Maximizing Trading Partner Performance and Collaboration in the Networked Economy

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Organizations can no longer afford to be content with focusing on optimizing internal operations (inside-out view). Instead, they need to focus on optimizing the entire value chain (outside-in view) and extend collaboration beyond the four walls.

Participate in this session and discover how best-in-class companies leverage inter-enterprise collaboration as a means to mitigate supply chain risk and drive revenue growth and profitability. You'll hear how leading Ariba customers have built a collaborative sourcing and supplier management program that leverages world-class web-based technology and tools, as well as structured processes, expertise, and a networked community.

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  • Speaking Notes: If procurement is about maximizing the value of supply, then strategic sourcing, as typically applied, addresses only a single element: pricing and TCO. Sourcing can only do so much to tap the true value of strategic relationships, drive innovation and improve supplier capabilities and performance over time. It is true that a strong sourcing process, embedded within a robust category management methodology, should set up the appropriate supplier relationship management (SRM) processes for success, especially surrounding strategic supplier relationships. But once preferred suppliers in a rationalized supply base are put in place, the game shifts toward joint value creation. This demands a collaborative approach that may prove difficult for many procurement organizations, as it requires new skills, processes, tools and organizational support.
  • In the next three years, SRM is predicted to overtake sourcing in overall value contribution (savings from the program as a % of spend).For every $1B in annual spend, top-performing organizations can expect to reduce costs by 2.48% or $24.8M through SRM investments. On average, this adds up to $1.1M in savings per strategic supplier. Top performers are turning to strategic suppliers to bring continuous improvement ideas to the table, leveraging lessons learned from pockets of excellence in areas like IT vendor management.
  • Top SRM performers: have 2.3X fewer strategic suppliers (per $B spend) than peers, enabling them to perform SRM with 37.5% fewer resourcesdedicate over 2.7X more resources to each strategic supplierare more than twice as likely to lead SRM via a single enterprise SRM group and program/processhave effective SRM skills at more than 2X the rate of peersdeveloped best-practice capabilities at 3X the rate of peer organizationsadopt technology much more aggressively than peers in self-service, analytics, etc.
  • Discuss Tab 1.3 of the PIP being the only source to determine what is the appropriate IT methodology for a particular project. Discuss the fact that the determination is not solely based on the number of Effort Hours but includes multiple criteria including:RiskComplexityNew vs. ExistingLevel of effort thresholdsInsist that adherence to the proper methodology class are tracked KPIs.
  • Maximizing Trading Partner Performance and Collaboration in the Networked Economy

    1. 1. Maximizing Trading Partner Performanceand Collaboration in the NetworkedEconomyMay 2013© 2013 Ariba, Inc. All rights reserved.
    2. 2. Agenda• Introduction• Panel Discussion• Key Takeaways• Q & A© 2013 Ariba, Inc. All rights reserved.2
    3. 3. What is Supplier RelationshipManagement (SRM)?Supplier Stratification SRM GovernanceSupplier PerformanceManagementSupplier Developmentand CollaborationHow should supplierrelationships be stratifiedbased on strategicimportance to prioritizeresources and tailormanagement processes?How should supplier-facingstaff be organized andinternal collaboration andsupplier interactions beconducted?How should supplierperformance be managedacross different suppliertypes and strata tomaximize performance?How should capabilities ofexisting suppliers bedeveloped to delivercontinuous improvementand ongoing costreduction?• Supplier StratificationDefinition• Supplier StratificationCriteria• Supplier StratificationProcess• Team Structure andRoles• Ongoing Governance• SRM CompetencyManagement• Function KPIDevelopment• Supplier PerformanceTarget, KPI andScorecard Definition• Ongoing SupplierMeasurement. IncludesCost, Quality, Risk, etc.