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Collaborative Sourcing:  Unlocking Greater Savings and Value for You and Your Supply Chain
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Collaborative Sourcing: Unlocking Greater Savings and Value for You and Your Supply Chain

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  • . Low value transactions moved out and focus on strategic spendBottom-line: Procurement organizations are challenged to continue to drive value beyond traditional approaches and categories
  • So let’s talk more about collaborative sourcing and the collaborative sourcing framework. As we discussed earlier, it is important to remember that while technology can absolutely enable collaboration (think facebook, twitter, google+, etc.), although we’ll start with technology, a collaborative sourcing framework goes far beyond software.That said, collaborative – or strategic – sourcing usually include some version of four distinct areas:Spend analysis to aggegrate, classify, and enrich, and analyze spend for strategic sourcing decision-makingSourcing ranging from simple rfx’s to auction tools to potentially complex configuration and optimization toolsContract management to assure the terms agreed to during the sourcing process are recorded and observed in requisitioning and invoicing,and Supplier management encompassing both information management – gathering info on the supply bases – as well as performance management – to monitor and track how your suppliers are performing and take resulting and/or corrective action.

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  • 1. B Collaborative Sourcing – Unlocking greater savings and value for you and your supply chain ABN AMRO - Peter Potters, Head of Business Management ABN AMRO - Hielke Posthumus, Development Manager Oriflame - Loic Fresne, Purchasing Director, New Product Development© 2012 Ariba, Inc. All rights reserved.
  • 2. AgendaIntroductionCustomer Story ABN AMRO OriflameQ&A2 © 2012 Ariba, Inc. All rights reserved.
  • 3. Procurement Gains Recognition as a StrategicFunction but Expectations Are Higher than Ever Expectations of today’s purchasing organizations Visibility and Cost Transparency of actual spend, Management visibility into sourcing pipeline and resourcing requirements Improve process Effective common process applied to efficiencies all procurement activity, with appropriate approvals Deliver fast Faster turnaround times and rapid results transitions to new supply with sustainable long-term relationships …all on a limited budget Full payback in 4 – 8 mos. Add more value… More spend under management, more process coverage, more strategic impact3 © 2012 Ariba, Inc. All rights reserved.
  • 4. There’s Savings…and Everything Else Top 2 CPO Pressures Source: Ardent Partners, 20114 © 2012 Ariba, Inc. All rights reserved.
  • 5. Evolution of Sourcing Community Technology Capabilities CollaborativeBusiness SourcingValue Strategic Sourcing eSourcing Manual Sourcing Time frame5 © 2012 Ariba, Inc. All rights reserved.
  • 6. Collaborative Sourcing Framework Spend Sourcing Analysis Technology Contract Management SIPM6 © 2012 Ariba, Inc. All rights reserved.
  • 7. B Collaborative Sourcing – Unlocking greater savings and value for you and your supply chain ABN AMRO - Peter Potters, Head of Business Management ABN AMRO - Hielke Posthumus, Development Manager© 2012 Ariba, Inc. All rights reserved.
  • 8. ABN AMRO: A Leading Bank in theNetherlands with Selective Presencein International Growth Areas “Our clients’ success is our success” 2011FY data  Revenue: € 7.8B  Ext spend: € 2.5B  Net profit: € 689M  FTE: 24,2258 © 2012 Ariba, Inc. All rights reserved.
  • 9. ABN AMRO Overview9 © 2012 Ariba, Inc. All rights reserved.
  • 10. External Pressures Have Driven the 2007-2012 Procurement Agenda at ABN AMRO Challenges for the Procurement Agenda Financial Industry •Significant contribution to reduce the •Limited top line growth bank’s Cost/Income ratio •Higher Capital Ratio requirements •Integrate Procurement processes •Loan restructuring (loss) and systems •Reduce TCO of systems landscape •Create transparancy in supply base Additional challenges for (incl. CSR performance) ABN AMRO + “Normal” development •Multiple Separations and •Category Management Divestitures (2007-2011) •Supplier Relationship Mgt •State take-over •P2P integration •Integration NL parts ABN AMRO •Etc… and Fortis10 © 2012 Ariba, Inc. All rights reserved.
