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Procurement Evolution - Measures of Success | Ariba LIVE Rome
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Procurement Evolution - Measures of Success | Ariba LIVE Rome

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CRH has been on a journey to use technology, innovation, and collaboration to drive ever-increasing procurement efficiencies. In this session, you'll learn about the company's first steps taken,......

CRH has been on a journey to use technology, innovation, and collaboration to drive ever-increasing procurement efficiencies. In this session, you'll learn about the company's first steps taken, the trials and tribulations they faced, and how those challenges were overcome.

Points of discussion will include selecting and implementing a technology partner; collaboration and support among IT, Supply Chain, and AP; e-procurement evolution; and developing a dashboard the exec board actually likes.

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  • Ariba is stronger north of the equator, Quadrem in the SouthQuadrem is in the south because that’s where the mines were in the worldAriba’s brand is well know in EU + NA, in reverse, Quadrem’s brand is better know than Ariba in LATAM and Africa

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  • 1. #AribaLIVE Procurement Evolution - Measures of Success Paul McCarthy, Procurement Manager, CRH plc April 9, 2014 © 2014 Ariba – an SAP company. All rights reserved. @ariba
  • 2. Agenda • Introduction • CRH Journey • Technology Evolution • Innovation • Measures of Success • Wrap Up © 2014 Ariba – an SAP company. All rights reserved.2
  • 3. CRH Plc Products Products for Construction Solutions Materials Cement & Aggregates Asphalt & Paving Readymix Concrete Distribution General Merchants Specialised Distribution Do-It-Yourself 3
  • 4. CRH Spend 4 11.4 11.9 12.9 13.2 12.6 10.5 11.0 11.5 12.0 12.5 13.0 13.5 2009 2010 2011 2012 2013 Supplier spend accounts for 70% of CRH Sales… …important to leverage benefits of CRH global scale 2009 – 2013 Supplier Spend €bn 2013 Group Sales €18.7bn PBITDA €1.48bn Non Supplier Costs €4.0bn Supplier Spend €12.6bn
  • 5. Agenda • Introduction • CRH Journey • Technology Evolution • Innovation • Measures of Success • Wrap Up © 2014 Ariba – an SAP company. All rights reserved.5
  • 6. CRH Procurement Journey © 2014 Ariba – an SAP company. All rights reserved.6 Europe Materials Pilot in Ireland 2002 1st European Mobile Plant Deal 2007 Group Procurement Team Initiated 2010 2008 US Materials Sourcing Program 2009 EPD NPR Program Rolled Out Ariba Rolled out across CRH 2013 2011 Oldcastle Energy Team Formed 1st Group Transport Team Meeting 2011 2012 ED Procurement Excellence Program Rolled Out
  • 7. Divisional Procurement Structure - EMAT Division-Level Resources 1 Procurement Director 5 Category Experts 1 Analyst Country-Level Resources National Purchasing Co-ordinators Procurement Director Capital Direct Sourcing Alternative Fuels Mobile Plant Transport Analyst Ireland Finland Poland Ukraine Switzerland MHIL Nesher Denizli JOINT VENTURE CONTACTS Netherlands © 2014 Ariba – an SAP company. All rights reserved.7
  • 8. Group Procurement Team  Divisional programs are key to success  Leverage scale… expand the scope of programs  Leverage knowledge… increase expertise on key categories 8 US Products VP Procurement US Distribution VP Procurement US Materials VP Sourcing Europe Materials Procurement Director (Chair) NPR Procurement Manager Products Procurement Director Distribution Procurement Director © 2014 Ariba – an SAP company. All rights reserved.8
  • 9. Strategic Plan for Procurement © 2014 Ariba – an SAP company. All rights reserved.9 Divisions developed their divisional plans o Using self assessment against best in class indicators Procurement teams engaged with management Realistic but stretching objectives… o Each program has different priorities Plans include roadmaps & targets Performance Strategy & Alignment Sourcing Process Procure to Pay Supplier Mgt Capital Talent
  • 10. 5-Year Plan Themes © 2014 Ariba – an SAP company. All rights reserved.10 • Network…..active buying groups across CRH • Process…..professional process • Technology…..group-wide system • Sustainability…..managing risk • Training…..common training programs • Value…..delivering competitive advantage
