Improve Your Bottom Line by IncreasingMRO Spend Under ManagementClaudio PintoSr. Director, Business Development, ThomasNet...
© 2013 Ariba, Inc. All rights reserved.3As many as 3,500 POs, invoices and relateddocuments are generated for every $1 mil...
Agenda• Defining Industrial MRO as a category• Why its worth watching• A look at the Implications, if you don’t keep an ey...
MRO as a Spend Category5Indirect SpendMaterials andconsumables purchasedthat do not become partof produced goods orservice...
Some Common Industrial MROCategories6CleaningHVACElectricalMaterialHandlingJanitorialEnergy/GreenSafetyPackagingPlumbingTo...
It’s Worth Watching…7ONLY50%of MRO parts available…in storerooms and inventory16%Of COGSAttributed to MRO$500KPER DAYCost ...
The Procurement “Pain” with MRO© 2013 Ariba, Inc. All rights reserved.8Receive and Invoice ExceptionsLack of visibility, a...
The Financial “Pain” with MRO© 2013 Ariba, Inc. All rights reserved.9Timing and DiscountsSmall amount of payables under ea...
A Day in the Life…10 © 2013 Ariba, Inc. All rights reserved.
A Day in the Life …revisited© 2012 Ariba, an SAP Company. All rights reserved.11
50%NegotiatedSavingsLeakedThrough non-compliance, penalties andmissed discount opportunities64%Best-in-ClassOrganizations ...
Let’s put this altogether now…13SupplierSupplierSupplierSupplierSupplierSupplierSuppliercXMLEDIEmailCSVHTMLcXMLAS2PaperSup...
How ThomasNet Can Help…Known SuppliersUnknownSuppliersRecommend SuppliersStreamline your current MROsupplier relationships...
ThomasNet’s Solution…• Customized for eachsupplier….• Pricing• Product selection• Compliance adherence• Easy and timelyimp...
Making it happen…the process…STEP 1 – Contact Your Ariba CMO• Your CMO will collaborate with ThomasNet andyou to identify ...
Next Steps1. Complete the response card and leave it with us –we’ll follow up2. Contact your Ariba CEx or Account Executiv...
18 © 2013 Ariba, Inc. All rights reserved.
Questions?© 2013 Ariba, Inc. All rights reserved.
Improve Your Bottom Line by Increasing MRO Spend Under Management
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Improve Your Bottom Line by Increasing MRO Spend Under Management

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MRO can be a messy category; estimates from industry analysts suggest that as many as 3,500 purchase orders, invoices and related documents are generated for every $1 Million in MRO spend. At an estimated average cost of $57 per document, this flurry of activity adds $200,000 in overhead – before factoring in the costs associated with managing an over-sized supplier base. Join Ariba partner ThomasNet to learn how to leverage your existing Ariba investments to capture more MRO as spend-under-management and improve your bottom line through the effective use of supplier catalogs and high quality procurement content.

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  • I’m suggesting using this to reconnect to the abstract and why these folks likely chose to attend the breakout session.This will be designed to fly in with visual emphasize of the #s
  • Speak to the continuum of managing Indirect Spend and moving into the subset of Indirect Spend, Industrial MRO with the ultimately possibility/goal to manage direct spend as well.
  • Steve, you wanted to add other categories
  • Each of these points can fly in and you can briefly speak to them.For a typical manufacturer – MRO is 16% of COGSOnly 50% of MRO parts are found in storerooms, when they are neededThe rest are spot buys – typically outside “standard” processesDrives “squirreling” behavior – undocumented inventory and high cost5% - 25% of MRO spend leakage is due to poor supply chain visibility, controls and complianceThe high cost of down time (Accenture)Broken gasket in a chemical plant may cost $500K per day and create major safety hazardsEach day a mining truck is down may cost the company as much as $1M in lost revenueA down transformer reduces revenue and hurts customer satisfactionOften not considered strategicLarge spend, incomplete accounting roll-upsToo many suppliers, too little product informationMinimal Form-Fit-Function rationalizationFrequently handled at the plant level – not centralizedPoor contract complianceNo purchasing leverageComplex specifications & poor documentationFragmented supply chain – drives maverick spendToo many choicesEnd-user, unapproved favoritesVery high touch, for both Buyers & SuppliersManual processesMultiple conversations
  • This slide can build from top to bottomWe can ask the attendees to raise their hands with some of these…”how many of you can relate to this point of pain”
  • This slide could build from top to bottomWe can ask the attendees to raise their hands with some of these…”how many of you can relate to this point of pain”