• Supplier DevelopmentNeeds Definition• Supplier DevelopmentProgram Definition• Ongoing SupplierDevelopment“Key processes, definitions, tools, and roles to drivecoordinated proactive management of suppliers across the business”Transactional SuppliersStrategicEnterprisePartnersStrategic SuppliersCore SuppliersTransactional SuppliersStrategicEnterprisePartnersStrategic SuppliersCore SuppliersTransactional SuppliersStrategicEnterprisePartnersStrategic SuppliersCore SuppliersTransactional SuppliersStrategicEnterprisePartnersStrategic SuppliersCore SuppliersStrategicSuppliersBasic SuppliersCoreSuppliersBasicSuppliersNon-Preferred80%FinancialValue20%FinancialValueStrategicCompany-Wide PartnersStrategicCompany-Wide PartnersOperations Management Team RolesExecutiveManagementTeam RolesBusiness Office RolesRelationshipLeads RolesFinancialPerformanceManagementContractManagementCommunicationsManagementLegal & AuditSupportRelationshipManagement LeadExecutiveSponsorExecutiveSponsorRelationshipManagement LeadRiskManagementPerformanceManagementCustomerSatisfactionManagementEscalationManagementOperationsManagementInitiativeManagementOperations Management Team RolesExecutiveManagementTeam RolesBusiness Office RolesRelationshipLeads RolesFinancialPerformanceManagementContractManagementCommunicationsManagementLegal & AuditSupportRelationshipManagement LeadExecutiveSponsorExecutiveSponsorRelationshipManagement LeadRiskManagementPerformanceManagementCustomerSatisfactionManagementEscalationManagementOperationsManagementInitiativeManagementOperations Management Team RolesExecutiveManagementTeam RolesBusiness Office RolesRelationshipLeads RolesFinancialPerformanceManagementContractManagementCommunicationsManagementLegal & AuditSupportRelationshipManagement LeadExecutiveSponsorExecutiveSponsorRelationshipManagement LeadRiskManagementPerformanceManagementCustomerSatisfactionManagementEscalationManagementOperationsManagementInitiativeManagementSupplier Team MemberOperations Management Team RolesExecutiveManagementTeam RolesBusiness Office RolesRelationshipLeads RolesFinancialPerformanceManagementContractManagementCommunicationsManagementLegal & AuditSupportRelationshipManagement LeadExecutiveSponsorExecutiveSponsorRelationshipManagement LeadRiskManagementPerformanceManagementCustomerSatisfactionManagementEscalationManagementOperationsManagementInitiativeManagementOperations Management Team RolesExecutiveManagementTeam RolesBusiness Office RolesRelationshipLeads RolesFinancialPerformanceManagementContractManagementCommunicationsManagementLegal & AuditSupportRelationshipManagement LeadExecutiveSponsorExecutiveSponsorRelationshipManagement LeadRiskManagementPerformanceManagementCustomerSatisfactionManagementEscalationManagementOperationsManagementInitiativeManagementOperations Management Team RolesExecutiveManagementTeam RolesBusiness Office RolesRelationshipLeads RolesFinancialPerformanceManagementContractManagementCommunicationsManagementLegal & AuditSupportRelationshipManagement LeadExecutiveSponsorExecutiveSponsorRelationshipManagement LeadRiskManagementPerformanceManagementCustomerSatisfactionManagementEscalationManagementOperationsManagementInitiativeManagementRolesOperations Management Team RolesExecutiveManagementTeam RolesBusiness Office RolesRelationshipLeads RolesFinancialPerformanceManagementContractManagementCommunicationsManagementLegal & AuditSupportRelationshipManagement LeadExecutiveSponsorExecutiveSponsorRelationshipManagement LeadRiskManagementPerformanceManagementCustomerSatisfactionManagementEscalationManagementOperationsManagementCompany SupplierCompany SupplierCompany CompanySupplierCompanySupplierCompanySupplierInitiativeManagementCompanySupplierCompanySupplierCompanySupplierCompanySupplierCompanySupplierCompanySupplierSupplierOperations Management Team RolesExecutiveManagementTeam RolesBusiness Office RolesRelationshipLeads RolesFinancialPerformanceManagementContractManagementCommunicationsManagementLegal & AuditSupportRelationshipManagement LeadExecutiveSponsorExecutiveSponsorRelationshipManagement LeadRiskManagementPerformanceManagementCustomerSatisfactionManagementEscalationManagementOperationsManagementCompany SupplierCompany SupplierCompany CompanySupplierCompanySupplierCompanySupplierInitiativeManagementCompanySupplierCompanySupplierCompanySupplierCompanySupplierCompanySupplierCompanySupplierSupplierCompany Team