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Efficient Spend Analytics to Drive Sourcing Pipeline and Savings
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  • BMO Financial Group named one of the World’s 50 Safest Banks: April 2012 by Global Finance http://www.gfmag.com/tools/best-banks/11661-worlds-50-safest-banks-april-2012.html#ixzz1oMpqiNjE The World Economic Forum has ranked Canada’s banking system as the most sound in the world, four years in a row.(World Economic Forum, Global Competitiveness Report, 2008, 2009, 2010 & 2011)By 2017, Toronto will surpass London to become the world's financial centre, according to Moody's Analytics. Canada currently employs 320,000 in its banking sector, while London employs 400,000. 
  • BMO operates internationally in major financial markets in Canada, the US and 23 other jurisdictionsBMO Strategic AgendaOur Vision: To be the bank that defines great customer experience.Our StrategyDirect our full energy to the pursuit of our vision.Leadin N. America and maintain a strong and growing presence in select global markets where our customers do business.Leverage the strength and visibility of the BMO brand across every business and customer segment.Compete on value and lasting relationships. We are a relationship bank. Make money make sense: Give our customers confidence by helping them control their spending, grow their savings, borrow smartly and invest wisely.Ensure our strength in risk management is recognized as a defining characteristic of the bank.Our Priorities Drive quality earnings growth across all N. American personal and commercial banking businesses by focusing on industry-leading customer experience and enhancing operating and sales force productivity. Accelerate the growth of our wealth management businesses by helping our broad range of clients meet all their wealth management needs and by continuing to invest in our N. American and global operations. Build deeper client relationships in our capital markets businesses to deliver growth in net income and strong ROE, while maintaining an appropriate risk/return profile. Develop our business in select global markets to grow with our clients, expand our capabilities and reach new customers. Sustain a culture that focuses on customers, high performance and our people.
  • Coding based on Op procerss rather than what was bought – Temp labor, Counting, Contractors, etc.. anther bad exampleToday’s focus on some of the ways we’ve address these challenges and driven beyond savings through better leveraged
  • Pre-transform data prior to up-loading to minimize complexity & QA Use flexible organization reference tableCan realign Business Units as needed to account for organization changesInclude Finance Contacts provide users with a business contactIncorporate both Legal and Operational Org data into ModelLeverage existing in-house taxonomyCross walking custom taxonomy to UNSPSC/Ariba ACT taxonomy created flexibilityTag taxonomy with Addressability: e.g. Addressable, Not Addressable, Out-of-ScopeCreate supplier segmentations (e.g. Critical/Strategic/Preferred and Employee)Concatenate sub-details to increase visibility (e.g. Accounting Codes)Repurpose “Parts” table to capture additional Corp Card detailsCapture information to identify potential payment process improvements (e.g. Invoice workflow dates and payment method)
  • Importance of finding advocates in business & regions to QA data and establishing simple user feedback processesDashboards & ReportingPower in getting “on the same page”Focus on “simple” to drive adoptionLeveraging spend with Market Intelligence to gain insights Parent Child Relationships (e.g. Unleveraged spend & Intercompany allocations)Diversity ReportingUsing both Enriched & Original data (e.g. locations, bankruptcy) to gain risk insightsIdentifying suppliers that should be shifted to P-CardsBalance of Trade: Working with sales to understand customer/supplier relationshipsM&A/Divestment Support: Gained/Lost Spend Leverage AnalysisCompliance & Demand Management: Spend Vis data key to governance programCurrency Exposure: Use original invoice currency to identify risks / opportunitiesSupporting other Corporate InitiativesSocial Responsibility (e.g. Environmental Impact: Carbon Footprint)Tax optimization
  • Interlink enriched supplier spend data with supplier SIM profilesGoal is to have sustainable way to conduct 360 degree supplier reportsPotentially expand enrichment to sales data to better assess Supplier/Customer relationshipsImprove understanding of Payment SystemsSegment GL codes as Capital vs. Expense to better identify spend patternsRefine Account Coding usage with Finance (e.g. Temps, Independent Contractors vs. Consulting)Continue working with AP & T&E systems to improve identification of EmployeesExpand Market Intelligence enrichment to improve Category & Risk Mgmte.g. Tag suppliers with D&B DUNS and LN Dossier Numbers enabling broader enrichmentContinue identifying un-enriched suppliers that need to be grouped under Global ParentsFind ways to better analyze reseller and suppliers with pass-through spendContinue refining classification model through stakeholder relationships (especially in smaller non-English speaking regions and with smaller suppliers)
  • Need to add Speaker’s Notes for Jim’s welcome.

