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Driving Continuous Improvement & Value in Your Spend Management Initiative
Driving Continuous Improvement & Value in Your Spend Management Initiative
Driving Continuous Improvement & Value in Your Spend Management Initiative
Driving Continuous Improvement & Value in Your Spend Management Initiative
Driving Continuous Improvement & Value in Your Spend Management Initiative
Driving Continuous Improvement & Value in Your Spend Management Initiative
Driving Continuous Improvement & Value in Your Spend Management Initiative
Driving Continuous Improvement & Value in Your Spend Management Initiative
Driving Continuous Improvement & Value in Your Spend Management Initiative
Driving Continuous Improvement & Value in Your Spend Management Initiative
Driving Continuous Improvement & Value in Your Spend Management Initiative
Driving Continuous Improvement & Value in Your Spend Management Initiative
Driving Continuous Improvement & Value in Your Spend Management Initiative
Driving Continuous Improvement & Value in Your Spend Management Initiative
Driving Continuous Improvement & Value in Your Spend Management Initiative
Driving Continuous Improvement & Value in Your Spend Management Initiative
Driving Continuous Improvement & Value in Your Spend Management Initiative
Driving Continuous Improvement & Value in Your Spend Management Initiative
Driving Continuous Improvement & Value in Your Spend Management Initiative
Driving Continuous Improvement & Value in Your Spend Management Initiative
Driving Continuous Improvement & Value in Your Spend Management Initiative
Driving Continuous Improvement & Value in Your Spend Management Initiative
Driving Continuous Improvement & Value in Your Spend Management Initiative
Driving Continuous Improvement & Value in Your Spend Management Initiative
Driving Continuous Improvement & Value in Your Spend Management Initiative
Driving Continuous Improvement & Value in Your Spend Management Initiative
Driving Continuous Improvement & Value in Your Spend Management Initiative
Driving Continuous Improvement & Value in Your Spend Management Initiative
Driving Continuous Improvement & Value in Your Spend Management Initiative
Driving Continuous Improvement & Value in Your Spend Management Initiative
Driving Continuous Improvement & Value in Your Spend Management Initiative
Driving Continuous Improvement & Value in Your Spend Management Initiative
Driving Continuous Improvement & Value in Your Spend Management Initiative
Driving Continuous Improvement & Value in Your Spend Management Initiative
Driving Continuous Improvement & Value in Your Spend Management Initiative
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Driving Continuous Improvement & Value in Your Spend Management Initiative

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A wise man once said Spend Management is a journey not a destination. Achieving sustained year-on-year benefits in your spend management initiative calls for a balancing act across multiple fronts – …

A wise man once said Spend Management is a journey not a destination. Achieving sustained year-on-year benefits in your spend management initiative calls for a balancing act across multiple fronts – analytics, sourcing, contracts, suppliers and operational procurement. Your company may have achieved some early returns in sourcing savings or procurement compliance. But how do you keep the momentum going?

In this session, we will explore how a truly integrated source-to-settle process offers a tremendous ROI, with spend analysis driving effective sourcing, well-managed suppliers, and contracts compliantly purchased off of. You’ll learn how a successful journey begins with the vision and a solid business case, and continues through effective deployment of technology and the necessary process change management.

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  • In a recent CFO study, more than half of them are increasing cost savings goalsMany of these target more than 5% savingsYet only 7% of Finance Execs feel Procurement brings good ideas to the table
  • This is further evidenced by statistics that show that Networked Enterprises simply perform better on numerous corporate KPIs. Statistics like 24% Increased revenue, 43% greater market share and 8% higher margins really can’t be disputed in terms of shareholder value, as uncovered by a recent McKinsey report.
  • enterprises see the benefits that the combination of cloud computing, enterprise apps, and community can bring to their business……and they want to take part in the Networked Economy.CFO Magazine study of 200 global finance executives: View using technologies – like the cloud and business networks – to better discover, connect, and collaborate with their customers, suppliers, banks, and other trading partners was a top priority for agility and growth.CIO Magazine study found IT executives prioritizing investments to improve external collaboration.Research series from Harvard Business School points to inter-enterprise collaboration as THE key competitive competence going forward.
