolidated Billing and Payment Spend Avoidance and Cost Control • Clients Across Multiple Industries Banking, Accounting, Healthcare & Pharma, Advertising & PR, Media, Manufacturing, Higher Ed, Many in the Fortune 5005 © 2012 Ariba, Inc. All rights reserved.
  • 6. A Complex Category in Flux • Seismic Shift from Print to Online • Electronic Content Different procurement workflow Complex management requirements Category Creep Potential legal exposure6 © 2012 Ariba, Inc. All rights reserved.
  • 7. Starting with PunchOut… If I PunchOut through Ariba and Purchase an Electronic Journal… Can My Department Share My Electronic Journal? Can I Clip and Redistribute? Within the Company? To Clients?7 © 2012 Ariba, Inc. All rights reserved.
  • 8. Far Beyond the SKU Management continues long Renewal Transfer after the procurement process is complete So how are these Do you issues remember my password? Non-Renewal Cancellation often handled now? And by whom?8 © 2012 Ariba, Inc. All rights reserved.
  • 9. You May Have This Problem Username and Password “Management”9 © 2012 Ariba, Inc. All rights reserved.
  • 10. Or This Problem Terms & Conditions10 © 2012 Ariba, Inc. All rights reserved.
  • 11. Who Manages it All? • Sometimes Purchasing Managers Library Groups IT Departments Individual Business Units • Often Nobody! – Failure to realize the growing costs of the complexity beyond the SKU11 © 2012 Ariba, Inc. All rights reserved.
  • 12. Costs and Risks • Duplication and Unnecessary Purchases Often found to be over 10% of total spend • High Administrative Costs Hidden costs in time and personnel Complexity often means little control or BI Lack of formal structures, creeping scope • Legal Exposure Entitlements under copyright law, contracts, T&C12 © 2012 Ariba, Inc. All rights reserved.
  • 13. A Solution: Services Provided Through Ariba Integration Model • Familiar PunchOut and single sign-on workflow, augmented with pre- and post-purchase management features PunchOut Pre-purchase SSO interaction13 © 2012 Ariba, Inc. All rights reserved.
  • 14. Pre-purchase: Advance Polling Advance renewal emails Users sign in to cSubs through Ariba to indicate their interest Managers easily track results, simplifying the information gathering process Historical reports and access statistics lead to smart spending decisions cSubs can assist with contract negotiation prior to purchase14 © 2012 Ariba, Inc. All rights reserved.
  • 15. Pre/Post-Purchase Management15 © 2012 Ariba, Inc. All rights reserved.
  • 16. Far Beyond the SKU with Post- Purchase Access and Management Administrator, PunchOut SSO Administrator Manages Resources Corporate Users, PunchOut SSO End Users Access Resources16 © 2012 Ariba, Inc. All rights reserved.
  • 17. Post-Purchase: Access17 © 2012 Ariba, Inc. All rights reserved.
  • 18. A Complex Service Simplified • Complex categories like e-content can be managed through the Ariba workflow • Simplification, consolidation, cost savings Better value and utilization from current spend • Higher user compliance Leveraging the familiar Ariba environment • Mitigate your company’s knowledge resource management risk18 © 2012 Ariba, Inc. All rights reserved.
  • 19. Introductions • Ken Redler Chief Technology Officer • Robert Calvert B2Bi Program Manager • Mike Meiring P2P Supplier Enablement, Communications, and Change Management Coordinator19 © 2012 Ariba, Inc. All rights reserved.
  • 20. Teller 1. “Exploit pattern recognition 2. Make the secret a lot more trouble 3. It’s hard to think critically if you’re laughing 4. Keep the trickery outside the frame 5. To fool the mind, combine at least two tricks 6. Nothing fools you better than the lie you tell yourself 7. If you are given a choice, you believe you acted freely” …presented to a conference on neuroscience and perception, transcript printed in Smithsonian March 201220 © 2012 Ariba, Inc. All rights reserved.
  • 21. Exploit Pattern Recognition Source to Invoice | Invoice to Source Catalog/ Configurator/ eQuote Non Catalog Contract PunchOut PunchOut Simple l l l l Goods Configured l l l l l Goods Milestone l l l l Service Metered l l l l l Service Monthly l l l l l Service Open Ended l l l l Service21 © 2012 Ariba, Inc. All rights reserved.