  • Opening:So, let’s take a look at a “day-in-the life” to understand the profound difference between using a catalog and not, as a means of driving industrial MRO spend. Imagine you have a machine on the floor that is critical to your manufacturing process. One morning, the operator hears a strange noise coming from the machine and calls the floor engineer. After troubleshooting the machine the engineer determines it’s a cooling fan, located within the Flux Capacitor control cabinet – it needs to be replaced. The machine is old, so after wrestling with it for a while, the fan finally comes out but there are no part numbers to be found. The engineer wanders over to the parts crib, but can’t find anything that looks remotely similar. So – what does he do?Build 1: He goes to the Google Machine to see what he can find. He types in “DC Fan” to see what comes up. The first thing he notices a link that has the words “Bikini” and “Disney has a Disney Fan Club”. This peaks his interest, so surfs over to their web site to do some exploring. After a few minutes (or more) he remembers why he was online and goes back to the original Google web site and sees that a number of links appeared towards the top that look like they might be what he’s looking for. So, for no reason other than its at the top of the list, he clicks the top link.Build 2: A set of various fan types come up, some of which look similar to the one in his hand and some of which don’t. The top photo looks pretty close, so he clicks on that …Build 3: and it shows what seems to be the fan. There isn’t much information – a general summary of that it is, but there are no detailed operational specifications (i.e. input power requirements, fan speed, air flow, mechanical dimensions, mounting information, etc.). It does, however, show a big list of companies eager to sell me one of these fine fans. So – what to do? He has two choices – the first is to click on one of the supplier links and see if he can work with that supplier to figure out what he needs . Or maybe he’ll click on the supplier and use his company credit card to order whatever shows up fist, then he’ll use his hammer to make sure it fits in the machine.Build 4: Or, he will open up the company’s non-catalog procurement application and put in what he knows about the part, hit send and hope the procurement agent that is unfortunate enough to get the Req will know where to buy the part from.
  • Make sure we address procurement content as we discuss this “day in the life…with MRO spend under management” since it segues into that term and value in the next slides
  • And digging a little deeper, Procurement Content ….Drives Contract ComplianceSourced Suppliers, with contracted items and pricingIncreases wallet –share for suppliers, driving better discounts, improved customer service and better all-around relationsDelivers a “Perfect PO”Accurate meta data ensures accurate order placement – reduces manual interventionDrives “touchless” invoices – fewer supplier support callsStreamlines the invoice approval process, enabling better discount captureConsumer-like buying experienceIntuitive and easy to use – ensures accurate selection process
  • You should speak to the value of ThomasNet as the expert in Industrial MRO and how we can not only streamline current suppliers but support buyers’ supply chain engagement and MRO spend under management initiatives with our business intelligence
  • The emphasis for this slide is the “customization” of our solution for each buying organization and their particular set of suppliers. ThomasNet does all of the work and there is not cost to the buying organization….other than some resource engagement at the onset
  • Just to illustrate how the engagement will work with ThomasNet and Ariba CMO teams and emphasize that we’ll do it all and make it happen
  • As we discussed, I will be creating a “lead gen” card that we can put on the seats in the breakout and then I can walk around and collect them etc. I will also be using our flair pins and possibly another hand-out too.
  • Improve Your Bottom Line by Increasing MRO Spend Under Management

    1. 1. Improve Your Bottom Line byIncreasing MRO Spend UnderManagementMRO can be a messy category; estimates from industry analysts suggest that asmany as 3,500 purchase orders, invoices and related documents are generated forevery $1 Million in MRO spend. At an estimated average cost of $57 perdocument, this flurry of activity adds $200,000 in overhead – before factoring in thecosts associated with managing an over-sized supplier base. Join Ariba partnerThomasNet to learn how to leverage your existing Ariba investments to capturemore MRO as spend-under-management and improve your bottom line through theeffective use of supplier catalogs and high quality procurement content.© 2013 Ariba, Inc. All rights reserved.
    2. 2. Improve Your Bottom Line by IncreasingMRO Spend Under ManagementClaudio PintoSr. Director, Business Development, ThomasNetSteve PateukStrategic Alliances & Business Development, Network & Financial Solutions, Ariba© 2013 Ariba, an SAP Company. All rights reserved.
    3. 3. © 2013 Ariba, Inc. All rights reserved.3As many as 3,500 POs, invoices and relateddocuments are generated for every $1 millionin MRO spend…At an estimated average cost of $57 each, thisactivity adds $200,000 in overhead – beforefactoring in the costs associated withmanaging hundreds of “informal” suppliers.
    4. 4. Agenda• Defining Industrial MRO as a category• Why its worth watching• A look at the Implications, if you don’t keep an eye out• “A day in the life …”• The value of it all• Putting it altogether and making it happen• What’s next?4 © 2013 Ariba, Inc. All rights reserved.
    5. 5. MRO as a Spend Category5Indirect SpendMaterials andconsumables purchasedthat do not become partof produced goods orservices that a companydelivers to the market forthe supporting operationsof a business.Indirect Spend – Industrial MROA subset of IndirectSpend, typically materialsthat specifically supportthe manufacturingprocess.Direct SpendDirect materials (rawmaterials, ingredients,standard parts,specialized parts) that gointo the manufacture of afinished good.© 2013 Ariba, Inc. All rights reserved.