MemberSupplier 1Supplier 3Supplier 2JointJointcapabilitycapabilityinvestmentinvestmentIntellectualIntellectualcapitalcapitalsharingsharing JointJointprocessprocessimprovementimprovementSystems &Systems &processprocessintegrationintegrationMultiMulti--suppliersuppliercollaborationcollaborationCapabilityCapabilityacquisitionacquisitionby supplierby supplier ValueValuecreationcreationopportunityopportunityJointJointcapabilitycapabilityinvestmentinvestmentIntellectualIntellectualcapitalcapitalsharingsharing JointJointprocessprocessimprovementimprovementSystems &Systems &processprocessintegrationintegrationMultiMulti--suppliersuppliercollaborationcollaborationCapabilityCapabilityacquisitionacquisitionby supplierby supplier ValueValuecreationcreationopportunityopportunitySupplier ScorecardFunctional Area / Category:Site:Scorecard Date:Status Definition Supplier Representatives:Good Meets or exceeds performance targetFair Does not meet performance target; acceptable variance; improvement needed Company Representatives:Poor Unacceptable variance from performance targets; action requiredInvalid Invalid percentage data has been entered into the cellKPIKPI Wt. MetricMetricWt.MetricTotalDataSourceScoreRangeAccept-able RangeLastYrLastQtrLastMoTodayOne QtrTrendMetricScoreKPIScoreOn time delivery percentage 50% tbd 0 - 100 ≤ 80 81 - 89 ≥ 90 90 80 85 90 h 9.0Delivery conformance 50% 100% tbd 0 - 100 ≤ 80 81 - 89 ≥ 90 80 78 85 95 h 9.5 9.3Additional available capacity 56% tbd 0 - 100 ≤ 80 80 - 89 ≥ 90 50 75 80 90 h 9.0Financial stress 33% tbd 0 - 60 ≤ 48 49 - 53 ≥ 54 40 54 58 50 i 8.3Credit score 11% 100% tbd 0 - 20 ≤ 16 17 ≥ 18 15 16 17 18 h 9.0 8.8Rejection rate 26% tbd 0 - 100 ≤ 80 81 - 89 ≥ 90 70 75 80 90 h 9.0Weighted non-comformance rate/ CAR26% tbd 0 - 100 ≤ 80 81 - 89 ≥ 90 80 83 85 91 h 9.1Process chage 16% tbd 0 - 60 ≤ 48 49 - 53 ≥ 54 40 45 50 60 h 10.0Audit rating 16% tbd 0 - 60 ≤ 48 49 - 53 ≥ 54 30 35 40 42 h 7.0Auidt response time 16% 100% tbd 0 - 60 ≤ 48 49 - 53 ≥ 54 40 43 45 56 h 9.3 8.9Response to standard request 9% tbd 0 - 100 ≤ 80 81 - 89 ≥ 90 60 70 80 91 h 9.1Response to emergency request 9% tbd 0 - 100 ≤ 80 81 - 89 ≥ 90 90 80 70 60 i 6.0Communication about potentialproblems9% tbd 0 - 100 ≤ 80 81 - 89 ≥ 90 70 75 76 78 h 7.8Flexibility to change 9% tbd 0 - 100 ≤ 80 81 - 89 ≥ 90 80 85 85 91 h 9.1Customer services 9% tbd 0 - 100 ≤ 80 81 - 89 ≥ 90 70 75 80 85 h 8.5Efficiency in providing information 9% tbd 0 - 100 ≤ 80 81 - 89 ≥ 90 90 80 70 60 i 6.0Local support efficiency 9% tbd 0 - 100 ≤ 80 81 - 89 ≥ 90 75 80 85 91 h 9.1Production lead-times 9% tbd 0 - 100 ≤ 80 81 - 89 ≥ 90 90 80 70 60 i 6.0Competitiveness of Productionlead-times9% tbd 0 - 100 ≤ 80 81 - 89 ≥ 90 75 80 85 90 h 9.0Stability of lead-times 9% tbd 0 - 100 ≤ 80 81 - 89 ≥ 90 75 80 80 80 g 8.0Compliance with quoted lead-times9% 100% tbd 0 - 100 ≤ 80 81 - 89 ≥ 90 75 80 85 90 h 9.0 8.0Performance TargetsUnaccept-able RangeTargetKPIs MetricsAssuranceofSupply-DeliveryAssuranceofSupply-Environment/Business15%15%Quality25%Services15%CommentsPerformance TrendSupplier Score(Scale of 1-10)Supplier NameSRM Lead:Account Manager:Supplier Contact:
    4. 4. Defining Supplier Management orAlternately Called “SRM”…© 2013 Ariba, Inc. All rights reserved.4SupplierPortalsVendor MasterManagementRiskManagementDiversity/Green/CorporateResponsibilityRegistration &On-boardingProcessPerformanceManagementSupplierManagementor SRMSupplierDiscovery“Supplier Management” is multi- faceted andtouches many aspects of Business Commerce• Supplier Information Management that unifiesplatform, process and supplier profiles across thecompany and keeps it current, complete and correct.• Highly usable web-based portal for suppliers to registerand manage information collaboratively with customers• Supplier Performance Management capabilitiesincluding Process Workflow and approvals, Surveysand scorecards, flexible role based dashboards andcustomizable reports• A Robust technology platform that seamlesslyintegrates in-context Supplier info such asParentage, Financials, Diversity and Sustainability tomanage and mitigate Supply Risk• A unified Supplier Record merging data and processflows to third party systems and data sources
    5. 5. © 2013 Ariba, Inc. All rights reserved.5Source: Procurement Key Issues Study, The Hackett Group, 2011Strategic Sourcing Is Foundational, but SupplierManagement (SRM) Is Transformational...