  • 22. Make the Secret a Lot More Trouble Source to Invoice | Invoice to Source Break it down Cloud Service Example Software and Service Example • 20 GB • Software License • Unlimited • Support (24 months) • Per Use • Prepaid Training Credits (1 time) • Professional Services (multiple rates)22 © 2012 Ariba, Inc. All rights reserved.
  • 23. It’s Hard To Think Critically When You’re Laughing Customer should forget you exist Example: Disney Tram or Monorail Simple things should be simple23 © 2012 Ariba, Inc. All rights reserved.
  • 24. Keep the Trickery Outside the Frame Share the complexity of supply chain at deployment; however, not at the transaction level • At deployment must be win:win • At transaction must be customer first Managing customer experience vs. process automation Manage Organizational impacts • Sales, Order Mgmt, AR/Collections, eBusiness It’s a channel for doing business; not an add-on to how you do business24 © 2012 Ariba, Inc. All rights reserved.
  • 25. To Fool the Mind, Combine at Least Two Tricks Non Catalog shouldn’t be the default (in its current state) Drive for additional value • Value of Non Catalog • Value of Configurator • Value of Contract • Value of Quote Integration (eQuote) Reconcile Value vs. POR25 © 2012 Ariba, Inc. All rights reserved.
  • 26. Nothing Fools You Better Than a Lie You Tell Yourself Buyers want to believe That all suppliers can manage all goods and services they sell, simple and complex All Suppliers Big and Small • Different developmental (POR) priorities • Different organizational constraints • Different sales priorities Both Buyer:Supplier need to be flexible to demand vs. capability26 © 2012 Ariba, Inc. All rights reserved.
  • 27. If You Are Given a Chance It is important that: Sellers sell what they have Buyers recognize that all Sellers don’t have the Sellers challenge same flexibilities, the themselves to grow and same speed to market, expand their capabilities the same objectives, the same capabilities.27 © 2012 Ariba, Inc. All rights reserved.
  • 28. Introductions • Ken Redler Chief Technology Officer • Robert Calvert B2Bi Program Manager • Mike Meiring P2P Supplier Enablement, Communications, and Change Management Coordinator28 © 2012 Ariba, Inc. All rights reserved.
  • 29. About UPS • Founded in Seattle, WA in 1907 • Corporate Headquarters: Atlanta, GA • Primary Business Units: Small Package Supply Chain Solutions (Logistics/Warehouse/Forwarding) UPS Freight • 2011 Delivery Volume: 4 Billion packages/documents • 2011 Total Revenue: $53.1 Billion ($44 Billion Small Package)29 © 2012 Ariba, Inc. All rights reserved.
  • 30. About UPS • Employees: 398,300 (324,000 U.S. and 74,300 Int’l) • Small Package Customers: 8.8 Million Daily 1.1 Million Pickup 7.7 Million Delivery Delivered more than 26 million packages on “peak day” 2011 (Dec. 22) • Total Facilities Worldwide: 2,879 • Total Ground Fleet (All Business Units): More Than 101,000 Units (Tractors, Package Cars, Motorcycles) • Aircraft: 223 UPS Aircraft and 300 Chartered30 © 2012 Ariba, Inc. All rights reserved.
  • 31. Collaborative Commerce Accomplishments with Ariba • Collaboration infrastructure: Oracle and Ariba Requisitioning process in the ERP Supplier connectivity through the Ariba Network • Catalog Orders (PO) and Local Services (Combination of PO Invoicing and Contract Invoicing 300-400 catalog suppliers now transacting via Ariba (PO Flip, cXML and EDI) Approximately 30,000 “non-catalog” suppliers - primarily services (Invoice against contract) – Local services, 3rd Party Transportation for our UPS Freight and Logistics business units, advertising, consulting, Corporate housekeeping and security services, medical services, uniform cleaning, etc. • Approach with catalog suppliers Exchange PO and invoice documents with the catalog suppliers Require order acknowledgement and advance shipping notices – helps ensure price has been acknowledged and provides order visibility • Approach with non-catalog suppliers Contract invoicing Use of Attribute fields to transmit information from invoice to ERP Some internal CIF catalogs to allow for “partial item” functionality (Medical Services, Uniform Cleaning, etc.)31 © 2012 Ariba, Inc. All rights reserved.