  • 11. Group-wide Themes 11 Leveraging scale & knowledge GroupInitiatives • Current Initiatives • Mobile Plant • Transport • Pigments • Additives • Global/Direct sourcing • Next Phase….Steel…. Communication • Group Updates • Divisional updates • Knowledge & commodity mgt. • Common KPIs & reporting Policies • Ethical Procurement • Rating Agencies • Sustainable Procurement © 2014 Ariba – an SAP company. All rights reserved.
  • 12. Group-wide Initiatives 12 Enabling Procurement networks across CRH Technology • Spend Visibility • e-Sourcing • Contract Manager • Supplier Manager • P2P Programs • Supporting Divisional Programs • Facilitation • Leveraging Initiatives • Common KPIs Training • Procurement 5 Step Process • Fact Based Negotiation • Business Education • Negotiation skills (GAP) © 2014 Ariba – an SAP company. All rights reserved.
  • 13. Agenda • Introduction • CRH Journey • Technology Evolution • Innovation • Measures of Success • Wrap Up © 2014 Ariba – an SAP company. All rights reserved.13
  • 14. Procurement Technology Review • RFI was sent to 38 vendors • 10 Vendors interviewed in June 2012 & sent an RFP Benefits of integrated solutions outweighed standalone systems • 4 vendors interviewed in August, did proof of concept and second RFP • Ariba was preferred solution so detailed proof of concept and customer visits done © 2014 Ariba – an SAP company. All rights reserved.14
  • 15. Technology Roadmap & Implementation © 2014 Ariba – an SAP company. All rights reserved.15 Spend Oldcastle on PRGX EMAT on Bravo EPD on Zycus Sourcing OMG on Iasta EMAT on Bravo x Contracts OMG on Sharepoint xEPD on Sharepoint Suppliers X US - Sep „13 EMAT - Sep „13 EPD - Jan „14 US - Jun „13 EMAT - Jun „13 EPD - H2 „13 US - Jun „13 EMAT – Jun „13 EPD - 2014 OMG to Ariba in Q3 ‟14 Other Divisions in 2014 / 15
  • 16. Implementation Guiding Principals • Using the tool must be easier than working around it • Focus on the user as well as on “system” & “process” • Well adopted tool is more valuable than tool features Advanced Training Templates, templates, templates Projects for all activities Advanced Support and Governance © 2014 Ariba – an SAP company. All rights reserved.16
  • 17. Ariba Objectives • Top-quality data for opportunity analysis • Use standard procurement process • Efficient sourcing using World class tenders • Common reporting of results • Cross-company contract repository • Knowledge sharing and procurement network © 2014 Ariba – an SAP company. All rights reserved.17
  • 18. Communication & Awareness Dedicated Core Adoption Team Active Super-user network Weekly, Monthly & Quarterly Updates  To users and Executives Regular training calls © 2014 Ariba – an SAP company. All rights reserved.18
  • 19. Agenda • Introduction • CRH Journey • Technology Evolution • Innovation • Measures of Success • Wrap Up © 2014 Ariba – an SAP company. All rights reserved.19
  • 20. Innovation – Mobile Plant © 2014 Ariba – an SAP company. All rights reserved.20
  • 21. Plan – trial 2,000 t UK SRF shipment into Parainen Positives – 1,700 t SRF, dry material, good bales, unloading and debaling Challenges – Quality, extra pre- load testing required SRF Imports to Finland © 2014 Ariba – an SAP company. All rights reserved.21
  • 22. Ethical Procurement • Procurement Ethical code communicated in Sept 2012 • No Direct High risk suppliers identified! • Top 30 suppliers per country to sign off Supplier code of conduct to secure indirect high risk. 22 © 2014 Ariba – an SAP company. All rights reserved.
  • 23. Agenda • Introduction • CRH Journey • Technology Evolution • Innovation • Measures of Success • Wrap Up © 2014 Ariba – an SAP company. All rights reserved.23
  • 24. KPIs & Metrics • Common savings definitions agreed across divisions • Ariba Savings Forms to be used • High Level KPIs: Spend under management Spend in Pipeline Spend under contract Target & Actual Savings © 2014 Ariba – an SAP company. All rights reserved.24
  • 25. Measures of Success - Savings • Targeting additional €90m in 2013 – 2015 © 2014 Ariba – an SAP company. All rights reserved.25
  • 26. Measures of Success – Managed Spend © 2014 Ariba – an SAP company. All rights reserved.26