  • Transcript

    • 1. Driving Continuous Improvement and Value in Your Spend Management Initiative Speakers • Joe Fox – Ariba, an SAP company • Lionel Jellins – ExxonMobil • Tom Moore – Sears Holdings Corporation • Scott Gray – Mastercard Moderator • Sundar Kamakshisundaram – Ariba, an SAP Company #AribaLIVE @ariba
    • 2. Agenda • • • • 2 Introduction Panel Presentations Key Takeaways Q&A © 2014 Ariba – an SAP company. All rights reserved.
    • 3. The Panel Team Speakers: • Joe Fox – Ariba • Lionel Jellins – ExxonMobil • Tom Moore – Sears Holdings Corporation • Scott Gray - Mastercard Moderator: Sundar Kamakshisundaram 3 © 2014 Ariba – an SAP company. All rights reserved.
    • 4. Driving Continuous Improvement and Value in Your Spend Management Initiative Joe Fox – Vice President Ariba – an SAP Company #AribaLIVE @ariba
    • 5. Top Challenges for Organizations • • • Reduce overhead cost Increase operational agility and flexibility Improve customer service satisfaction Source: Hackett Group - 2013 Procurement Issues Study 5 © 2014 Ariba – an SAP company. All rights reserved.
    • 6. The Reality of Procurement 2013: • • • Pressure on margins Expand complex indirect spend categories spend Focus on risk 2012 2013 Source: Hackett Group - 2013 Procurement Issues Study 6 © 2014 Ariba – an SAP company. All rights reserved.
    • 7. According to CFO Research… 52% of you are focused on improve process efficiency 40% feel it is important to focus on greater collaboration & automation All are top priority for CFOs 7 © 2014 Ariba – an SAP company. All rights reserved. Source: CFO Magazine survey of 263 senior finance executives
    • 8. The Networked Enterprise Collaboration is improving productivity and profits 77% 55% 41% Increased access to knowledge Better information sharing Improved collaboration across silos 24% increased revenue 63% Increased marketing effectiveness “Increasingly companies are embracing collaboration as part of their strategy to grow.” 43% Greater market share 8% Higher margins “Networked enterprises were 50% more likely than their peers to have increased sales, higher profit margins, gain market share, and be a market leader.” *Source: McKinsey on Business Technology, Spring 2011 – “The Rise of the Networked Enterprise” 8 © 2014 Ariba – an SAP company. All rights reserved.
    • 9. Digitized and Intelligent Collaboration Inter-Enterprise Collaboration is the New Competitive Competency “Tighter collaboration with customers, suppliers, and partners, achieved by having a techsavvy supply chain is key to steering through unpredictable economic environment.” “Increasingly companies are embracing collaboration as part of their strategy to grow.” “The underlying benefit of cloud computing is improved collaboration, both within the organization and externally… trading partners benefit from being able to collaborate using a common platform.” 9 © 2014 Ariba – an SAP company. All rights reserved.
    • 10. Spend Management Evolution …from Visibility to Collaboration Last 15 Years Next 15 Years Procurement Management Cross Process/LoB Value Sourcing Management Inter-Enterprise Value Contract Management Innovation Continues B2B Collaboration Invoice Management Process on Mobile Payment Management Commerce Insights Business Network Community Commerce Buyers Save – Sellers Grow – Both Manage Cash 10 © 2014 Ariba – an SAP company. All rights reserved.
    • 11. Specialize and Synchronize and Coordinate 11 © 2014 Ariba – an SAP company. All rights reserved.
