Seven Habits of Highly Successful Procure-to-Pay Programs

Session Abstract With economic uncertainty lingering, Procure-to-Pay (P2P) performance has risen up the corporate agenda. Yet, many P2P programs stall due to an incomplete vision, poor adoption, and lackluster supplier enablement. Successful leaders have come to understand P2P is more than just a shopping cart. The most successful P2P programs maximize spend under management, drive company-wide compliance, and are embraced by supplier partners. This session explores how some of the industrys most successful P2P programs have driven widespread adoption, compliance, and superior results.2 © 2012 Ariba, Inc. All rights reserved.

Speakers - Dollar Tree, Inc.• Natasha Pendell Natasha Pendell is a graduate of Michigan State University with a degree in Supply Chain Management and has over ten years of experience in procurement and sourcing management. She gained priceless experience by working at Whirlpool, Medtronic, Compass Minerals and now Dollar Tree. In her current role as Strategic Sourcing Manager, Natasha’s P2P duties include supplier enablement and catalog management.• Howard Tant Howard Tant has a background in corporate Financial Planning & Analysis with several industries including retail, education and telecommunications. His current role is Procurement Operations Manager & P2P Administrator for Dollar Tree where he oversees all aspects of system performance including adoption, procurement process, training and reporting.3 © 2012 Ariba, Inc. All rights reserved.

Speaker – Corinthian David Beaver• 25 Years of Experience – in various supply chain disciplines – Procurement and Sourcing, Logistics Management, Industrial Engineering, Production Management, Management Consulting and IT Systems Implementation and Integration• Vice President, Procurement, Sourcing and Travel – Corinthian Colleges Responsible for the procurement and sourcing activities across a spend base of approximately $500M. Key commodities include Textbooks and Student Supplies, Bookstore Operations, Furniture and Fixtures, Promotional Items and Print, IT Hardware, Software and Consumables, Office Equipment and Supplies, Air, Hotel and Car.• Vice President, Procurement, Sourcing and Travel – Live Nation Responsible for the procurement, sourcing and travel activities at the largest live entertainment company in the world. Key commodities managed include utilities, food and beverage, staging and lighting, freight and shipping, merchandise, ATMs, event cleaning, security and staffing.• Executive Director, Procurement, Sony Pictures Entertainment Responsible for managing a wide range of commodities including facilities, architectural services, real estate, furniture, carpet, warehousing, utilities and janitorial services.• Management Consultant, Price Waterhouse Coopers Responsible for managing and implementing numerous procurement transformation projects across multiple industries including large entertainment, utility and consumer product companies.4 © 2012 Ariba, Inc. All rights reserved.

Speaker - Synovus • Kevin P. Gowen serves as Chief Procurement Officer and Group Executive, Procurement and Corporate Real Estate for Synovus Financial Corp. After 17 years with IBM, Gowen joined Synovus in 1996 and has served in various operational and leadership roles in technology and procurement. In 2008, he was named to the position of Senior Director of Procurement. He is responsible for Procurement and Facilities Management of all property owned and occupied by Synovus. Gowen holds both Master of Science and Bachelor of Science degrees in Mechanical Engineering from Georgia Institute of Technology.5 © 2012 Ariba, Inc. All rights reserved.

Seven Habits ofB Highly Successful Procure-to-Pay Programs Natasha Pendell Strategic Sourcing Manager Dollar Tree, Inc. Howard Tant Procurement Operations Manager Dollar Tree, Inc.© 2012 Ariba, Inc. All rights reserved.

Company Info Dollar Tree, Inc. (NASDAQ: DLTR) • Leading operator of discount variety stores selling everything for $1 or less • Headquartered in Chesapeake, Virginia • Sales $6.6 billion (FY11) • 4,351 stores (FY11) • No price increases to our customers in 25 years for Dollar Tree stores!7 © 2012 Ariba, Inc. All rights reserved.

Business Background • Problems Faced (Indirect purchasing) Lack of up-front standardized approvals Paper invoices Line item spend difficult to obtain Manual contract compliance (no catalogs) • Business Case Evaluated several companies Ariba sourcing customer since 2004 Dynamic Discounting ROI8 © 2012 Ariba, Inc. All rights reserved.

Business Background • People Involved Executive sponsorship – COO Cross-functional implementation team – 40 total – 15 core Department Power users – 25 assisting with: – Change management and adoption – Training, troubleshooting9 © 2012 Ariba, Inc. All rights reserved.