  • 27. Measures of Success - Ariba • 2011 – 2013 spend from all divisions on Ariba Data Quality Improvement plans in place • # of e-Tenders – currently 20 per month • Sharing Knowledge – 16 knowledge projects, event content being copied across divisions • Standardized metrics – 400 savings forms • Cross Divisional Contract Repository Growing © 2014 Ariba – an SAP company. All rights reserved.27
  • 28. Agenda • Introduction • CRH Journey • Technology Evolution • Innovation • Measures of Success • Wrap Up © 2014 Ariba – an SAP company. All rights reserved.28
  • 29. Wrap-Up • CRH are on a journey towards excellence • Procurement Technology is a key enabler • Innovation in categories and processes is critical • Alignment with business and mandate from executive • Clear and standardized measures of success © 2014 Ariba – an SAP company. All rights reserved.29
  • 30. #AribaLIVE Procurement Evolution - Measures of Success Redouane EL BENNANE, Project Manager, Neopost April 9, 2014 © 2014 Ariba – an SAP company. All rights reserved. @ariba
  • 31. • Neopost purchase status 4-5 • Neopost presentation 3 • Neopost goals 6 • E-Proc benefits Neopost 7 • Challenges and way to achieve 8-9 • New E-Proc landscape 10-11 • Results 12 © 2014 Ariba – an SAP company. All rights reserved.31
  • 32. Neopost (Mail management solutions) in Numbers 18 operating companies 90 countries covered, 800K customers 5500 employees Turnover 2012 : 1 billion € Ebit : 25% of turnover Net income : 15% © 2014 Ariba – an SAP company. All rights reserved.32
  • 33. © 2014 Ariba – an SAP company. All rights reserved.33
  • 34. Project goals : 2011 Non production expenses status ? 100 M€ © 2014 Ariba – an SAP company. All rights reserved.34
  • 35. Project goals : Structuration of purchase modes Supp 1 Supp 2 Supp N Blanket order 1 2 3 4 Contract
  • 36. BuyWISE would improve most of purchase related processes, allowing to make financial, time and quality savings PROCUREM ENT SUPPLIER MANAGEM ENT Benefit description Improvement type Financial Time Quality Increase in coverage rate and consolidation of purchases +++ Improvement of PR / Order / Reception process, + ++ Automatic generation of detailed, standardized and accurate spend analysis reports. ++ ++ Better follow up and sharing of contracts, through end dates alerts and single storage location + ++ Storage and archiving of any supplier information and document ++ + Possibility to generate automatic supplier dashboard +++ ++ © 2014 Ariba – an SAP company. All rights reserved.36
  • 37. Convince Neopost board to have an e-procurement tool Be sure that all Neopost entities are involved Challenges for Group purchasing Dprt © 2014 Ariba – an SAP company. All rights reserved.37
  • 38. - Feasibility study : Conducted with consultant agency - Functional scope - ROI calculation - Involvement of Neopost board members - Steering committee Go/No Go decision - Sponsor requested for the project, „Lobbying‟ - Change management - Communication and training efforts - Definition of processes - Strong project team - Involvement of local project managers : mainly finance profile - IT people - Support administration workload How to achieve this? © 2014 Ariba – an SAP company. All rights reserved.38
  • 39. Today • Automatic:  Approval workflow managed into SAP for Supply Chain • Manual:  Catalogs, workflow • Automatic:  P2R (Purchase to Receive -non production expenses only)  Catalogs  Approval workflow  Contract (pricing term)  SIPM (Supplier Information Performance Management – Production and non production expenses)  Sourcing (Production and non production expenses) Tomorrow Current and future landscape © 2014 Ariba – an SAP company. All rights reserved.39
  • 40. Scope of BuyWISE 1/2• Countries: France Germany UK Holland • Modules: P2R SIPM Sourcing • Catalogs: Catalogs (15 per central/country= 60 internal and external catalogs + and 4 to 5 punch out) • Back end: SAP • Go live: Sept 2012 : UK March 2013 : FR, DE & NL © 2014 Ariba – an SAP company. All rights reserved.40
  • 41. - Change management : - Buy-In and support from leading staff (CEO, CFO, CIO) - Good acceptancy of new processes and workflow by internal customers - Catalogs (standard and generic) quantity : - 85% of spend via catalogs - 70% of initial spend scope now through Ariba - Same way of purchase for all main European companies (workflow, reports) - Shared suppliers contracts and documents (in progress) Results © 2014 Ariba – an SAP company. All rights reserved.41