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How to Get Dynamic with Discounting & Supercharge Your Business Transformation Results
 

How to Get Dynamic with Discounting & Supercharge Your Business Transformation Results

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Procure to Pay automation initiatives bring tremendous returns through the benefits of automation. But by adding Dynamic Discounting you can supercharge your ROI and significantly speed up your time ...

Procure to Pay automation initiatives bring tremendous returns through the benefits of automation. But by adding Dynamic Discounting you can supercharge your ROI and significantly speed up your time to value. Come hear from companies who have reaped these benefits and learn how you can too.

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  • 89% of eligibleinvoices are discounted in some fashion due to the dynamic calculationsRoughly 250 suppliers with spend of $500K and over have been excluded from program due to treasury management considerations

How to Get Dynamic with Discounting & Supercharge Your Business Transformation Results How to Get Dynamic with Discounting & Supercharge Your Business Transformation Results Presentation Transcript

  • How to Get Dynamic with Discounting and Supercharge Your Business Transformation Results Laura Musgrove, Director, Freeport McMoran Rick Gray, Senior Treasury Specialist, American Electric Power Dave Bennett, Sr. Mgr., Working Capital, Ariba March 19, 2014 #AribaLIVE @ariba © 2014 Ariba – an SAP company. All rights reserved.
  • Agenda • • • • 2 Dynamic Discounting Strategies American Electric Power Freeport McMoran Q&A © 2014 Ariba – an SAP company. All rights reserved.
  • David Bennett, Senior Manager – Ariba Financial Solutions DYNAMIC DISCOUNTING STRATEGIES 3 © 2014 Ariba – an SAP company. All rights reserved.
  • Ariba Discount Management Components Ariba Discount Professional™ (Technology) Value Engineering Team (Managed Services) + 4 © 2014 Ariba – an SAP company. All rights reserved. $/€ Savings + DPO Improvement (Outcome) =
  • Supercharge Savings with Ariba Discount Professional™ 1. Capturing missed discounts through Ariba’s smart invoicing approach 2. Rapidly enabling more suppliers to increase the amount of spend under discount 3. 4. Introducing sliding scale dynamic discounts Giving Visibility into Opportunity to right audience and providing Technology to act on it 4 5 © 2014 Ariba – an SAP company. All rights reserved.
  • About Ariba Value Engineering • Trusted Advisor Role Interview key stakeholder: What’s Working and Challenges Recommend solutions/services that address current challenges Prescribe process changes to support efficiencies or prepare for transformation to automation Help identify risks in advance and advise how to mitigate • Success Planning An evaluation that not only pinpoints savings and cash management opportunities that are trapped inside your Procurement and Finance operations, but provides details on how to realize those benefits Savings timeline Integrated supplier flight plans that show size/scope/timing of deployment • Why do companies participate? A personalized readout that shows areas of savings potential and categories of spend that can/should be fully enabled Projected benefits, ROI and how to accelerate time-to-value Clear understanding of what it will take to achieve benefits Minimal investment of time and resources to ensure success 6 © 2014 Ariba – an SAP company. All rights reserved.
  • Ariba Working Capital Managed Services • Spend Analysis and Business Case Development Peer benchmarking and Data Enrichment Supplier Liquidity Analysis Suppliers already participating in early pay programs • Program Design Working Capital/DPO Improvements and/or Early Pay Savings Payment Terms Standardization and Early Pay ACH • Unlimited Supplier Outreach Position customer approved messaging and terms Augments Procurement by working through a different stakeholder: Finance Channel • 7 Lifetime Program Management © 2014 Ariba – an SAP company. All rights reserved.
  • Rick Gray, Treasury Operations, American Electric Power AEP’S WORKING CAPITAL AND DISCOUNT STRATEGY & RESULTS 8 © 2014 Ariba – an SAP company. All rights reserved.
  • AEP Background • American Electric Power (AEP) is one of the largest electric utilities in the United States, delivering electricity to more than five million customers in 11 states. 2012 Revenues were $14.9 Billion, resulting in $1.497 Billion ongoing earnings Approximately 18,500 employees Implemented e-invoicing, e-procurement, Sourcing, Spend Analytics and Discount Pro from Ariba On-Demand 9 © 2014 Ariba – an SAP company. All rights reserved.
