Driving Buyer-Seller Collaboration Through E-Sourcing


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Driving Buyer-Seller Collaboration Through E-Sourcing

  1. 1. B Driving Buyer-Seller Collaboration through E-Sourcing Sundar Kamakshisundaram – Ariba Alexandre Sayre – Schindler Corporation Jacob Larsen – Maersk Alex Romera – Staples© 2012 Ariba, Inc. All rights reserved.
  2. 2. AgendaIntroductionPanel Discussion Schindler Corporation – Alexandre Sayve Maersk – Jacob Larsen Staples – Alex RomeraQ&A2 © 2012 Ariba, Inc. All rights reserved.
  3. 3. There’s Savings…and Everything Else Top 2 CPO Pressures Source: Ardent Partners, 20113 © 2012 Ariba, Inc. All rights reserved.
  4. 4. Collaboration Is King Top 2 CPO Strategies Source: Ardent Partners, 20114 © 2012 Ariba, Inc. All rights reserved.
  5. 5. What Are Analysts Saying about Sourcing? Source: “Strategic Sourcing in the Mid-Market Benchmark”, Aberdeen Group. But can you balance this against your current level of performance?5 © 2012 Ariba, Inc. All rights reserved.
  6. 6. Evolution of Sourcing Community Technology Capabilities CollaborativeBusiness SourcingValue Strategic Sourcing eSourcing Manual Sourcing Timeframe6 © 2012 Ariba, Inc. All rights reserved.
  7. 7. B Driving Buyer-Seller Collaboration through E-Sourcing Alexandre Sayve Global eProcurement & eSourcing Manager Schindler Group AG© 2012 Ariba, Inc. All rights reserved.
  8. 8. Schindler Purchasing ExcellenceAlexandre SayveCorporate Purchasing© Schindler | MAN | Alexandre Sayve | Page 8
  9. 9. Schindler Lucerne 1874Founder Robert Schindler Plant 1900 Controller 1930 Drives 1954 Cars 1890 Lift boy© Schindler | MAN | Alexandre Sayve | Page 9
  10. 10. Our Product Is Mobility Hotels Office buildings Hospitals Airports Factories Ships Residential Shopping centers buildings© Schindler | MAN | Alexandre Sayve | Page 10
  11. 11. We Move 1 Billion People Every DayLeadership through customer service 2011 Stats: Turnover = CHF 7.9 B© Schindler | MAN | Alexandre Sayve | Page 12 EBIT = CHF 780 Mio / 12%
  12. 12. Schindler PurchasingExcellence© Schindler | MAN | Alexandre Sayve | Page 13
  13. 13. eSourcing and Supplier Collaboration – Spending on purchased goods & services can represent up to 70% of company’s cost, which obviously makes purchasing a critical and strategic priority for improving company’s bottom-line results – Automated sourcing process & solutions have enabled organisation to eliminate cumbersome & manual processes, shorten time cycles, better management of supply chain and cost reduction – As a consequence, the sourcing function is much more strategic and acknowledged as such. – The problem is some purchasing professionals still have a single-minded focus on price, where suppliers are squeezed for price reductions and policies are made to restrain maverick spending, which creates tensions with supplier responsible for the innovation and product/ service improvement making collaboration very difficult or impossible.© Schindler | MAN | Alexandre Sayve | Page 14
  14. 14. Requirements for eSourcing & Supplier Collaboration – Robust Procurement process with correct classification of products and services used globally within the organisation – Robust spend analysis in order to get full visibility on volume engaged with suppliers – Define a clear strategic sourcing roadmap by commodities (direct/ indirect) starting with the low hanging fruit and quick win savings to then more complex commodities. – A number of factors drive where & when to begin quite often the decision is driven by another question… How much do you want to save? – A differentiator also being tendered via RFX and/ or eAuction? – RFX drive process efficiencies vs. eAuctions drive best value! – You can tender everything… not so eAuction – Choose an area where real desire / need exists to improve or maximise best value. – Always keep in mind speed to market – Make sure you own the award / decision process – Avoid areas with known supply chain difficulties or volatility – Avoid significant change management / internal political issues (KISS) – Pick a commodity or service that is straightforward for which you can provide a watertight specification© Schindler | MAN | Alexandre Sayve | Page 15
  15. 15. Select Suitable Commodities & Services Example of check list / qualifying questions Score low / med / high & look for most highs – Level of your current purchasing influence - Compliance – Level of expected support from key stakeholders – Do you have exact specifications? – How many potential competent suppliers <3, 4-8,>9+ – Type of buy: Spot, Single source contract, Frame agreement – Value of spend: less than, equal to or higher than market norm? – Can you roll into 2 or 3 year contract? Increase supplier appeal? – Regional / National / International supply? – Is now a good time to buy?© Schindler | MAN | Alexandre Sayve | Page 16
  16. 16. Historic eAuction Areas Yielding Significant Returns – Both direct and indirect areas where a large supply base exists preferably with 1st & 2nd tier supply option – Remember …COMPETITION (real or perceived!) is key – No.1 Stationery including Paper – IT from Hardware to Software & Consumables – Commercial Print – Facilities Management – Logistics / Courier Services / Freight – Fleet & Insurance – Utilities – Telephony - inc. mobiles – Clothing / Workwear – Temporary Labour / Recruitment / Training – Professional Services – Travel / Travel Management – Data Storage – System Integration© Schindler | MAN | Alexandre Sayve | Page 17
  17. 17. Sweet Spots…– Renewing existing contracts– Securing new consolidated spend opportunities– Improving value from spot purchases– Maintaining best market price– Keeping the incumbent in check!© Schindler | MAN | Alexandre Sayve | Page 18
