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Driving Continuous Improvement & Value in Your Spend Management Initiative | Ariba LIVE Rome

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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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  • 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.
  • Group Procurement has responsibility for Indirect Procurement operations in all markets.Supported by a global Procurement policy.Supply chain Procurement operates inter –market, main GI spend is in UK. Supply chain - 192 contracts + motor networkKey message: commonality of procurement processes and policy across all markets. Differing levels of maturity but progressing towards consistent adoption.
  • Generic segmentation model however important to focus resource on the correct areas.Arcs used to eliminate borderline cases.
  • Slide is somewhat repetition, show for context and how segmentation leads to task frequency and move on.
  • discuss recurrences, start dates, due dates, statusesExplain how we report off of the due date and owner fields
  • Support needed from Ariba reporting improvements, roadmap delivery etc…..
  • Support needed from Ariba reporting improvements, roadmap delivery etc…..
  • Click the schedule icon,  select Full Schedule, select the day your session occurs at the bottom, and search on the session titleYou can also click the speaker icon and search for session speakers to find the sessionClick on the session to bring up detailsYou’ll see 3 tabs on the page, Details, Speakers, and Surveys, as shown on the slideClick on the Surveys tabClick on Breakout Session SurveyRespond to survey and click submit
  • Transcript

    • 1. #AribaLIVE Driving Continuous Improvement and Value in Your Spend Management Initiative @ariba Speakers • Joe Fox – Ariba, an SAP company • Neil Campbell – Aviva
    • 2. Agenda • Introduction • Panel Presentations  Power of Networked Collaboration  Aviva’s Journey to Procurement Excellence and Continuous Improvement • Key Takeaways • Q & A © 2014 Ariba – an SAP company. All rights reserved.2
    • 3. #AribaLIVE Driving Continuous Improvement and Value in Your Spend Management Initiative @ariba Joe Fox – Vice President Ariba – an SAP Company
    • 4. Top Challenges for Organizations © 2014 Ariba – an SAP company. All rights reserved. Source: Hackett Group - 2013 Procurement Issues Study • Reduce overhead cost • Increase operational agility and flexibility • Improve customer service satisfaction 4
    • 5. The Reality of Procurement 2013: © 2014 Ariba – an SAP company. All rights reserved. Source: Hackett Group - 2013 Procurement Issues Study • Pressure on margins • Expand complex indirect categories spend • Focus on risk 2013 2012 5
    • 6. The Networked Enterprise Collaboration is improving productivity and profits 41% Improved collaboration across silos 55% Better information sharing 24% increased revenue 77% Increased access to knowledge 63% Increased marketing effectiveness 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” “Increasingly companies are embracing collaboration as part of their strategy to grow.” © 2014 Ariba – an SAP company. All rights reserved.6
    • 7. © 2014 Ariba – an SAP company. All rights reserved. “Increasingly companies are embracing collaboration as part of their strategy to grow.” Digitized and Intelligent Collaboration Inter-Enterprise Collaboration is the New Competitive Competency “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.” “Tighter collaboration with customers, suppliers, and partners, achieved by having a tech-savvy supply chain is key to steering through unpredictable economic environment.” 7
    • 8. Spend Management Evolution …from Visibility to Collaboration Procurement Management Cross Process/LoB Value Sourcing Management Inter-Enterprise Value Contract Management B2B Collaboration Invoice Management Process on Mobile Payment Management Commerce Insights Business Network Community Commerce Buyers Save – Sellers Grow – Both Manage Cash Innovation Continues Next 15 YearsLast 15 Years © 2014 Ariba – an SAP company. All rights reserved.8
    • 9. Specialize and Synchronize and Coordinate © 2014 Ariba – an SAP company. All rights reserved.9
    • 10. LoB Collaboration and Coordination …My process helps your process helps my process Buyers Save – Sellers Grow – Both Manage Cash CPO as the Conductor/Facilitator of Cross Process and Cross LoB & Network Spend Management Value © 2014 Ariba – an SAP company. All rights reserved. Processes Contracts Receiving LoB’s Purchasing Inventory Suppliers Payment Payment Supply Chain ServicesWarehousing Legal Procurement Accounts Payable Treasury Supply Chain Government CPO 10
    • 11. Cross-Process Value = New Value Creation … Key to a Successful Spend Management Strategy © 2014 Ariba – an SAP company. All rights reserved. Analyze Spend Source Contracts Procure Invoice Pay Identifying Value Realizing Value Price Optimization Cash ManagementProcess Improvements Spend Compliance 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 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 11
    • 12. #AribaLIVE Driving Continuous Improvement and Value in Your Spend Management Initiative @ariba Neil Campbell – Senior Manager Aviva Procurement
    • 13. Presentation title here 00.00.00 page 13 Driving Continuous Improvement and Value in Your Spend Management Initiative The Aviva story Neil Campbell Senior Category Manager, AVIVA Procurement
    • 14. Aviva • Aviva is a life, general and health insurance business and provides asset management services. • We are the largest insurer in the UK and we have strong businesses in selected international markets. • Our products help 34 million customers enjoy the peace of mind that comes from managing the risks of everyday life. • With a 300 year history, insurance is in our DNA. Whether it is our strength in analytics, claims management or distribution, we have world class capabilities • We aim to become the insurer customers would “most recommend” to their friends and family.
    • 15. Aviva Procurement • Group Procurement Indirect 3rd party expenditure Main categories of spend include - I.T hw/sw, Marketing, Consultancy Global annual expenditure £2.2bn. • Supply Chain Procurement Direct expenditure to service insurance claims White goods, motor repair network, trade and legal services, £1.1 bn annual expenditure Diverse Supply Chains and market conditions. Common Procurement processes employed across teams.