    6. 6. Some Common Industrial MROCategories6CleaningHVACElectricalMaterialHandlingJanitorialEnergy/GreenSafetyPackagingPlumbingToolsLighting© 2013 Ariba, Inc. All rights reserved.
    7. 7. It’s Worth Watching…7ONLY50%of MRO parts available…in storerooms and inventory16%Of COGSAttributed to MRO$500KPER DAYCost of a broken gasketin a chemical plantUp to25%Of MRO spend leakage is dueto poor supply chain visibility© 2013 Ariba, Inc. All rights reserved.
    8. 8. The Procurement “Pain” with MRO© 2013 Ariba, Inc. All rights reserved.8Receive and Invoice ExceptionsLack of visibility, auditing and trackingHigh number of exceptions from APto procurementPO Transmit, Confirm and TrackHigh FTE costs doing re-issues &expeditingSupply chain riskRequest and Replenish, Catalog and ContractLack of controls risks compliance Maverick buying
    9. 9. The Financial “Pain” with MRO© 2013 Ariba, Inc. All rights reserved.9Timing and DiscountsSmall amount of payables under earlypay discountsInconsistent payment termsExceptions and ApprovalsAssuring proper approvalsKnowing if non-PO invoice pricesare correctReceipt and CaptureHigh paper entry costs High % of exceptions
    10. 10. A Day in the Life…10 © 2013 Ariba, Inc. All rights reserved.
    11. 11. A Day in the Life …revisited© 2012 Ariba, an SAP Company. All rights reserved.11
    12. 12. 50%NegotiatedSavingsLeakedThrough non-compliance, penalties andmissed discount opportunities64%Best-in-ClassOrganizations capture 64% ofsuppliers, representing 80% ofSpend Under ManagementThe Power of Procurement Content• Consumer-like buying experience• Reduces maverick spend• Drives contract compliance• Improves the spot buying process• Delivers a “Perfect PO”12 © 2013 Ariba, Inc. All rights reserved.
    13. 13. Let’s put this altogether now…13SupplierSupplierSupplierSupplierSupplierSupplierSuppliercXMLEDIEmailCSVHTMLcXMLAS2PaperSupplier SupportDiscount & PayPO & Invoice AutoCatalogs & ContractsPO ManagementInvoicingDiscount & PayCatalog ShoppingComponents• e-commerce Adapter for Ariba• Connectivity with the Ariba Network forPO & Invoice Automation, SMART Invoicing• Procurement content and catalogs, powered byThomasNet’s Marketplace SPEC• Integrated delivery methodology andimplementation services• Ariba software applications a la carte• Supplier enablement and support© 2013 Ariba, Inc. All rights reserved.
    14. 14. How ThomasNet Can Help…Known SuppliersUnknownSuppliersRecommend SuppliersStreamline your current MROsupplier relationships with PunchOutcatalogs to comply with your Aribarealm processes.Identify new suppliers currently beingviewed on Ariba.ThomasNet.com by yourcompany. Contact and PunchOut enablethose that are prioritized.Survey Ariba.ThomasNet.com andconnect you with suppliers in newcategories. Contract and PunchOutenable those that are prioritized.© 2013 Ariba, Inc. All rights reserved.14
    15. 15. ThomasNet’s Solution…• Customized for eachsupplier….• Pricing• Product selection• Compliance adherence• Easy and timelyimplementation forsuppliers• Supplier funded contentdevelopment© 2013 Ariba, Inc. All rights reserved.15
    16. 16. Making it happen…the process…STEP 1 – Contact Your Ariba CMO• Your CMO will collaborate with ThomasNet andyou to identify the MRO suppliers, current or new,that you’d like to get Ariba-ready.STEP 2 – ThomasNet Connects with YourTarget Suppliers on Your Behalf•ThomasNet’s project manager will coordinate withAriba and the supplier to ensure that we gather theappropriate set of products information andcontracted pricing details.•There will be a quality review process between thesupplier and you to ensure the accuracy of theproduct details and pricing.STEP 3 – ThomasNet Gets SupplierCatalogs Ariba-ready•Suppliers’ rich product data is made Ariba-readywith ThomasNet’s Marketplace SPEC technologyfor you to access within your Ariba realm.STEP 4 – ThomasNet EstablishesSupplier Network Connectivity•Your suppliers completed catalog is loaded to yourAriba realm so that you can begin procurementdirectly from their product information.•ThomasNet continues to maintain and update thesuppliers catalogs as required to continue to meetyour specific procurement needs.© 2013 Ariba, Inc. All rights reserved.16
    17. 17. Next Steps1. Complete the response card and leave it with us –we’ll follow up2. Contact your Ariba CEx or Account Executive17 © 2013 Ariba, Inc. All rights reserved.
    18. 18. 18 © 2013 Ariba, Inc. All rights reserved.
    19. 19. Questions?© 2013 Ariba, Inc. All rights reserved.

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