    6. 6. The Benefits of CollaborationSource: McKinsey & Company, “The rise of the networkedenterprise, Web 2.0 finds it’s payday.” Survey of 4,394 executives.Spring 2011“ Networked enterprises are 50% more likely tohave increased sales, higher profit margins, gainmarket share, and be a market leader. ”41%improvedcollaborationacrosssilos55%betterinformationsharing24%increasedrevenue77%increasedaccess toknowledge63%increasedmarketingeffectiveness43%greatermarketshare8%highermargins“Increasingly companies areembracing collaboration as partof their strategy to grow.”© 2013 Ariba, Inc. All rights reserved.6
    7. 7. Agenda• Introduction• Panel Discussion• Key Takeaways• Q & A© 2013 Ariba, Inc. All rights reserved.7
    8. 8. The Panel TeamSpeakers: Patrick Connaughton, Hackett Research Somit Mukherjee – DaburRyan Wheelan – Ally Bank John Butkus – Fifth Third Bank© 2013 Ariba, Inc. All rights reserved.8Moderator : Sundar Kamakshisundaram,Sr. Director – Solutions Marketing, Ariba, Inc
    9. 9. © 2011 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.SUPPLIER RELATIONSHIP MANAGEMENTMAXIMIZING TRADING PARTNER PERFORMANCE AND COLLABORATION IN THENETWORKED ECONOMYPatrick ConnaughtonResearch DirectorThe Hackett GroupMay 8th, 2013
    10. 10. © 2011 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.SRM’s evolution aligns closely with procurement’s goals
    11. 11. © 2011 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.The value contribution is clear…
    12. 12. © 2011 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.… with a lot of room left to grow
    13. 13. © 2011 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.What key capabilities are World-class organizations focused on?Top 10 SRM capability gaps between importanceand maturityImportancevs. maturitygap (Rank)SDM component Capability element description1.Information: SupplierperformancemeasurementSophistication of KPIs and SLAs used forsupplier performance management2.Information: SupplierperformancemeasurementExtent of supplier scorecards to driveperformance improvement3. Enabling TechnologyDegree of technology used to enablesupplier management programs andprocesses4.Process: SupplierdevelopmentLevel of continuous performanceimprovement with suppliers5.Governance andOrganizationClarity of performance management roles6. Skills and TalentDegree of skills and training provided toSRM professionals7.Process: SupplierpartneringMaturity of issue-resolution processes withsuppliers8.Information: SupplierperformancemeasurementSophistication of process for establishingsupplier metrics and targets9.Process: Supplierquality and riskMaturity of processes for suppliercertification10.Governance andOrganizationMaturity of SRM rolesSource: The Hackett Group, 2012SRM capability maturity indescending order1 2 3 4Enabling technologyProcess sourcingService placementInformationSkills & talentProcess design (drilldown)Governance &organizationTop Quartile Current Maturity LevelAverage Target Maturity LevelAverage Current Maturity LevelLagging Achieving Exceeding Leading
    14. 14. © 2011 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.The characteristics of top SRM performers…2.11.62.43.03.20.40.51.00.70.9Talent management processes assess current/future skillgaps and develop hiring/training/outsourcing plansOutsourcing, offshoring and COEs support specificprocessesFormal cross-functional teams with clear roles andownership, internal alignment, integrated interface tosuppliersBusiness office/COE centralizes mgmt. of all aspects of thesupplier relationship processA formal account management role for key supplieraccountsPeer group Top performersTop performersaverage 2.53Peer groupaverage 0.77Extent to which practices have been adoptedStrategicSRMSRMstrategy&alignmentScale:0 = Not applied1 = Applied somewhat in a few areas2 = Applied very well in a few areas3 = Applied somewhat across most areas4 = Applied well across most/all areas5 = Going even beyond this practice
    15. 15. © 2011 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.Practical success factors of SRM adoptersOrganization Process Metrics• Strong governance structurewith champions for the programin each area; engagement withinternal audit for programadherence and support.• Understanding the SRMprocess, having a framework; aculture of collaboration in theorganization.• Active support from uppermanagement, internally andexternally.• Regular steering committeereviews.• A mandatory externalaccreditation program aimed atupskilling capabilities.• Vendor risk managementprofiles for key supplierrelationships.• Consistency of SRMapproach, with strategicrelationships effectivelymanaged via use of best-practice tools.• Supplier recognition program,including supplier awards.• Joint strategic suppliertechnology roadmapping.• Use of a scorecards asmeasurement and feedbackmechanisms.• Measuring cost-avoidance.• One-page scorecards.• Clear metrics that are activelymanaged with the contracts.• Supplier scorecards trackperformance and progress ofinitiatives.
    16. 16. © 2011 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.Ultimately, Top Performers are better customers to their key suppliers4%38%46%12%0%20%30%50%1=We are definitelyNOT a customer ofchoice2=Were a goodcustomer in a fewareas3=Were a goodcustomeroverall, but still havea few opportunities4=Were a very goodcustomer, especiallywith criticalsuppliersPeer GroupTop PerformerRelative to your competitors, to what extent do you feel that you area "customer of choice" for suppliers in critical spend categories?
    17. 17. © 2011 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.Contact InformationThe Hackett GroupSuite N5001117 Perimeter Center WestAtlanta, GA 30338Phone: +1 770 225 3600Martin House5 Martin LaneLondon EC4R 0DPPhone: +44 207 398 9100Torhaus WesthafenSpeicherstrasse 5960327 Frankfurt am Main, GermanyPhone: +49 69 900217 08, rue de Port Mahon75002 Paris, FrancePhone: +33 1 53 43 0400Strawinskylaan 3051G, 1077 ZXAmsterdam, The NetherlandsPhone: +31 20 301 2210Patrick ConnaughtonResearch Director, Procurement Research & Advisorypconnaughton@thehackettgroup.com1-888-8HACKETTadvisor@thehackettgroup.comwww.thehackettgroup.com
    18. 18. © 2011 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.www.thehackettgroup.comStatement of Confidentiality and Usage RestrictionsThis document contains trade secrets and other information that is company sensitive, proprietary, and confidential, the disclosure of which would provide a competitiveadvantage to others. As a result, the reproduction, copying, or redistribution of this document or the contents contained herein, in whole or in part, for any purpose is strictlyprohibited without the prior written consent of The Hackett Group.Copyright © 2009 The Hackett Group, Inc. All rights reserved. World Class Defined and Enabled.