  • 11. Much Improved Alignment with Business Stakeholders • 9 Miljoenen 8 7 Spend Analysis 6 5 Spend deep dives with senior 4 Business Mgt • 3 2 1 Sourcing Projects 0 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 Active participation in Events Business Audit Legal Business Professional Consulting (non IT) Services Services Consulting IT Services Business approval on award and savings • Contracts Contract Mgrs (business) actively involved in maintaining records • Suppliers Basis for SRM program11
  • 12. Much Improved Alignment with CFO Organization • Spend deep dives aligned Order2Invoice with CFO Spend deep dives aligned with responsible CFO • Benefits tracking and validation integrated in Sourcing projects Pipeline/Done Deal savings recorded on dForm Strategic Sourcing Approvals by Business owner and Financial Category Head control Supporting evidence in Sourcing Project Validation by CFO Monitored by Audit Performance reporting12 © 2012 Ariba, Inc. All rights reserved.
  • 13. Granularity of Spend Analysis as Unique Selling Point of Procurement to Business and Driver for Compliance Management BU/Dept xyz • Analyse Spend Spend Analysis 9 Start at BU/Dept level Miljoenen 8 7 6 Trend per category/year Drill down to cost center, 5 4 3 2 1 supplier, product. If needed, to invoice level!! 0 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 Business Audit Legal Business Professional • Consulting Services Services Consulting IT Services (non IT) + Top-20 suppliers Compare with contracts Contracts per category Analyse discrepancies Category 123 • Create shared action plan Contract Mgt Contract CW21963220 Supplier ABC123 Value 62216 Redirect spend to preferred CW21963221 CW21963222 DFJ 377 KWE262962 500151 40000 contracts CW21963223 CW21963224 KAAW73 OEWGB 200066 543000 Contract additional suppliers CW21963225 CW21963226 VKEEU VKKOGJ 67220 522200 Re-tender Etc.13 © 2012 Ariba, Inc. All rights reserved.
  • 14. Ariba Modules Used for All Strategic Sourcing Activities in NL Sourcing 200 projects NL 75 events (RFx) € 60-70M savings Spend Vis Contract mgt € 2.0B spend 1300 active contracts 200,000 invoices with 800 suppliers >10,000 suppliers 200 >85% coverage 3 source systems managed suppliers Outside NL: 700 contracts SI&PM 60 Users (Create project) 250 active team members14 © 2012 Ariba, Inc. All rights reserved.
  • 15. Majority of the Procurement Agenda Realized, but Still Plenty to Be Done Procurement Agenda Status / Work to be done • Significant contribution to  Granular spend analysis reduce the bank’s  Shared sourcing pipeline Cost/Income ratio  Validated savings tracking • Integrate Procurement  One sourcing process processes and systems  One procurement system  P2P integration • Reduce TCO of systems  Migrated from CD to SaaS landscape  Decommissioning program • Create transparancy in  Integrate supplier data supply base (incl. CSR  Shared platform performance)15 © 2012 Ariba, Inc. All rights reserved.
  • 16. Implementing a Strategic Sourcing Tool Is Only Successful as Part of an Overall Change Program Services strategy • Who are your main stakeholders • What are the services you will provide • What are your targets/KPI’s Processes Systems • What is the end-to-end process • What is the to-be architecture • What are supporting processes • Where to start (Business case) • Where can you improve • Data management People Governance • What skills are present/required • Align with your stakeholders • Be aware of the culture • Clear RASCI (Change!)16 © 2012 Ariba, Inc. All rights reserved.
  • 17. B Collaborative Sourcing – Unlocking greater savings and value for you and your supply chain Loic Fresne, Purchasing Director, New Product Development, Oriflame© 2012 Ariba, Inc. All rights reserved.