    • 12. LoB Collaboration and Coordination …My process helps your process helps my process CPO as the Conductor/Facilitator of Cross Process and Cross LoB & Network Spend Management Value Inventory Processes CPO Contracts Payment Purchasing Payment Receiving LoB’s Legal Supply Chain Procurement Suppliers Accounts Payable Warehousing Treasury Government Buyers Save – Sellers Grow – Both Manage Cash 12 © 2014 Ariba – an SAP company. All rights reserved. Supply Chain Services
    • 13. Cross-Process Value = New Value Creation … Key to a Successful Spend Management Strategy Analyze Spend Source Contracts Procure Identifying Value Process Improvements Price Optimization Upstream Need • Line Level Invoice Paid Data for Sourcing • Supplier Performance Data for Analysis Gives • Contract Pricing for Compliance/Inv Match • Supplier Information for Vendor Master Management 13 © 2014 Ariba – an SAP company. All rights reserved. Invoice Pay Realizing Value Spend Compliance Cash Management Downstream Need • Contract Terms, Pricing and Payment Terms • Supplier Contracted Pricing and Content Gives • Receipt Date, Paid Invoices, Vendor Master • Demand Actuals, Realized Savings, Discounts Collected
    • 14. Driving Continuous Improvement and Value in Your Spend Management Initiative Lionel Jellins – Global IT Ventures and Operations Manager for Procurement ExxonMobil #AribaLIVE @ariba
    • 15. ExxonMobil – an Introduction The world’s largest publicly held oil and gas company $45 billion in earnings Return on average capital employed of 25% 77,000 employees worldwide $40 billion capital and exploration expenditure Source : ExxonMobil Annual Report 2012
    • 16. ExxonMobil – a Global Operator • • • • • Upstream presence in 40 countries Refining or Chemicals manufacturing facilities in 17 countries 100,000 suppliers in 52 countries Global Procurement organisation managing sourcing to payment Over $50 billion annually in procurement-managed spend As of December 2012
    • 17. ExxonMobil – a Procurement Timeline with SAP Most procurement executed at affiliate level 1990 SAP R/3 introduced regionally with Procurement capability Ariba and Ariba Network introduced SAP BW analytics available 2000 SAP Vendor Invoice Management introduced HANA-based advanced analytics MDG for materials and vendors 2010 2020 All ERP systems upgraded to ECC 6.0 Exxon and Mobil merge Increasing: Supplier connectivity, automated approvals and LVPOs, use of purchase orders and 3-way matching
    • 18. Procurement Cycle Field managed Procurement managed
    • 19. Use of Ariba - Some Statistics Pre-commitment Post-commitment  Category Management  T&E and Purchasing Card 100K+ Active Projects  Agreement Management ~20K Active Agreements  Analysis  Reports – Audit Requests eRFX 4K+ Events 2K+ Reverse Auctions Over 75K Users  Ariba Network Connectivity 1,400 Suppliers since 2007 SAP Fax Connectivity Over 200K POs annually  Requisitioning 18 Punch-out Catalogs  Category Procurement  Contract Wizard  eForms
    • 20. Drivers for the Future A shifting technology market impacts Procurement IT choices Influences Impact User Expectations impact client satisfaction Mobility Big Data Analytics will provide new efficiencies will help identify new commercial opportunities Monolithic ERP Systems Cloud Computing devolving into more Cloud and Hub applications can minimize costs and increase functionalities Vendor Consolidation reduces competition / increases costs Government Monitoring Web Security Challenges will address Capital Flight and Tax Avoidance adds risk to Supplier Connectivity Rising cost of Software limits expansion of new technologies
    • 21. Where next… Touch-less Touch-less and Paper-less Transactions Connected Simple Simple and Intuitive User Interfaces Data Transparency Supplier Dependent Fully Integrated and Supplier Connected Systems Broad Market and Transaction Visibility Suppliers manage Supplier Data Lowest Cost Lowest Cost Transactions
    • 22. Driving Continuous Improvement and Value in your Spend Management Initiative Tom Moore – Director of Procurement Sears Holdings Corporation #AribaLIVE @ariba
    • 23. SHC Spend Management Journey • • • • • • • • 23 Goals Business case Plans Issues/Challenges Solutions Change Management Accomplishments Keys to Success © 2014 Ariba – an SAP company. All rights reserved.
    • 24. Sears Holdings Corporation Who we are: • An integrated retailer operating through its subsidiaries Sears Roebuck & Co., Kmart and Lands’ End with almost 2,500 full-line and specialty retail stores in the United States and Canada. • Leading home appliance retailer as well as a leader in tools, lawn and garden, fitness equipment and automotive repair and maintenance • Key proprietary brands include Kenmore, Craftsman and DieHard, with a broad apparel offering, including such well-known labels as Lands' End, the Kardashian Kollection, Jaclyn Smith and Joe Boxer, as well as The Country Living Home Collection, Sofia by Sofia Vergara, Adam Levin and Nicki Manaj Collections • The nation's largest provider of home services, with more than 14 million service and installation calls made annually 24 © 2014 Ariba – an SAP company. All rights reserved.