    19. 19. 19November [ ], 2011Ryan WheelanAriba Live Conference – May 2013
    20. 20. 20Awards and Recognition• Stevie Awards for Customer Service – 2013• Kiplinger’s Personal Finance (Online Bank “Hit”) – 2012• Money Magazine “Best Banks in America” – 2012• “Best Online Bank,” “Best Savings Account” and “Best One-Year CD”• Ponemon Institute’s 2011 Most Trusted Companies for Retail Banking StudyAlly Financial OverviewAlly Financial is a leading vehicle financial services company poweredby a top online bank franchise. Ally offers a full suite of automotivefinancing products and services, including new and used auto and RVinventory and consumer financing, leasing, inventoryinsurance, commercial loans and vehicle remarketing services. Allyoperates as a bank holding company.
    21. 21. 21Ally Core Values
    22. 22. 22Supplier Management CollaborationSourcingLine ofBusinessSupplierRisk• Product/Service Risk Evaluation• Ongoing SupplierScorecards/Evaluations• Supplier Issue Tracking• Supplier Controls Review• On-site visits• Internal Risk Function Evaluations• Supplier Risk Documents• RFI/RFP Data• Sourcing Deal Data• Supplier Selection• Contract Negotiation• Issue Remediation• SLA Creation
    23. 23. 23Collaboration: Supplier RiskSourcingLine ofBusinessSupplierRisk• SPM Project per Supplier• Contains Phases, Survey, dForms, & linkage to Lineof Business eForms• Supplier Risk Document Storage• Controllable/Auditable• Date/Time Stamps• History TrackingSupplierPerformanceManagementProject• Supplier Controls Review• Ability to send to multiple participants at Supplier viaAriba• Consistent Supplier Responses• Ability to attach Risk DocumentsSurvey• Supplier Risk and Internal Risk Output Data• Product/Service Risk eForm and Survey RiskOutput• Key Participants & DatesdForms
    24. 24. 24Collaboration: SourcingSourcingLine ofBusinessSupplierRisk• Sourcing Project per Deal• Contains Events, dForm, Approvals, & ContractLinkage• Sourcing Deal Documents• Controllable/Auditable, Date/Time Stamps, &History TrackingSourcing Project• RFI/RFP Supplier Responses• Ability to send to multiple Suppliers via Ariba• Consistent Supplier InputEvents• Supplier Deal Data & Approvals• UNSPSC, Cost, Savings, Project/ServiceRisk, Approvers, Supplier Selection, SLAs, etc.dForm• Contract Workspace per Contract• Contains Contract Risk dForm & SourcingProject Linkage• Contracts• Controllable/Auditable, Date/Time Stamps, &History TrackingContractWorkspace(s)• Contract Risk• Template Deviations• Risk ApprovalsdForm
    25. 25. 25Collaboration: Line of BusinessSourcingLine ofBusinessSupplierRisk• Product/Service Risk Evaluation• Automated Workflow• Calculated Fields based on algorithms andscoringeForms• Ongoing Supplier Scorecards/Evaluations• Automated Workflow• Calculated Fields based on algorithms andscoringeForms• Supplier Issue Tracking• Enterprise-wide tracking of Supplier Issues• Ability to categorize as Closed/Open• Broad access and controlsOfflineTool
    26. 26. 26Collaboration: ReportingDataWarehouse:ReportingSupplierRiskLine ofBusinessSourcingReports Driving:• Supplier• RFI/RFP Short List• Supplier Selection• Line of Business• SLA Tracking• Scorecard Management• Risk Level• Project Management, etc.• Scheduled SupplierEvaluations• Certificate ExpirationsInternal Collaboration for ManagingThird-Party Supplier Risk
    27. 27. 27Ally Supplier Management MetricsDataWarehouse:ReportingSupplierRiskLine ofBusinessSourcing•Supplier Risk•Managed Suppliers in Program: 100+•Categories Managed: All•Monthly Scorecards Created: 100+•Sourcing•Sourcing Deals for Suppliers inProgram: 1,500+•Contracts for Suppliers in Program:3,500+•Line of Business•Product Service Risk Evaluations:2,500+•Issue Tracking: 250+
    28. 28. 28 Fifth Third Bank | All Rights ReservedStrategic Sourcing Ariba Process OverviewApril 2013
    29. 29. 29 Fifth Third Bank | All Rights ReservedSourcing Process Integrated with AribaService RiskTierEvaluationSupplierIntegrationSupplierRiskReviewPerformanceMonitoring1) Know the Service and Potential Risk-Calibrate the Correct Due Diligence Required (Ariba)2) Integrate Right Number of Suppliers for Project Bid – Self Registration Ariba-5/33) Correct Level of Risk Review Based on Risk Calibration of Service (Ariba)4) Continual Supplier Performance Monitoring – SLA Scorecard (Ariba)PROCESSES DEIGNED AND EXECUTED IN ARIBA
    30. 30. 30 Fifth Third Bank | All Rights ReservedDisasterRecoveryInitial Filter (SAS)PLCLevel 3AssessmentofRiskTierLevelSourcing PortfolioOfficersSourcingRelationshipPartnersCriticality ofServiceVolume ofDataDataSensitivityRegulatory= Sourcing InitiativesReview and Oversight Tier Levels6: Highest Level5: High-Moderate4: Moderate3: Moderate-Low2: Low 1: LowestLocationService Risk Tier EvaluationService Assessment Survey (SAS) Executed with Ariba SI Workspace