  • 18. 2012-05-23 Copyright ©2011 by Oriflame Cosmetics SA 18
  • 19. Oriflame Purchasing2012-05-23 Copyright ©2011 by Oriflame Cosmetics SA
  • 20. Agenda • Oriflame Business • Global Supply • Purchasing • Ariba for Oriflame2012-05-23 Copyright ©2011 by Oriflame Cosmetics SA 20
  • 21. Introduction to Oriflame Revenues by Geography 2011• Founded in 1967 in Sweden EMEA• International cosmetics company selling 28% direct• Sells direct in more than 60 countries1 Latin America 6%• €1.5 billion in annual sales1 Asia• #1 direct sales company and largest CIS & 10% Baltics cosmetics brand in the CIS Region 55% Manufacturing &• 3.6 million active sales consultants1 Other 1%• 7,900 full-time equivalent employees1 € million 2011 2010• Portfolio of approx. 1000 products1 Sales 1 494 1 514 Gross margin 67.9% 66.2%• Catalogues distributed in 40 languages1 EBITDA 182 184• Market Capitalization: app. €1.5 billion Adjusted operating profit (2 164 168 Adjusted operating margin (2 11.0% 11,1% Cash flow from operating activities 135 95 Net interest-bearing debt 233 201 1 Data as at Dec 31, 2011 2 2010: Before restructuring costs in the EMEA region of €0.7m and the effect from the Iran impairment of €10.1m 2011: Before restructuring costs of €5.9m 21 Copyright ©2012 by Oriflame Cosmetics SA
  • 22. A Long-Term Growth Company 1990 – 2011: CAGR organic sales of over 15% €m1,600 1,514 1,4941,400 1,320 1,3171,200 1,1091,000 918 800 766 652 671 600 544 447 395 400 355 327 333 325 242 181 188 200 132 77 90 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Copyright ©2012 by Oriflame Cosmetics SA 22
  • 23. Brands and Products Sales by Category 2011 Wellness 4% Acc.• Oriflame Sweden: Wisdom of nature and the best of 10% Fragrances science 20%• 40+ years of skin care expertise Skin Care 21%• 1000 products of which 450 new or re-launched per year• Advanced formulations developed in Oriflame’s Global R&D Personal & Hair Care Centres by over 100 scientists 21% Colour C. 24%• Products targeted to men are 10% of total product range Skin Care Colour Cosmetics Fragrance Personal & Accessories Hair brushes Wellness Facial Moisurisers Lipsticks Men Hair Care Vitamins Hair care Hand bags Anti-ageing Foundations Women Nutritional shakes Bath & Shower Sunglasses Face & Body Eye shadows Home fragrance Deodorant Belts Mascaras Foot care Jewellery Powders Feminine Hygiene Towels Nail Oral Hygiene Gifts 23 Copyright ©2012 by Oriflame Cosmetics SA
  • 24. The Oriflame Catalogue• Oriflame’s “shopping window”• 17 campaigns per year – 12 campaigns in Asia• New offers and catalogue every third week – 40 languages• A dynamic combination of product and catalogue development in Stockholm Copyright ©2012 by Oriflame Cosmetics SA 24
  • 25. Our Business Model IncentivesConsumer Independent sales consultants Oriflame Order Order Products Products Payment Payment Copyright ©2012 by Oriflame Cosmetics SA 25
  • 26. Direct Sellingchannel categoriesDirect selling Industry - ProductCategoriesSource: WFDSA 2010 Copyright ©2012 by Oriflame Cosmetics SA 27
  • 27. THIS IS ORIFLAMEOur Logotype &SloganOur Vision To be the #1 Beauty Where we’re going Company Selling DirectOur Mission To Fulfil Dreams Our reason for beingOur Offer Look Great Make Money Have Fun What we offerOur Business What we should beOpportunity best in the world atconcept Brands & Network World Class People & How we create andOur Strategy Products Marketing Service Culture build the business opportunity conceptOur Values & Togetherness, Spirit & Passion How we workOperating Respect People, Focus on Customers, Demand Quality, togetherPrinciples Seek Simplicity and Cost-efficiency, Pursue Long-term Growth