Efficient Spend Analytics to Drive Sourcing Pipeline and Savings Efficient Spend Analytics to Drive Sourcing Pipeline and Savings Presentation Transcript

  • B Efficient Spend Analytics to Drive Sourcing Pipeline and Savings BMO Financial Group Reed Elsevier Dun & Bradstreet© 2012 Ariba, Inc. All rights reserved.
  • Efficient Spend Analytics to Drive Sourcing Pipeline and Savings Clarity of spend is key to the management of any profitable business. Many companies are forced to be reactive due to lack of visibility across their spend dynamics. In this session we will explore different scenarios in which spend visibility became challenged, the root causes for these issues, and the most effective solutions.2 © 2012 Ariba, Inc. All rights reserved.
  • Our Speakers Greg Keeling, MA, MBA, FICB Eric Walsworth, Jim Lawton Senior Manager, Strategic Director, Procurement President and General Planning & Programs & Tools Manager Infrastructure, Procurement & Strategic Sourcing Reed Elsevier D&B Supply Management Solutions BMO Financial Group3 © 2012 Ariba, Inc. All rights reserved.
  • Efficient SpendB Analytics to Drive Sourcing Pipeline and Savings The Spend Trend: Ariba Spend Visibility @ BMO Financial Group Gregory Keeling Sr. Manager, Strategic Planning & Infrastructure Procurement & Strategic Sourcing BMO Financial Group© 2012 Ariba, Inc. All rights reserved.
  • BMO Financial Group Disclaimer BMO Financial Group (BMO) does not make any representation that the results included in this presentation can be expected or obtained in any implementation of any such products and services. The information in this document is provided "as is" without any warranty, either expressed or implied, for your private use only on the understanding that BMO Financial Group does not have any liability to you for providing this information whether or not you rely on it.5 © 2012 Ariba, Inc. All rights reserved.
  • BMO Financial Group • Established in 1817, BMO Financial Group is a highly diversified North American financial services organization. • With total assets of $538 billion as of January 31, 2012 and more than 47,000 employees, BMO serves more than 12 million personal, commercial, corporate and institutional customers in North America and internationally. • We serve Canadian clients through BMO Bank of Montreal®, our personal and commercial banking business, BMO Nesbitt Burns®, one of Canada’s leading wealth management firms, and BMO Capital MarketsTM, our North American investment and corporate banking division. • In the United States, clients are served through BMO Harris Bank, a major U.S. Midwest personal and commercial bank, Harris Private Bank, with wealth management offices across the United States, and BMO Capital MarketsTM.6 © 2012 Ariba, Inc. All rights reserved.
  • BMO’s North American Footprint7 © 2012 Ariba, Inc. All rights reserved.
  • BMO’s History with Ariba 1,500+ Enterprise Users • Sourcing 100 core users (+ growing) 2008 piloted eSourcing with 3 - 4 RFPs 3,300+ Supplier Users 2009 almost 100% RFPs issued via Ariba • Spend Visibility 2009 inaugurated spend analysis, launched with 2008 data for level set Monthly enrichment of accounts payable data • Electronic Invoicing 2011 design, build and launch 2012 deployment: goal 2,100 suppliers, eliminate 150,000 paper invoices 2013 complete deployment • Contract Management 2011 design, build and launch 2012 full deployment and migration of 12,500 contracts8 © 2012 Ariba, Inc. All rights reserved.
  • Ariba Sourcing • Used for all sourcing events, including Opportunities Assessments, RFx and Reverse Auctions • Used for Workload Planning and managing sourcing projects • Unified Sourcing Process template based on methodology; incorporates conditional user tasks and workflows • Approvals integrated into sourcing events • Multiple dashboards for easy-access reporting • Savings Form used to monitor project savings • Leveraging tool for non-Sourcing project management9 © 2012 Ariba, Inc. All rights reserved.