    31. 31. 31 Fifth Third Bank | All Rights ReservedSourcing – Supplier IntegrationProject InitiationOpportunityAssessmentSourcingStrategySupplierRegistration(Ariba)Sourcing EventSupplierOn boardedSupplierPerformanceMonitoringStrategic Sourcing Process CycleEnd
    32. 32. 32 Fifth Third Bank | All Rights ReservedSupplier Risk ReviewIT Risk• Completes IT Risk Review RequirementsOperationalRisk• Operational Requirements are MetHumanResources• H.R. Requirements are CompliantCommunityAffairs• Reviews Diversity/ISO/Green StatusFinance• Strength of Financial Position B/S-P/L-Cash FlowEnterpriseRisk Mgt• Overarching Risk Review CompletedRisk Review Completed for Service Providers using Ariba PM Workspace
    33. 33. 33 Fifth Third Bank | All Rights ReservedSLA Scorecard Performance MonitoringSupplierOn BoardedSLA Scorecard- Created in Ariba- By Service- Line of Business Owner- Review Schedule SetScored onSchedule BasisOngoingCollaborativePerformanceMonitoringSupplier Performance ExcellenceCollaborative MonitoringBest In Class Performance
    34. 34. Dabur. Celebrate Life.Maximizing Trading PartnerPerformance and Collaboration in theNetworked EconomyA Dabur perspectiveSomit MukherjeeHead-ProcurementDabur India LtdMay 2013
    35. 35. Dabur. Celebrate Life.DABUR GROUP – AN INTRODUCTIONLargest Indian Personal &Health care Company –Revenue of over USD 1BnMarket Cap of USD 4 BnWorld Leader in AyurvedaPortfolio of over 400Herbal / Ayurvedic ProductsProfessionally ManagedAwarded for excellence inCorporate GovernanceStrong Internal CompetenciesRobust Manufacturing Set up &State of the Art R&D FacilitiesA Trusted Indian Brand
    36. 36. Dabur. Celebrate Life.AN INDIAN MULTINATIONALORGANISATION WITH GLOBAL SOURCING
    37. 37. Dabur. Celebrate Life.Dabur’s Health & Wellness ProductsNamaste Laboratories Inc. Chicago, IL
    38. 38. Dabur. Celebrate Life.A DIVERSIFIED SOURCING BASE OF 3000+ ITEMS• Global Materials spend of over US $ 450 million• 900 commodities , 3000 item codes• 21 sourcing locations & 700 + vendors• 9 sourcing time-zones globally• 5 Currencies• Std deviation of over 30% in prices
    39. 39. Dabur. Celebrate Life.PriceCostsProfitPriceCostsPriceProfitsProfit CostsWhat business model do you operate on ?• Store brands control price. . Investors expectations control profits.. Mgt has to control costs. . Business environment highly challenging. Calls for end to end collaboration
    40. 40. Dabur. Celebrate Life.PerformanceAnticipatoryChangeReactiveChangeCrisisChangeResources:Substantial Deteriorating MinimalTimeWhen do we change practices ??.....aschange is inevitable
    41. 41. Dabur. Celebrate Life.Networked EnvironmentStrategic Roadmap of SourcingMaverickBuying(Decentralized)CentralizedProcurement,Scale AnalysisE-ProcurementContractManagement,OpportunityIdentificationBenchmarking,SupplierPerformanceCollaborativeSourcingCompetition TimelineWe have a significanthead startDabur Timeline
    42. 42. Dabur. Celebrate Life.COLLABORATION Vs TRADITIONALSOURCING : Improving Trading Partner Performance• Procurement departments have defined budgets and a volatile priceenvironment• Need to expand the scope of high value sourcing activities across a widerrange of spend, categories , business units spread globally• Identification of ‘ripe’ high value categories , spends and partners as part ofEnterprise Risk Management• Unleash Next generation of Value enhancing changes in Sourcing
    43. 43. Dabur. Celebrate Life.COLLABORATIONNEEDS….…..AND LEADS TO…• Improved visibility and understandinginto the true cost of sourcingdecisions and awards• Mitigating the risk of savings leakage& Potential risks (incl. delivery) byenabling a shared visibility into varioussourcing scenario impacts• Providing the sourcing team deeperinsights into the global spendmanagers needs and preferences forfuture planning.• Top Management Commitment• Supplier performancemanagement• Training & Capacity Building• Risk mitigation & productionfocus enhancement byintermediary manufacturing innon core areas• Due diligence in supplierselection , GAP analysis &continuous assessment• Vendor as a partner for PriceRisk Management
    44. 44. Dabur. Celebrate Life.Physical FactualEmotionalLEVERAGES HUMANSENSIBILITIES BETTER• Real Worldly– Efficient & Journey oriented– Effective & more likely tosustain– Focus on maximisingBusiness potential• Traditional– Competitive– Effective but oftenmistrusting