  18. 18. Benefits of e-RFXIdeas for you to consider– Expedite negotiations more effectively– Reduce time with the evaluation process & scoring– Efficiently request / exchange of information with market– Can fully automate RFX rounds– Provide greater clarity & consistency for all parties– Easier to track & journal all communications to repeat through time– Aids electronic data capture & knowledge sharing within Schindler– Common standards / compliance on T&Cs, Code of Conduct…– Drive negotiations from weeks & months into days & hours!– Easier internal liaison with your stakeholders– Improved & streamline workflow process– Easy roll over into eAuctions for final terms and price negotiation– More and more of your larger suppliers prefer to do business this way– Improves purchasing control© Schindler | MAN | Alexandre Sayve | Page 19
  19. 19. Benefits of eAuctionConstructing Lot for Maximum Return – Before deciding lot strategy decide on best type of eAuction (i.e. Forward / Reverse, Dutch, Japanese or blind bids? etc.) This is key to a successful event – Identify the core component costs (stationary): – Volume purchase 200 to 300 line items (reverse) – Rest of catalogue start not per item but as % discount off all items in catalogue lot (50%) – (forward) – Credit terms line item– start at 30 days (forward) – Consider supply base i.e. allow regional suppliers to compete with national suppliers by dividing supply requirements up into regions – Even complex requirements such as the Audit can be auctioned as a single line item, provided buyers have very good specifications pre the event – Buyers often still seek to extrapolate key cost components as part of the basket / lot in line item format i.e. cost of printing the annual report …once this is known it is possible to decide if the PS fee to produce this as part of the service represents good value? – Often it is not and the printing can be sourced directly by the buyer (negotiating the cost out of the overall audit fees)© Schindler | MAN | Alexandre Sayve | Page 20
  20. 20. Benefits of eAuctionSteps to running a successful event – PLAN…Not to Plan is to Plan to Fail! – Avoid commodities or services which have significantly escalated in price or that are strategic to your business or are volatile – Keep the auction simple & if it is a first request support – Make sure you have a competitive environment…sufficient value / supply base – Double check everything & agree a strategic game / event plan – Appoint an internal auction lead / event owner – Select a commodity or service where you have a real demand…& award control! – Select something which has at least 3 suppliers capable of bidding competitively – Choose a suitable tool / platform with appropriate event decrements / increment capabilities along with type of event options / functionality – Maximise the appeal of the eAuction to suppliers… the greater the value the better… ensure you have water tight SLA’s if consolidating or amalgamating contracts! – Create a competitive environment / buying options – …increase your negotiation power and the dynamic of competition between your selected suppliers – …provide direct feedback to your suppliers where and how to improve their cost structure – …reduce your negotiation time, effort and cost significantly – …are handled with fairness, guaranteed by supplier trainings and by providing same chance and information to all participants© Schindler | MAN | Alexandre Sayve | Page 21
  21. 21. Benefits of eAuctionSteps to running a successful event – Decide on your other selection criteria & go through an RFP process prior to the auction – Eliminate Suppliers who you would not select for technical, functional or other commercial reasons prior to the price auction. Implement killer Qs – Spend time training your bidding suppliers – Make sure your suppliers are commercially prepared - i.e. they have internal bid support and key position holder for price decrease – Consider advising all suppliers that you may not award the contract to the lowest bidder & may award based on “best overall value proposition” – Make sure you have a technical helpline available to all your bidders / participants – Make sure you have a trained backup to your auction lead…and a contingency in the event of power failure, etc. – Establish a start price and historic price to compare savings driven during the event – Allow Suppliers to increase their bids in a reverse auction – Charge Suppliers to participate to an auction – Allow Suppliers into the auction who you are not prepared to award the contract to – Squeeze more out of the best two suppliers by inviting them in! – Ask too many suppliers to participate! – Bid yourself to encourage a lower price© Schindler | MAN | Alexandre Sayve | Page 22
  22. 22. Steps to a Successful Event… The simple key to success with eAuctions is PREPARATION!© Schindler | MAN | Alexandre Sayve | Page 23
  23. 23. Therefore Plan Your eAuction Strategy Key Decision Points – Which suppliers to invite? – Those who can bid for all vs. some lines (Qualify) – Those who have met all the pre-qualification criteria – How to structure your auction – Single or multiple line / lots – Price or price & attribute weighting? – Careful planning settings, auto extension, bid decrements… – Award criteria – Weighting from pre auction evaluation – Stick to the T & Cs…Use already published approach© Schindler | MAN | Alexandre Sayve | Page 24