  • Ariba Invoice Pro • Launched late 2011; broad supplier enablement in 2012 • E-Invoicing will:  Reduce number of paper invoices (currently 51% of total)  Reduce number of cheque remittances (currently 59% of total)  Reduce number of supplier inquires regarding payment  Reduce work effort to receive and manage invoices and  Increase cash optimization – payment based on contract terms  Increase savings due to active discount management capability  Increase spend compliance by matching invoices to contracts  Increase visibility into invoice spend prior to data enrichment10 © 2012 Ariba, Inc. All rights reserved.
  • Ariba Contract Management • Migrate contracts from stand-alone legacy system ~12,500 contracts • Next areas of work Contract compliant invoicing (non-PO invoices) Contract authoring Customized templates (contract workspaces from Sourcing events)11 © 2012 Ariba, Inc. All rights reserved.
  • Ariba Spend Visibility @ BMO • Analysis of enterprise supplier and employee spend • Consolidated data combines accounts payable data from all legal entities (7 GLs) through a single UI for efficient analysis • Centralized reporting group manages tool and data • Data Enrichment: Oracle A/P is source of truth for spend data • Top 90%+ of “sourceable” spend is enriched monthly • Utilized for monthly cost management C-Level reporting • Supports Strategic Sourcing decision-making • Provides Sourcing category managers visibility into spend details • Offers detailed reports for group Spend Efficiency Teams12 © 2012 Ariba, Inc. All rights reserved.
  • Spend Analysis Maturity Strategic Sourcing launched November 1996 • 1997 – 2003 (Manual Classification) AP data extracted and manipulated in Excel or Access (50% of spend) Basic information: Supplier Name, GL, Cost Centre and Spend • 2003 – 2008 (Spend Cube – Standard Classification Library) Formalized categorization of spend, only at summary level (not invoice) Required significant MS Access skills to generate reports • 2009 – present (Ariba Spend Visibility) Increased sophistication of reporting and ease of use Enriched spend data, supplier parentage Business rules to focus on “sourceable” spend vs. payments13 © 2012 Ariba, Inc. All rights reserved.
  • BMO Spend Tree • AP data organized into areas of spend, providing insight into 128 categories of products and services at the segment level • Category (5) Subcategory (31) – Segment (128) » Classification (647) • Based on Ariba Classification Taxonomy (ACT) which is based on the UNSPSC (United Nations Standard Products and Services Code) • UNSPSC has many irrelevant categories for us. Some relevant categories are often not semantically convenient; needed to “BMOized”14 © 2012 Ariba, Inc. All rights reserved.
  • Value of Data Enrichment • Invoice line-item data enriched monthly Informed by: supplier, invoice description, GL coding, business rules, ERP commodity code 90%+ of invoice data enriched • Non-sourceable spend not enriched • Supplier parentage enriched using D&B information to provide Ultimate Global Parent • Enrichment provides: Spend in a category # of suppliers in a category # of invoices / supplier • Employee expenses rationalized based on enrichment15 © 2012 Ariba, Inc. All rights reserved.
  • Use of Spend Visibility Data • Dashboards Enterprise spend statistics – Sourceable spend (# of suppliers, invoice spend) – Sourceable employee spend (# of supplies, invoice spend) Spend overview for five main categories + category breakdowns Organizational overview of spend Top 15 Sourceable Suppliers Trending charts Value: # of active and completed projects (by category, by organizational group; project status; estimated/actual savings • Spend Reports Reviewed monthly by Cost Management Committee (CFOs + SVP of Strategic Sourcing) and Spend Efficiency teams16 © 2012 Ariba, Inc. All rights reserved.
  • Spend Visibility Challenges • Inadequate or incomplete or inaccurate data May provide erroneous view of suppliers or spend in a category May be impossible for data to be meaningfully enriched May cause inconsistent enrichment practices May result in inappropriate conclusions • Examples of challenging spend to enrich Value-Added Resellers (understanding the “real” spend) Professional Services (understanding rates and other charges) Telecommunications (specialized solution for wireless spend) Travel (spending categories can be mixed)17 © 2012 Ariba, Inc. All rights reserved.