  • AEP’s Journey • • AEP was looking for an e-invoicing, P2P solution to reduce invoice discrepancies Ariba Discount Professional was included in the business case Savings through increased early payment discounts were used to help justify the project • AEP contracted for Ariba Discount Professional prior to the existence of Linda’s team at Ariba We received assistance in designing our program and advice on roll out The outreach portion of the managed services was not utilized for our implementation Technical implementation was less than 10% of the entire P2P effort (1.5 FTE, 3 months) and it worked! Our results prior to the managed services was minimal, basically covered the cost of Ariba Discount Professional • Once we engaged the Managed Services, the acceptances and integrations exceeded our goals Approximately 10 times the volume we achieved on our own Managed Services continues to work with us, Reporting results and recommending improvements 10 © 2014 Ariba – an SAP company. All rights reserved.
  • Lessons Learned/Key Insights • Technical Design and Build Integration was not that bad Changes to legacy and error messaging was more challenging • • • • • 11 Need to build a process to onboard suppliers Transacting invoices via Ariba is not required Listen to Managed Services Advice Build a good tracking process during onboarding, there will be payment questions Internal communications need to be repetitive and decisive © 2014 Ariba – an SAP company. All rights reserved.
  • Laura Musgrove, Director, Freeport-McMoRan FREEPORT-MCMORAN’S WORKING CAPITAL AND DISCOUNT STRATEGY & RESULTS 12 © 2014 Ariba – an SAP company. All rights reserved.
  • Freeport-McMoRan’s Journey • Situation prior to Ariba Discount Program was managed by JP Morgan Chase for four years prior to the Ariba conversion We had 123 core suppliers on Chase with little-to-no increases We now have 188 suppliers since 5/2013 with a softer approach 13 © 2014 Ariba – an SAP company. All rights reserved.
  • Freeport-McMoRan’s Journey • Challenges faced Limited time to convert from JP Morgan Chase to Ariba Getting suppliers to change from JP Morgan Chase to Ariba and still maintain discount terms Conflicting cash management strategies due to economic/business conditions 14 © 2014 Ariba – an SAP company. All rights reserved.
  • Freeport-McMoRan’s Journey • Role of Discount Pro and Working Capital Services Utilized Ariba resources to onboard and convert suppliers Implemented Ariba Discount Professional in parallel with other Ariba Network enablement activities • Results/Plans Increased the number of suppliers transacting by 50%, however, discount dollars have not increased at the same rate due to cash management strategy changes at FCX Identify suppliers that Ariba can approach in 2014 to onboard to Ariba Discount Professional 15 © 2014 Ariba – an SAP company. All rights reserved.
  • Freeport-McMoRan’s Journey 13-May 58,589 1363 Disc Savings Disc Inv Count 13-Jun 13-Jul 13-Aug 13-Oct 13-Nov 13-Dec 113,982 13-Sep 79,053 69,160 71,704 115,802 148,515 118,999 1592 1554 2897 2446 3139 3111 3088 160,000 140,000 120,000 100,000 80,000 Disc Savings 60,000 Disc Inv Count 40,000 20,000 0 1-May 16 1-Jun 1-Jul © 2014 Ariba – an SAP company. All rights reserved. 1-Aug 1-Sep 1-Oct 1-Nov 1-Dec
  • Lessons Learned/Key Insights • What worked Having two separate teams within Ariba contact new vs. existing suppliers help grow the program faster Suppliers did better with the one on one attention for every step of the process 17 © 2014 Ariba – an SAP company. All rights reserved.
  • Lessons Learned/Key Insights • What could have gone better ‘Soft’ ask works better than pressure – we had to work with Ariba to refine messaging Interface design and testing should have been more comprehensive Checklist of set up and configuration tasks for converting a supplier needed to be done sooner 18 © 2014 Ariba – an SAP company. All rights reserved.
  • Lessons Learned/Key Insights • Surprises Don’t underestimate the amount of setup and configuration tasks that need to be completed with each supplier for successful transactions • Advice to those in audience considering adding discounting to the mix Internal Treasury Department needs to be involved in the project and should provide initial input/approvals for ‘allowable’ terms that can be selected on the network 19 © 2014 Ariba – an SAP company. All rights reserved.
  • Lessons Learned/Key Insights • Thoughts on role Managed Services played Ariba definitely adds value to the process, but the client still needs to respond to supplier feedback and monitor the program Utilizing a comprehensive tracking tool provided a clearer picture of successes and improvement opportunities – 20 Worked jointly with Ariba Managed services to design the tracking tool © 2014 Ariba – an SAP company. All rights reserved.