The Story • Project Kickoff – Jan. 2010 • Development – Spring/Summer 2010 • Supplier Enablement/Catalogs – Summer 2010 • Testing – Fall 2010 • First Transaction – Dec. 15, 2010 • Pilot – Dec. 2010/Jan. 2011 • Go-Live Feb. 2011, phased rollout10 © 2012 Ariba, Inc. All rights reserved.

Seven Habits of Highly Successful P2P Programs 1. Change Management (Adoption) 2. Implementation and Support Team 3. Training and Communication Plan 4. Spend Analysis 5. Department Feedback 6. Supplier Enablement 7. Early Payments/Dynamic Discounting11 © 2012 Ariba, Inc. All rights reserved.

Results • Statistics Suppliers – 1st 12 months – 500 active relationships (150 new suppliers through PO quick enablement) Internal Users – 250 throughout nine divisions POs – 1st 12 months – 25,000 Invoices – 1st 12 months – 35,000 Discounting – Standing and dynamic plans/Discount Pro12 © 2012 Ariba, Inc. All rights reserved.

• Corinthian Colleges (CCi) is one of the largest career college, post- secondary education companies in the United States and Canada, with more than 102,000 students. • The company operates 105 schools in 25 states and 17 schools in Canada. • CCi serves the large and growing segment of the population seeking to acquire career-oriented education. • Our company was founded in 1995 and we completed an initial public offering in 1999. As of Feb 2012, we had approximately 15,000 employees in North America, including 6,600 full-time and part-time faculty members. • Our mission is to help students prepare for careers that are in demand or advance in their chosen field.15 © 2012 Ariba, Inc. All rights reserved.

Practical Approach for “Internally Selling” an E-Procurement Project • Explaining e-procurement to non-procurement professionals – What is e-procurement? • What is the Business Problem we are trying to solve? • What is the financial benefit for taking on such a project? • How much of our spend can we target for improvement? (suitability) • How long will this take? • How long will this project take and when will we realize the benefits?16 © 2012 Ariba, Inc. All rights reserved.

E-Procurement Will Help Us More Efficiently and Effectively Order Goods and Services • E-procurement is a tool to help staff order goods and services – Incorporates catalogs of products or lists of approved suppliers – Automates approvals – Sends orders to suppliers electronically – Facilitates paying suppliers electronically – Provides transaction data for A/P – Provides spend data for Strategic Sourcing – Provides supplier and usage Data for Control Our project is focused on Submit improving this part of the Obtain Pay Invoice P2P process Business Supplier Needs Receive Strategic Catalog or Approved Fulfill Supplier List Monitor and Order Sourcing Control RFP & Order Negotiate Product Negotiate Select online (if Suppliers needed) Get Approvals17 © 2012 Ariba, Inc. All rights reserved.

What Is the Business Problem We Are Trying to Solve? • More Organized Buying Single point of entry for all buying activity Aggregates all of our catalogs and vendors into one process • Easy to Use (amazon.com experience) • Reduced Time Spent Negotiating with Vendors Pre-negotiated content New and non-catalog purchases are routed to Procurement for assistance • Automates CER Process (ready in May) • Budget Checks (Phase 2) • Automates Approvals (approve via email, i-phone, blackberry) • Improved visibility into purchases due to approval being required before the order is placed • Allow campus employees to focus on students and not vendors18 © 2012 Ariba, Inc. All rights reserved.

What Is the Financial Benefit of Solving This Problem? Soft Savings/ Better Compliance Efficiencies • User compliance with Contracts• Enforcement of other policies • User compliance with preferred suppliers• Less spending because of visibility • Demand management• Simplified product search• Simplified invoice + PO matching More Discounts• Automated PO transmission• Continuous Improvement eProcurement • Captured rebates Savings • Early Payment discounts Intangible Savings ($5M - $8M) • Dynamic Discount capture• Real-time visibility into spend Stricter Approvals commitments• Real-time management of GL • Fewer unnecessary purchases accounts • Reduced buying of “luxury” products• Enhanced detection of fraud and services Better Sourcing Reduced Errors• Strengthened negotiation position • Errors in transmission due to demonstrable compliance • Errors in pricing • Errors in invoicing/matching19 © 2012 Ariba, Inc. All rights reserved.