  24. 24. Turning Suppliers into eSourcing Champions – Keep suppliers informed of your planned actions be they eTender or eAuction events…No red curtain moment! – Train suppliers – Engage suppliers…ask for feedbacks on the process and areas of improvement – Establish event rules document them and forward them inc. event timings, preview etc. – Establish a lead supplier contact – head honcho! As pricing will go way beyond a Sales Exec. or Account Managers authorisation obtain contact details – Provide potential suppliers with sufficient time to respond / prepare…this differs by product / service / commodity / region & country – Establish an opening bid price preferably prior to the event opening and ask they enter this. – Be prepared for the immediate reaction “We do not participate in eAuctions” ! Especially from the incumbent…Shame because 60% of the time they win – Provide a bidding buddy to cajole / coax / act as an internal reference point for all suppliers in the negotiation – Allow surrogate bidding - subject to conditions – Sell the event to them… but avoid advice on bidding!© Schindler | MAN | Alexandre Sayve | Page 25
  25. 25. After the Event – Remember you will potentially have more losers than winners! Speak to all within 24 /48 hrs – Ask all participants to confirm details / final submission via email in writing – Stick to your notification re award / negotiation decision – event debrief - as published prior to the eAuction – Seek feedback …Ask what they liked? did not like? (learn from the experience) – Keep them warm as you may want to re-engage them next time around! – Key to a successful buyer / supplier relationship is communication…do not be afraid post award to explain at a high level the reason behind the award decision. Take care if using a combination of weighting & price in an event as you may legally have to substantiate weighting or transformational imbalances. These are often subjective and open to scrutiny! – Often eAuctions in particular are cited as being useful only once…NOT SO… they will always extract best price at the time you go to market (if constructed carefully) as suppliers can see what it is they have to do to win your business…so no more sucking teeth or huffing & puffing! – We still need the buyer to determine when is a good time to go to market …remember the technology is simply a tool! Use it wisely!© Schindler | MAN | Alexandre Sayve | Page 26
  26. 26. Common Mistakes! – Poor technology – Insufficient Planning – expertise – Not thorough enough with pre-selection criteria – Did not have buy in – control over order! – Cherry picking – Wanted more off? – Overly complicated event – process – Inappropriate weighting / scoring – Can’t back up transformational bidding – Too many / few suppliers!© Schindler | MAN | Alexandre Sayve | Page 27
  27. 27. Lessons Learned and Results  The Ariba Sourcing solution was successfully rolled out in our 4 main regions as planned: North America, Latin America, Asia Pacific and Europe  Comments and feedbacks from our team were extremely positive Managed a survey under Ariba Sourcing with an average score of 4.2 out of 5  In total 100 buyers and commodity managers were trained and transferred onto the new tool  12 projects already managed around the 4 zones since training including two fully completed  Further training will be required around the world in order to overachieve CHF 690 Mio Sourcing target per year, increase traction and momentum  In addition advanced Sourcing training and tactics including Full TCO approach with cost model transparency to be delivered -> Sourcing 2.0  Planning on developing the template library extensively in order to share knowledge across the region as we have a fragmented organised  Ultimately the goal is to rollout the other modules by 2012-2013 along with a special focus on Spend Visibility first, followed by SPM and CM.© Schindler | MAN | Alexandre Sayve | Page 28
  28. 28. Key to Success  Strong support from Top Management (From CEO to CPO)  Detailed communication plan on project  Implication of Buyers and Category Managers at zone & group level during the preparation and implementation phase to improve processes and create momentum  Strong training program including super admin training of regional coordinators in order to support other buyer locally in case of issues / problems on top of Ariba support  Plan additional training later on to increase traction and increase use of tool and more importantly use of advanced functionalities  Avoid implementing all modules / functionalities at the same time if the organisation is not ready  Creating the perfect system from Day 1 is almost impossible – your process and tool will evolve with time and your user community© Schindler | MAN | Alexandre Sayve | Page 29
  29. 29. B Driving Buyer-Seller Collaboration through E-Sourcing Jacob Larsen Global eProcurement & eSourcing Manager Maersk© 2012 Ariba, Inc. All rights reserved.
  30. 30. Buyer-Seller Collaboration at Maersk31 © 2012 Ariba, Inc. All rights reserved.
  31. 31. Company Overview32 © 2012 Ariba, Inc. All rights reserved.
  32. 32. Organisational Overview33 © 2012 Ariba, Inc. All rights reserved.
  33. 33. Maersk E-Sourcing Program34 © 2012 Ariba, Inc. All rights reserved.
  34. 34. APMM E-Sourcing Strategy35 © 2012 Ariba, Inc. All rights reserved.
  35. 35. Key Take-ways for Buyer-Seller Collaboration in E-Sourcing36 © 2012 Ariba, Inc. All rights reserved.
  36. 36. B Driving Buyer-Seller Collaboration through E-Sourcing Alexa Romera Staples© 2012 Ariba, Inc. All rights reserved.
  37. 37. Q&A Contact info: Sundar Kamakshisundaram: sundar@ariba.com38 © 2012 Ariba, Inc. All rights reserved.
  38. 38. 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**39 © 2012 Ariba, Inc. All rights reserved.