    45. 45. Dabur. Celebrate Life.An independent agency forprice assessment anddiscoveryIndependent priceassessment is done toenhance transparency inpricing for all stakeholders.The means to offsetprice risk for all playersis provided.The means of pricediscovery mechanismthrough efficient papermarkets (Exchanges andOTC) to be provided.Farmers/Vendors/Suppliers•Focus on improving yield .• Invest in cultivation withassured return and financeat early stages.DABUR/CP Co.• Provide long term, fixed priceand /or guarantee contracts totrade partners.• Develop supply chain.• Provide financial institutionwith quality assurance.• Invest in stakeholder education.Financial Institution• Provide finance against long term contractsand infrastructure development.. Provide finance against commodity warehouse.DABUR/CP Co.Invest in branding/marketing tocreate genuine structuremargins.ProcessorsEngage in contractmanufacturing with theassurance of structuredmarketRESOURCE CONNECTIVITY & PERFORMANCE
    46. 46. Dabur. Celebrate Life.BENEFITS REALIZED BY ACTIVE PARTNER(S)COLLABORATIONCycle TimeReductionMore Timefor StrategicInputsImprovedBottom-lineProcessComplianceMarketTransparency• Significant reduction in data collectionefforts and cycle time• More time for high value activitiessuch as spend analysis, strategyselection, and award optimization• Helped shave off significant time fromthe traditional offline negotiationprocess• Helped the organization save bid-to-award lead time• Significant reduction in cost due todynamic bidding process• Average savings of 5 – 15%, dependingon category type and other governingfactors• Increased transparency• Objective and documentedsupplier selection• Helped to derive the true and bestmarket price of the auctioned items.• Enabled buyers to know and achievethe best market priceSourcingCollaboration
    47. 47. Dabur. Celebrate Life.AT DABUR……LIVE EXAMPLES OF THE TRADE PARTNERCOLLABORATION Participate in Infrastructure : Logistics Rigid Polymer containers : Packaging Herbs Sourcing : Raw Material Protection & Sustainability Honey Sourcing : Expansion of Supply Fruit Pulp Procurement : Managing the External Supply Chain
    48. 48. Dabur. Celebrate Life.49LOGISTICS : SCOPE OF COLLABORATION•3rd party collaboration in Logistics to maximise value forFarmers, Processors and Buyers
    49. 49. Dabur. Celebrate Life.RIGID PACKAGING SOURCINGTechnology provider, Manufacturer, Raw Material processor and Buyer working insynergy to combat inflation
    50. 50. Dabur. Celebrate Life.SUSTAINABLE HERBS SOURCING•Production of planting material•Sale to farmers at cost•Agreements with other inputproviders•Buy back arrangements•E-auctions for regularprocurement•Now, due to our everyday e-procurement, there is a need foran Ariba mobile APP
    51. 51. Dabur. Celebrate Life.HONEY PROCUREMENT2. Overhaul of Buying strategy of Honey :- From Competitive Buying to Collaborative Buying3. Advantageous Position :-- Company “collaborates with Vendor “ to arrive at the best negotiated rate- Negotiations still on , However Vendor COGM +Margin is the basis for negotiationsinstead of a flat market price being trust on vendors- “Correct Identification “ of best market price - crucial for an agricultural item with aunstructured market.1. Traditional model of Procurement :-- Fierce Competition amongst vendors ,followed by intensive negotiations to arrive at thebest possible market rateOver a period of time – inherent flaws inthe system crept up :- quality, shrinking of vendordata base, etc.
    52. 52. Dabur. Celebrate Life.FRUIT PULP PROCUREMENTFruit stocking & ripening Washing of FruitsThermal treatmentCrushing & DestoningHomogenization Pasteurisation Packaging•Primary producers of a commodity, processors, logistics providers andbuyer networking in a perishable high value product
    53. 53. Dabur. Celebrate Life.Knowledge drivensourcingSustainableBusinessEco-systemHedge ifrequired w.r.tportfolioadjustedbudgeted pricesMark toMarket/Mark toTarget/Use VARconcepts withsuitablesoftwareEnsure continuity of successesand reduce/revisit failureTRUE COST/PRICEDISCOVERYOperationalize Sourcing Decisions/Collaborateon market intelligence/forecasts and Valueadd techniquesAnalyze spends and ‘Focus’ on objectivesProcurementoptimisation/Price DecisionPerformance/Risk monitoringPartnering/Hedging costsSystematizingEfficienciesTarget settingBudgetingMAXIMISING TRADING PERFORMANCEGrowth&stability
    54. 54. Dabur. Celebrate Life.ACTIVE COLLABORATION FOR SUPERIOR TRADINGPERFORMANCE IN A NETWORKED WORLD
    55. 55. Dabur. Celebrate Life.THANK YOU….