    • 25. Spend Management Goals Sears Holdings’ goals at the onset of the journey included: • Price Compliance: Source  Contract  PO  Invoice • Policy Compliance: Replace manual processes with automated, rule-based, policy-compliant processes • Improve Analytic Capabilities: Provide analytic tools to foster strategic management of spend 25 © 2014 Ariba – an SAP company. All rights reserved.
    • 26. Business Case Develop a Strong Business case • • • ID and define the end state (best in class) and the benefits of being there ID and define where you are today Quantify the theoretical gap and the financials associated with the gap     • • 26 Keep it simple Use concrete examples Develop the realistic ROI Cut the RIO by a fraction and highlight that you have done so Get financial stakeholder to participate in the development of the business case Update and expand the business case as you go based on what you learn along the way………you’ll need to defend it © 2014 Ariba – an SAP company. All rights reserved.
    • 27. Plans Development and management of multiple plans is essential based on where you currently are relative to process maturity and tool set capabilities • Strategic plan • Master project plan • Multiple detailed sub-project plan complete with task/resources and durations • Continuous tracking and re-planning Have a route picked out but be willing to continuously re-route. You will take wrong turns and some of these will lead to new discoveries. 27 © 2014 Ariba – an SAP company. All rights reserved.
    • 28. Issues/Challenges (aka “opportunities”) Anticipate issues in the following areas: • Business Process – Standardization and reengineering effort depends upon maturity of your organization • Policy – Only develop policies you can enforce – tools allow expansion of policies • Technology – Be honest and assess your points of integration, data cleanliness, technology resources and bandwidth • People – Assemble a team with a mix of:    28 Internal & external Dedicated and part-time Subject matter experts from business as well as solution experts © 2014 Ariba – an SAP company. All rights reserved.
    • 29. Solutions Understand that there are a number of variables which can be altered when searching for solutions to challenges encountered along the way. These variables can be classified into: tools, people, processes, environment. • • • • 29 Develop Alternatives – be open minded and creative in developing alternatives Operate within the theoretical limits of the tool (vs. the published limits) Push the envelope Willingness for continuous improvements © 2014 Ariba – an SAP company. All rights reserved.
    • 30. Change Management Simply stated, Change Management is: Getting people to do what you want them to do! It’s a psychological campaign: • • Teaching – Provide readily available help through teaching (not just training) • 30 Be a master at making change their idea whenever possible… Communication – Demonstrate value and elevate practices while bringing others with you © 2014 Ariba – an SAP company. All rights reserved.
    • 31. Accomplishments • • • • • • • • 31 Category business process standardization across internal organizations Rate Compliance – Compliance to Pricing and Terms Vendor Compliance – Channeling spend to preferred suppliers Change Management – Converting naysayers, turning our biggest skeptics into our leading allies Product & Service Standardization – Channeling spend to specific products and services Maverick Spend – Eliminating the practice and associated risk Policy Compliance – Mechanically controlling to align with, and insure policy compliance Efficiency Gained – Variety of efficiencies were achieved © 2014 Ariba – an SAP company. All rights reserved.
    • 32. Keys to Success • • • • • • • • • • 32 Right-size the team along with having a strong experienced skill-set Know your spend (Analytics) Proactively engage all cross-functional members before beginning (Procurement, Finance/AP, Business/functional organization and IT) Assess the maturity level of the Buying/Sourcing organization Know the level of process standardization across the organization Make the system easy to use while making it hard to use an alternate purchasing route Develop solid business case that is logical and strait forward Create, maintain and manage your plans Be flexible and willing to change the way you (and your organization) are doing things Supplier Enablement – engage Ariba to help © 2014 Ariba – an SAP company. All rights reserved.
    • 33. Driving Continuous Improvement and Value in Your Spend Management Initiative Scott Gray – Senior Director Mastercard #AribaLIVE @ariba
    • 34. Summary - Wrap Up Align Results to Objectives Build Collaborative Relationships and Obtain Executive Sponsorships Be Flexible ACCELERATE SAVINGS, IMPROVE COMPLIANCE & MITIGATE RISK! 34 © 2014 Ariba – an SAP company. All rights reserved.
    • 35. Thank you Q& A Contact information: Sundar Kamakshisundaram Sr. Director – Global Solutions Marketing E: sundar.kamak@sap.com 35 © 2014 Ariba – an SAP company. All rights reserved.

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