  • 28. Oriflame OrganisationPurchasing Is Part of Global Supply CEOMarketing & CFO Global Supply COO HR R&D Group Group Group Finance GroupPlanning & Manufacturing Quality Process Global Supply Purchasing Logistic Warsaw & Projects Copyright ©2011 by Oriflame Cosmetics SA
  • 29. Our Supply Strategic Direction Better align supply- and Cut lead-times and sales in the increase flexibility in group, sourcing locally the end-to-end supply where appropriate chain Build capacity to support Make the Oriflame growth and increase share experience easy, reliable of in-house manufacturing and friendly for the consultant Copyright ©2011 by Oriflame Cosmetics SA
  • 30. Purchasing Organisation Edwin Koehler VP Purchasing Johan Gillbro Purchasing Development manager Louise Jerneborg Project Manager & Analyst Ivana Peijec Contract coordinator Charlotte Haggren Project coordinator Tony Igoe Therese Westerlund Loic Fresne Director Global Director Global Director NPD Indirect Spend Strategic Sourcing Purchasing Ed Mc Phillimy VACANT VACANT Viannei Hermes Abishek MishraJohan Gillbro Acting Jennie Ahl Ashima Enjeti Travis Natt Sr Sourcing SR Sourcing Sourcing Category manager Stina Granberg Sourcing Manager Global ConferencesPurchasing Category Purchasing Category Purchasing Manager Manager Manager Purchasing Category India/Asia Manager Manager Category Manager Manager Sr Buyer Components Finished Goods Raw Materials FRA CCS PHC SKC Wellness Petra Dernhagen Category Manager Colin Cowrey Marek Kowalski Global Print Jaspal Anna alvemo Sanna Ruponen Elena Bayeva Anna Xavier Buyer Sr Buyer Components Buyer India Sr Buyer Sr Buyer Sr Buyer Buyer Raw Materials FRA CCS PHC SKC Laura Eckback Coordinator Indirect Spend Yi Ling Admass Badeen Buyer Buyer CCS PHC 2012-05-23 Copyright ©2011 by Oriflame Cosmetics SA
  • 31. Sourcing Requirements Hierarchy AQSCIE A Assured SupplyResponsiveness Q Quality C Cost S Service - II Innovation + Environmental & Ethical
  • 32. Sustainability Focus • End 2009 Oriflame employed a senior CSR advisor reporting directly to the CEO • Objective during fist half 2010 to develop a strategy for CSR with the Oriflame business • Projects and next steps will be defined as a result of strategy investigation • One of the priorities will be to share experiences with our key suppliers and see how to move forward together Vision: Oriflame wants to work with sustainable suppliers
  • 33. On what criteria do we award businessto suppliers?Criteria for award: AQSCIE – Capacity, lead time, MOQ and service level (Planning, Manufacturing) – Passed quality audit/technical visit (Quality, Packaging Development) – Technical feasibility and support (R&D scale up, Packaging Development) – Total cost : includes freight, duty, origination costs, payment terms etc. (Purchasing) – Supplier status and strategic importance (Purchasing) Copyright ©2011 by Oriflame Cosmetics SA
  • 34. Critical Deadlines for Suppliers - NPDMonthsbeforelaunch • RFQ received: response time - 7 days from receipt of RFQ 13 • Business award – Work can begin! 12 • Tooling initiated 12 • Colour-matching initiated with component supplier: 10 working days from receipt of reference 12 • Artwork delivered to component supplier 7 • Component specification issued – Production of components can now start! 5 • First delivery of components into finished product supplier 4 • First collection of finished products from supplier – 2
  • 35. Interactions with Suppliers Component R&D suppliers Packaging Planning Finished product suppliers Purchasing Copyright ©2011 by Oriflame Cosmetics SA
  • 36. Ariba Purpose and ScopePurpose• Implementation of an e-sourcing system for all purchasing tenders sent to suppliersScope Not in scope• Indirect spend • NPD Project management• Direct spend • Packaging• Accessories sourcing • Creation of structures• Strategic sourcing 2012-05-23 Copyright ©2011 by Oriflame Cosmetics SA