  • 32. Complexities of Goods (Catalogs) • Configuration – SKU-driven catalogs cannot accommodate • Challenges Additional information required beyond the SKU Item Number Tiered Pricing Minimum/Maximum Quantities • Examples: Business cards (contact information) Promotional Marketing Products (imprinting information) Awards (inscription details) Some industrial products (minimum order quantity requirements)32 © 2012 Ariba, Inc. All rights reserved.
  • 33. Complexities of Services • Wide Variety of Service Areas Janitorial, landscaping, vehicle towing, pest control, vehicle repairs, snow removal, fire equipment inspection • Many Pricing Models Hourly rates, mileage rates, flat rates, etc. • More Complex Services Require Additional Information Use of Internal CIF Catalogs to Accommodate Requirements Examples: Medical Services, Tires, Uniform/Industrial Cleaning33 © 2012 Ariba, Inc. All rights reserved.
  • 34. Primary Goals for Services – Contract Invoicing • Eliminate Paper Invoices • Systemically Validate Contract Rates LPO process required manual process for rate validation • Improve Payment Cycle Time Average 22 days to create/approve/match/pay LPOs to Invoices Average eight days to approve contract invoices Quicker cycle time promotes acceptance of Early Payment Offers • Sunset Internal Local P.O. Application (Customized Oracle) • Reduce Transactional Costs • Generate Additional Savings via Early Payment Offers34 © 2012 Ariba, Inc. All rights reserved.
  • 35. The Way We Were – LPO/Paper Invoice UPS Employee Orders UPS Employee UPS Employee Creates Service via Receives Paper P.O. in ERP System Phone/Email/Etc. Invoice from Supplier (After Invoice) Invoice Key Entry by Invoice is Matched to Outsourcer Local PO and Paid35 © 2012 Ariba, Inc. All rights reserved.
  • 36. Way We Are Now – Contract Invoice UPS Employee Orders Supplier Creates UPS Employee Service via Invoice in Ariba Approves Invoice in Phone/Email/Etc. Against Contract Ariba. Invoice is Paid • Approved Invoices Pend for Terms • Early Payment Offers Made via the Network36 © 2012 Ariba, Inc. All rights reserved.
  • 37. Challenges • Sheer Volume of Suppliers and Contracts Approximately 30,000 suppliers could ultimately be targeted for Contract Invoicing Approximately 20,000 contracts to manage • Decentralized Purchasing Culture Service suppliers owned and managed by local UPS business managers Supplier compliance has been a challenge as a result • Some Stakeholders Insist on Issuing a Purchase Order • Sharing Data Between Ariba and Oracle Flex field requirements • Invoice Routing Use of specific email in Sold To field Associating an email address to a building code37 © 2012 Ariba, Inc. All rights reserved.
  • 38. Keys to Success • Communicate…Communicate…Communicate • Train…Train…Train • Stakeholder Representatives on the Project Team Automotive Facility Management • Ensure Adequate Knowledge and Resources Ariba Support Other Third-Party Support38 © 2012 Ariba, Inc. All rights reserved.
  • 39. Thank you!39 © 2012 Ariba, Inc. All rights reserved.
  • 40. Share This Session…NOW…from your mobile! • All presentations are posted: Guidebook mobile app – Search Apple or Android app store for Guidebook – Enter code “collabor8” Or at Slideshare.net/Ariba • Share via email or social media **Come back soon – we are syncing #AribaLIVE audio and video interviews to the presentations**40 © 2012 Ariba, Inc. All rights reserved.
  • 41. Recommended Approach for Enabling Spend Off-Contract Goods & Simple Goods & Services w/ Recurring/ 3rd Party/Emergency Process Category: SKU-Based Goods Services Complex Agreements Goods & Services Buying Requisition via Non- PO Release Against Requisition via Catalog Invoice Against Contract Process Catalog Contract Three bids and a buy Pricing Compliance Catalog Contract Contract Audit  Goods or Services Goods or Services Receipt Fulfillment Goods Receipt No Receipt Receipt  No Receipt Invoice PO & Goods or  PO, Contract & Receipt PO & Goods Receipt Contract Reconciliation Services Receipt  PO & Contract  Off-Contract Spend  IT Hardware  IT Consulting  Direct Mail Spend Commodity Examples: (Spot Buys or One-  Office Supplies  Creative Agency  Market Research Time Purchases)  Promo Items  Temp Labor  Facilities Management Implementation Low Low-to-Medium Medium Medium Effort41 © 2012 Ariba, Inc. All rights reserved.