    56. 56. © 2013 Ariba, Inc. All rights reserved.Summary and Key Take-aways
    57. 57. 58To maximize Trading Partner Performance . . .58• Solidify sponsorship of internal champions and executives• Design a collaborative relationship methodology to improvesupplier management• Determine Supplier Segmentation Model (i.e.strategic, key, transactional)• Pilot specific categories and/or supplier tiers• Use technology as an enabler to understand supplierperformance and riskManage all aspects of supplier information and performance on a singleintegrated technology platformGain complete visibility into supplier information, performance, and riskProvide suppliers a single web-based portal to share information to manybuying organizations• Measure the success of the SRM methodology and plan forcontinuous improvement© 2013 Ariba, Inc. All rights reserved.
    58. 58. Q&AContact info:Sundar Kamakshisundaram: sundar@ariba.com© 2013 Ariba, Inc. All rights reserved.59
    59. 59. Please Complete Session SurveyGo to Surveys© 2013 Ariba, Inc. All rights reserved.60Select SessionClickChoose oneRate SessionThank you for joining us
    60. 60. The Hackett Group Procurement Benchmark-2011Backup slide 12.222.501.672.202.562.382.402.602.803.003.800.320.560.480.810.960.680.381.350.321.351.85Supplier development resources (e.g., Lean/six sigma experts) help suppliers improveperformance and capabilitiesDetailed supplier capability studies and open-book costing techniques used for mutuallybeneficial improvement opportunitiesGainsharing established so suppliers share in realized SRM benefitsRelevant suppliers measured on submitting improvement ideas; process in place toassess and provide timely feedback on proposalsSupplier conferences for best-practices sharing, supplier recognition, supplier feedbacketc.Formal assessment and nurturing of ongoing strategic relationships(e.g., communications, conflict resolution)A "voice of the supplier" feedback process used (e.g., supplier surveys, reversescorecards, etc.); process in place to respond to supplier feedbackIssue resolution via clear escalation/resolution process; preventive processimprovements focused on relationship healthConcise SRM strategies and 1/3/5-year plans developed for strategic suppliersSLAs periodically reviewed to ensure relevancy and minimize bureaucracy; metricslinked to business outcomesPeriodic supplier performance reviews for contract compliance and to identifyimprovement opportunities (e.g., risk reduction)Peer group Top performersTop performersaverage 2.56Peer groupaverage 0.82Extent to which practices have been implementedCapabilitymgmt.CollaborationmanagementRelationshiphealthmgmt.PerformancemanagementScale:0 = Not applied1 = Applied somewhat in a few areas2 = Applied very well in a few areas3 = Applied somewhat across most areas4 = Applied well across most/all areas5 = Going even beyond this practice
    61. 61. 64%52%64%52%49%41%21%21%Some type of supplier management process incl. outside ofprocurement - Direct spendSome type of supplier management process incl. outside ofprocurement - Indirect spendEnterprise-wide SRM program/process - Direct spendEnterprise-wide SRM program/process - Indirect spendPeer group Top performersBackup slide 2Percent of companiesHarder(but better)Easier
    62. 62. The Hackett Group Procurement Benchmark-2011Backup slide 31.71.91.32.21.62.12.11.72.21.72.121.91.82.22.42.22.12.42.11.82.61.822.21.61.61.822.22.12.22.12.31.20.91.41.11.211.21.31.11.2111.20.70.60.911.20.91.110.71.11.21.11111.111.211.10.8Extent to which supplier portals are usedDegree of external system integration with suppliers for day-to-day operationsDegree of technology used to enable supplier management programs and processesLevel of skills on SRM teamDegree of skills and training provided to SRM professionalsMaturity of SRM rolesMaturity of supplier capability assessmentsMaturity of issue resolution processes with suppliersMaturity of supplier risk managementMaturity of processes for supplier certificationLevel of support given to suppliersLevel of supplier enablement and capability buildingLevel of continuous performance improvement with suppliersMaturity of supplier partnering structuresLevel of collaborative activities with suppliersLevel of supplier collaborationMaturity of process for supplier to provide feedback to buying organizationMaturity in setting joint objectives with suppliersFocus of influence on suppliersDegree of risk and reward-sharing with suppliersExtent to which supplier stratification practices are usedLevel of value measurement with suppliersExtent of supplier scorecards to drive performance improvementSophistication of KPIs and SLAs used for supplier performance managementSophistication of establishing supplier metrics and targetsMaturity of service placement strategyMaturity of business process sourcing strategyClarity of performance management rolesMaturity of organizational structure to support SRMLevel of executive support for SRM programLevel of focus on supplier innovation outside of new-offering developmentDegree that SRM is tied into strategic sourcing activitiesDegree of collaboration with stakeholdersScope of SRM programCurrent Maturity Level (average score) Gap to Target Maturity LevelSource: Hackett Procurement Capability Maturity Model (SRM section), 2012Strategy &alignmentOrganizationPerformancemanagementProcess:AlignmentProcess:Partnering &developmentProcess:Risk/qualitySkills & talentEnablingtechnologyLagging Achieving Exceeding Leading1 2 3 4

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