  • 37. Ariba the New Sourcing Solution forPurchasing A web service solution to replace our Excel template RFQs  A Tool to drive system improvement and process alignment • Direct Spend, NPD – Emails and messaging to suppliers in one place, automated awards – One to many easy to use internet web interface rather than excel • Indirect Spends Overall Benefits – Sourcing tool with eauction capabilities to maximize savings & increase spend coverage • Accessories – Emails and messaging to suppliers in one place, automated awards • Raw Materials - Sourcing tool with eauction capabilities to maximize savings & sourcing events 2012-05-23 Copyright 2011 By Oriflame Cosmetics SA
  • 38. Organization Project Ariba Loic Fresne NPD PUR Indirect spend Supplier Raw Material WORK STREAMS DESCRIPTION management • Define process requirements • Loic Fresne • Patrick Botell • Robert • Colin Cowdrey • Process Definition • Define RFQ requirements • Sabine Barth Connolly • Secure process are ready for go-live • Sanna Ruponen • Business Readiness • Secure sign off solution (ACC) • Ariba solution • Ariba • Ariba • Ariba • Ariba • Application Design/Build • Secure interface with IFS • Jaroslav • Jaroslav • Jaroslav • Jaroslav • Kratochvil Kratochvil Kratochvil Kratochvil • IT set up Secure IFS modifications • Hanna Bjelkevik • Hanna Bjelkevik • Hanna Bjelkevik • Hanna Bjelkevik • Documentation of system design • Lead execution of tests • Sabine Barth • Patrick Botell • Robert • Colin Cowdrey • Identify all issues in business • Sanna Ruponen • Hanna Connolly • Hanna Testing • Re-test issues found (ACC) Bjelkevik • Hanna Bjelkevik • Hanna Bjelkevik Bjelkevik • Identify master data that needs to • Sabine Barth • Patrick Botell • Robert • Colin Cowdrey be set up Connolly Master data set up • Load all systems with correct data • Train users and super users • Hanna • Hanna • Hanna • Hanna • Train suppliers Bjelkevik Bjelkevik Bjelkevik Bjelkevik Training and Roles • Sabine Barth • Patrick Botell • Robert • Ed Mc Phillimy • Secure security of IT roles Connolly • Loic Fresne • Therese • Robert • Ed Mc Westerlund Connolly Phillimy2012-05-23 Copyright ©2011 by Oriflame Cosmetics SA
  • 39. Indirect Spends and Raw MaterialsIndirect Spends Raw Materials No Data integration with IFS enabled an earlier start Data to be integrated to IFS, no import, different set  Supplier self register on- up as Direct Spend, NPD line to be invited for bidding using generic SPQ  1 RFP Template to be built  3 Templates built  Commodity tender for  Printing Tender running in different sites Ariba, 10 suppliers invited currently bidding  e auction as a likely useful  Conference template, to be option used for conference tenders  Mobile tender with the aim of running an eauction  GO LIVE the 28th of April 2012-05-23 Copyright 2011 By Oriflame Cosmetics SA
  • 40. Prior to Ariba Situation for Direct Spend MS Excel MS Outlook 3 RFQ is sent in Outlook mail • Many activities were performed manually 1 Structures 2 Information • Little time to are kept in downloaded to evaluate and IFS MS Excel manage RFQ responses • No transparency, no r history on events in one place7 Structures 6 RFQ responses 5 RFQ responses 4 Suppliers receive are selected are evaluated in are received in and responds to and cost is MS Excel mail RFQ approved • Internal • External
  • 41. System Overview for Direct Spend Component Event Filling Event Ariba Sourcing Automated Awards 5 templates 1 template RFQ Process to suppliers Step 1 Step 2 Customized Pack Brief Component EXW FG EXW PriceIntegration with IFS Structures Prices, LT, MOQs… LT, MOQs… IFS System / ERP Transactions OCSA set up Manual duplication of data ? Planning GM MRP, 4 Shifts ? JDA 2012-05-23 Copyright ©2011 by Oriflame Cosmetics SA