    • 16. CATEGORY MANAGEMENT Aviva Procurement Process Framework Procurement Strategy Procurement Operational Management / People / Finance / Planning PLAN PROCURE MANAGE SUPPLY Governance, Monitoring, Quality Assurance, Support, Reporting Customer need Customer need satisfied Aviva vision, mission and values Category Management approach delivered, evidenced and optimised through Ariba
    • 17. CATEGORY MANAGEMENT • Underpinned by Ariba process and task discipline, surveys and Spend Analysis. • Knowledge Project functionality used to drive consistent, repeatable process and provide current document templates. • Utilisation of SIPM module to - Run Market Assessment Surveys - Deliver insight via analytical and compound reports on supplier and project activity direct to custom dashboards. • Multiple additional Knowledge Projects used to partition key information. - Supplier Financial Assessments - Compliance MI - Link from Projects to individual knowledge areas. PLAN PROCURE MANAGE SUPPLY Analyse trends & challenge the business needs Know the marketDefine the commercial strategy
    • 18. …so what does it look like ?
    • 19. …….pre-requisite step • Segmentation happens at outset of Sourcing Activity. • Categorised based on risk metrics and annual expenditure. • Midpoint (£) set to ensure top 80% of spend covered PLUS all Business Critical arrangements. • Classification dictates process and rigour applied during Sourcing. • Additional Supplier Preferencing score applied post contract. • Any supplier classified as A or B forms part of our managed supply and is subject to quarterly compliance review. Supply and Contract segmentation CATEGORY MANAGEMENT PLAN PROCURE MANAGE SUPPLY
    • 20. Sourcing Project created for every Procurement activity. - This step creates functional Book of Work and Savings pipeline. - Procurement can only claim savings from within a Sourcing Project. (Savings D Form) - Different sourcing templates created for new requirements and renewals. Sourcing Events (RFI / RFP / Auction / Surveys) - Auctions mandated in 2014 - suitability matrix and process deployed across Book of Work. - Sourcing Library for current best practice content …….. 5 years of historic re-useable content. - Event Support team and process established - Sourcing Events evaluated in Ariba. (scored, weighted, graded, consensus) CATEGORY MANAGEMENT PLAN PROCURE MANAGE SUPPLY Source in line with commercial strategy Embed spend controls in i-Procurement Meet saving target Underpinned by Supply Market segmentation, Ariba process, event and task discipline. Ariba overview screen customised to allow key information to be recorded.
    • 21. CATEGORY MANAGEMENT PLAN PROCURE MANAGE SUPPLY …….so what does it look like?
    • 22. CATEGORY MANAGEMENT PLAN PROCURE MANAGE SUPPLY Manage supply chain risk Maintain business fit through term Contracts delivering and risks managed Underpinned by Contract segmentation, Supplier Classification, Ariba process, event and task discipline. Key supplier arrangement identified as Managed Supply. Supplier Performance Management Project established for every contract and Supplier relationship. ACW record created for every contract. Surveys and scorecards initiated to track and manage -Supplier and Contract Risk -Customer Satisfaction -KPI and SLA’s
    • 23. …SPM and ACW project structure Managed Supplier Contract Management 1 Contract Management 2 Contract Management 3 SPM Performance Management ACW Contract 1 Contract 2 Contract 3 SPM Projects CATEGORY MANAGEMENT PLAN PROCURE MANAGE SUPPLY
    • 24. • Process framework embedded across all Supply and Contract Classifications. • Rigour and frequency determined by A, B or C rating. • Process driven through Ariba SPM to ensure compliance and collaboration. • Consistent internal approach and Supplier experience on contract management tasks. CATEGORY MANAGEMENT PLAN PROCURE MANAGE SUPPLY …process rigour
    • 25. ARIBA LIVE EXAMPLE APRIL 2014 …so what does it look like? Conditions, Ownership and Templates Contract Classification entered at set-up stage. Additional conditions based on other fields. Individual templates for Supplier and Contract management activity……..now updated for 2014! Supplier Owners clearly defined CATEGORY MANAGEMENT PLAN PROCURE MANAGE SUPPLY
    • 26. ….. so what does it look like? Recurring phases, Tasks, owners, dates CATEGORY MANAGEMENT PLAN PROCURE MANAGE SUPPLY
    • 27. Lessons learned • Lessons learned o Senior sponsorship and mandate is vital. o Learning curve on Ariba software, be prepared to support users. o Process must be agile. Ensure appropriate change mechanisms in place. o Supply arrangements must be classified correctly or resource challenges arise. o Collaboration brings challenge around resource, accountability and capability. o Ownership of tasks and projects needs to be clear.
    • 28. Summary • This is an evolving programme for Aviva, we are now on release 4 of our framework o Increase in consistency, capability, documentation and approach. o Steady increase in compliance to task and activities. o General trend shows reduction in supplier / contract risk. o RFP and Auction volumes increasing, £ benefits being realised. o Continue to refine and embed in UK and other markets.
    • 29. Summary - Wrap Up Align Results to Objectives Build Collaborative Relationships and Obtain Executive Sponsorships Be Flexible ACCELERATE SAVINGS, IMPROVE COMPLIANCE & MITIGATE RISK! © 2014 Ariba – an SAP company. All rights reserved.30
    • 30. Thank you Q A& Contact information: Sundar Kamakshisundaram Sr. Director – Global Solutions Marketing E: sundar.kamak@sap.com
    • 31. Please Complete Session Survey Locate Session 32 Click Surveys Button Select Breakout Survey Rate Session Thank you for joining us © 2014 Ariba – an SAP company. All rights reserved.