  • The Future of Spend Analysis • Increased use of electronic invoicing Greater transparency into spend, reducing time to access details and increasing data accuracy Linking POs and e-invoices – Easier tracking of PO status Linking contracts and e-invoices – Reduced reconciliation efforts; more granular analysis of supplier spend • Demand management and supplier rationalization Identification of business area spend outliers Identification of non-compliant spend Identification of spend categories for demand management Identification of categories for supplier rationalization18 © 2012 Ariba, Inc. All rights reserved.
  • B Efficient Spend Analytics to Drive Sourcing Pipeline and Savings Eric Walsworth Reed Elsevier Global Procurement, Director of Programs & Tools© 2012 Ariba, Inc. All rights reserved.
  • Reed Elsevier (“RE”) Leading provider of professional information solutions including Health, Science, Legal, Risk, Business Content, and Tradeshows Customers use our products to enable better decisions, evaluate risk, forge business relationships and gain business insight20 © 2012 Ariba, Inc. All rights reserved
  • • Science & Technology £2.1bn* • Health Sciences • Legal & Professional £1.6bn* • Risk Solutions £0.9bn* • Data Services £0.7bn* • Online marketing solutions • Magazine brands and websites • Trade exhibitions and conferences £0.7bn* * Annual revenues FY 201121 © 2012 Ariba, Inc. All rights reserved
  • Ariba Solutions Deployed • Sourcing Pro Use Discovery to find new suppliers and for quick bids • Contracts Pro Expanding use of DocuSign eSignatures • Supplier Information and Performance Mgmt (SIPM) • Spend Vis Transitioned from another With Diversity Enrichment analytics platform22 © 2012 Ariba, Inc. All rights reserved
  • We Have Typical Spend Vis Challenges Multiple Payment and Account Coding ~20 ERP/Legacy AP, Wire & Corp Card systems Systems covering 50 Division/Country combinations Large Supplier Count with Duplicate 110K+ ERP Suppliers  ~20% fewer Global Parents Names within & across Systems Multiple Languages 9 Languages Organization Structure impacted by Evolving Organization Structures Realignments and M&A/Divestments Adoption & Feedback Challenges Range of Technical/Analytical Skills Supplier data between analytics and other tools not 360ᵒSupplier View Challenges fully synchronized (yet) As spend analytics matures, expectations increase Evolving Stakeholder Demands (this is a good thing!)23 © 2012 Ariba, Inc. All rights reserved
  • Observations and Lessons Learned • Spend Vis Model Design Steps taken to mitigate anticipated challenges • Driving Value Beyond Sourcing Migration to support broader range of initiatives • Looking Forward Driving continuous improvement24 © 2012 Ariba, Inc. All rights reserved
  • Spend Vis Model Design • Leverage integrated spend and supplier enrichment • Pre-transform data prior to up-loading to minimize complexity & QA • Use flexible organization reference table • Leverage existing in-house taxonomy • Create supplier segmentations (e.g. Critical/Strategic/Preferred and Employee) • Concatenate sub-details to increase visibility (e.g. Accounting Codes) • Repurpose “Parts” table to capture additional Corp Card details • Capture data to identify potential payment process improvements (e.g. Invoice workflow dates and payment method)25 © 2012 Ariba, Inc. All rights reserved
  • Driving Value Beyond Sourcing • Dashboards and Reporting: Focus on “simple” to drive adoption • Leveraging spend with Market Intelligence to gain insights • Identifying suppliers that should be shifted to P-Cards • Balance of Trade: Working w/sales to understand customer/supplier relationships • M&A/Divestment Support: Gained/Lost Spend Leverage Analysis • Compliance & Demand Mgmt: Spend Vis data key to governance program • Currency Exposure: Use original invoice currency to identify risks/opportunities • Supporting other Corporate Initiatives26 © 2012 Ariba, Inc. All rights reserved
  • Looking Forward • Interlink enriched supplier spend data with supplier SIM profiles • Improve understanding of Payment Systems • Expand Market Intelligence enrichment to improve Category and Risk Mgmt • Find ways to better analyze reseller and suppliers with pass-through spend • Refine classification model via stakeholder relationships (especially in smaller non-English speaking regions and with smaller suppliers)27 © 2012 Ariba, Inc. All rights reserved
  • Thank You Eric Walsworth Director of Procurement Programs & Tools eric.walsworth@reedelsevier.com28 © 2012 Ariba, Inc. All rights reserved
  • B Efficient Spend Analytics to Drive Sourcing Pipeline and Savings Supplier and Spend Management – Moving Beyond the Numbers Jim Lawton, President, D&B Supply Management Solutions© 2012 Ariba, Inc. All rights reserved.