  • 42. Potential Future Situation • More suppliers can compete for the business 2 RFQ’s are • Reverse auction published in functionality Ariba 1 Structures are kept in • Help Purchasing to PLM move away from manual work • Intermediate interface will be from IFS to Ariba RFQ’s are • Long term from 4 evaluated in PLM Ariba5 Structures 3 Supplier enter are selected Ariba and respond and cost is to RFQ approved • Internal • External
  • 43. Advantages with Ariba• Automated and stored communication instead of emails – RFQ – Awards • Purchasing to get away• Easy to use internet web interface from copying and pasting of data in Excel• e-Auction capabilities to maximize savings – Indirect Spends and Raw materials• Strategic Sourcing support – Supplier Profile Questionnaires on line• Transparency of data negotiated and agreement made with suppliers2012-05-23 Copyright ©2011 by Oriflame Cosmetics SA
  • 44. 2012-05-23 Copyright ©2011 by Oriflame Cosmetics SA 50
  • 45. Summary and Key Take-aways Align Results Align Results to Objectives Executive Obtain Executive Sponsorship from senior leadership Sponsorships (e.g., CFO, Business Unit GM and or Functional Leaders) Collaborative Work on building collaborative relationships with partner Relationships functional groups (particularly Finance) Be Flexible Be willing to make difficult choices and do more with less Take on aggressive goals beyond sourcing Add more value… More spend under management, more process coverage, more strategic impact51 © 2012 Ariba, Inc. All rights reserved.
  • 46. Q&A Contact info: Sundar Kamakshisundaram: sundar@ariba.com52 © 2012 Ariba, Inc. All rights reserved.
  • 47. 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**53 © 2012 Ariba, Inc. All rights reserved.
  • 48. 54 © 2012 Ariba, Inc. All rights reserved.
  • 49. Strategic Sourcing Suite HelpsProtect Bottom Line and ImproveAlignment during Crisis Challenges Solutions Results Company• Pressure to return bank • Deploying Ariba’s full • Much improved alignment ABN AMRO to profitability Strategic Sourcing suite with business stakeholders on demand to minimize time through active participation in Profile• Economic environment to savings and TCO events, contracts and spend Dutch bank dating back limited ability to grow analysis to 1765 top line • Selected Ariba Spend• Increased pressure to Visibility™ to better • Much improved alignment Ariba Solutions prioritize and quantify with CFO organization manage costs effectively opportunities and maximize through the integration of Ariba Spend Visibility Ariba Sourcing• Significant ownership and spend leverage benefits tracking and Ariba Contract Management organizational changes up validation in Sourcing • Selected Ariba Sourcing™ Ariba Supplier Information to state takeover to reduce cycle time and • Granularity of spend analysis and Performance Management• Opportunity to better increase savings seen as unique selling point leverage spend, identify of Procurement to Business • Selected Ariba Supplier and a driver for compliance opportunities, and Information and Performance manage suppliers management Management™ to better• Aim to be a leading bank manage total supplier base • Supplier 360 when it comes to (spend, sourcing, contracts, s • Selected Ariba Contract upplier info) is developing sustainability within the next Management™ to maintain few years and embed into an integral view on a company-wide visibility into supplier sustainability in the bank’s supplier contracts and strategy and operations improve due-date • Improved sharing of best management practices and global visibility into contracts © 2010 Ariba, Inc. All rights reserved.