  • About D&B • D&B (NYSE:DNB) is the worlds leading source of commercial information on businesses, enabling companies to Decide with Confidence® for over 170 years. • The D&B database has information on 206+ million businesses in over 190 countries. • More than100,000 companies rely on D&B to help build strong business relationships with their customers, suppliers and partners. • Supply management-specific data expertise gives the insights companies need for supply chain optimization.30 © 2012 Ariba, Inc. All rights reserved.
  • The New Normal in Supply Management:Expect the Unexpected • Walking the fine line between uncertainty and opportunity • Like we’ve never seen before: Natural disasters, political unrest, economic conditions Increasing need to: – Drive cost effectiveness – Meet shareholder expectations for growth – Combat competitive pressure • Challenge - crafting supply management strategies to survive and thrive at the same time31 © 2012 Ariba, Inc. All rights reserved.
  • To Deal with Constant Change You NeedDeeper Insight into Your Supply Chain • Spend Efficiency Supplier rationalization/Spend analysis Lost cost country sourcing Just in time inventory • Accurate Reporting Internal C-level views Industry standards Regulatory compliance • Proactive Risk Mitigation Supplier improvement programs Accurate forecasts Alternate sources of supply32 © 2012 Ariba, Inc. All rights reserved.
  • Getting Clarity Starts with Asking the Right Questions • How can I get more detailed information on suppliers? • How much am I spending with suppliers at a corporate family level? • How diverse is my supply base? And how can I locate more diverse suppliers? • Where are the greatest risks in my supply chain?33 © 2012 Ariba, Inc. All rights reserved.
  • The First Step Is to Answer: “Who Are My Suppliers?” The Advantage • Supply chain visibility with a consolidated, standardized view of suppliers • Deeper supplier insights, U.S. or foreign, public or private, small or large, to enable data discovery The Results • Manage suppliers in established and emerging markets with more confidence • Quickly find and qualify new suppliers globally • Leverage the learnings most important to you34 © 2012 Ariba, Inc. All rights reserved.
  • Then, Identify Opportunities for CostSavings and Risk Mitigation… The Advantage • Gain broader awareness of suppliers with expanded corporate family views • Identify hidden paths for cost savings and risk exposure management The Results • Strategically leverage full purchasing clout during negotiations • Find sourcing opportunities within existing relationships globally • Mitigate amplified risk exposure across a supplier family35 © 2012 Ariba, Inc. All rights reserved.
  • …and Capitalize on Supplier Diversity to Create Competitive Advantage The Advantage • Benchmark supply base diversity levels and how they meet diversity goals • Create more competitive and dynamic supply options • Seek out and encourage innovation The Results • Comply with corporate, federal, state and Tier 2 reporting requirements • Strengthen customer loyalty and enhance brand image • Drive faster innovation cycles • Realize stronger share price36 © 2012 Ariba, Inc. All rights reserved.
  • Stay Ahead of the Curve By Knowing HowYour Suppliers May Behave Tomorrow The Advantage • Get a sense of potential supply interruption before it can impact the: Bottom line: through stock outs Top line: through idling the manufacturing line Brand: through damage to quality and product availability The Results • Source from financially stable suppliers • Get advance notice to reduce risk and protect supply chain continuity • Deliver consistent, objective treatment of suppliers37 © 2012 Ariba, Inc. All rights reserved.
  • Sustain Your Success Down the Road with These Tips • Establish a single source of truth of supplier information for a 360-view • Apply context to supplier data - Make it actionable • Start analysis with the categories your company cares about most • Instill a cross-functional process including Procurement, Finance, Operations • Approve and manage suppliers with tools and relevant data points connected to your processes • Identify your company’s challenges and create a mitigation plan to address them38 © 2012 Ariba, Inc. All rights reserved.
  • 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.