Better Compliance in More Detail • Sourcing savings are jeopardized by “Rogue Spending”, where staff buys goods/services from unapproved suppliers • Level of rogue spending varies greatly depending on culture, tools, and policies - up to 52 percent in some companies Why Staff Engage in Rogue Spending How eProcurement Reduces Rogue Spending More comfortable with other suppliers  Tool encourages use of preferred supplier but has mechanism for using other suppliers with appropriate approvals Lack knowledge regarding preferred  Tool shows user who to use suppliers Too busy to find approved source/item  Easy-to-use product/service catalog; one-stop shopping Don’t think it matters  Tool outlines benefits of using preferred supplier Unaware of policies  Tool clearly defines policies to user No one challenges them  Tool has built-in approval workflow and reporting No visibility  Tool has built-in reporting and approval workflow20 © 2012 Ariba, Inc. All rights reserved.

Suitability of CCi Spend for E-ProcurementCategories Most Suited for E-Procurement• Many buyers• Diverse buyers• Goods/services simple to describe• Frequent transactions• Agreements in place with suppliers• Many invoices• Simple invoices• Complex discount structures• Suppliers already conducting e-procurement with other customers * Spend on individuals above and beyond spend on individuals in the Excluded Categories21 © 2012 Ariba, Inc. All rights reserved.

Quantifying Suitability for E-Procurement Campus Operations = 3 Off Limits Category = 0 SKU = 4 Education materials = 3 >65% of Category Spend Utility = 2 Campus Infrastructure = 2 to individuals = 0 Contract = 2.5 Corporate = 1 All Others = 1 Custom = 1.5 Spot = 1 Suitability Score Used Off Limits Type of = For X Filter X Orders X Transaction Invoice Complexity Vendor Tech Relationship with Frequency X X Sophistication X CCi Very High = 3 High = 3 > 50% of spend with Ariba Network vendors = 3 Already Sourced = 3 High = 2.5 Medium = 2 10-50% of spend with Ariba Network vendors = 2 Not Sourced = 1 Medium = 2 Low = 1 <10% of spend with Ariba Network vendors = 1 Unknown = 1 Low = 122 © 2012 Ariba, Inc. All rights reserved.

Categories by Wave % Spend with ePro Ariba Network Category Wave Suitability Savings* Suppliers Annualized Computer Equipment & Savings by Wave Accessories 1 159.8 $254,807 96% $MM Furniture 1 90.0 $253,124 43% 1 $0.91 66.4 $45,065 67% Student consumables 1 2 $2.56 Medical Equipment & Supplies 1 61.8 $205,481 61% 3 $1.68 Safety Equipment & Services 1 61.3 $17,479 13% 4 $0.36 Hardware 1 58.7 $18,155 91% Σ $5.49 49.5 $21,931 84% Hand tools 1 Machinery Services & Supplies 1 45.6 $12,210 64% AV Supplies 1 44.6 $77,896 99% * Conservatively assumes at most 95% of calculated savings can be captured23 © 2012 Ariba, Inc. All rights reserved.

Implementation Timing Integrate w. PeopleSoft E-Procurement Implementation Activities Months After Project Start System Testing Initial User Training Begin Wave 1 Savings (Full savings 6 mo later) Enable Wave 1 Suppliers Begin Wave 2 Savings Ramp-up Enable Wave 2 Suppliers Begin Wave 3 Savings Ramp-up Enable Wave 3 Suppliers Begin Wave 4 Enable Wave 4 Suppliers Savings Ramp-up 3 6 9 12 15 18 21 24 26 Cumulative Savings $ MM Q1 $0.00 Q2 $0.00 Q3 $0.08 Q4 $0.37 Q5 $1.31 Q6 $1.91 Q7 $3.00 Q8 $4.32 Q9 $7.0724 © 2012 Ariba, Inc. All rights reserved.

Company Info • Synovus Financial Corp. Commercial and Retail Banking, Investment, Mortgage HQ in Columbus, GA; founded in 1888 $27 Billion in Assets; 40th largest US Bank Holding Co. Five-state footprint in Southeast w/ over 300 locations Community-oriented customer relationship model Decentralized business model with centralized support functions27 © 2012 Ariba, Inc. All rights reserved.

Business Background • 2009 expense/efficiency initiative identified opportunities in centralizing Procurement • Over $300 million in addressable spend • Minimal structure and oversight • Buy points scattered across 30+ operating divisions • Gaps in vendor and contract management identified as risk points28 © 2012 Ariba, Inc. All rights reserved.

Business Background • Goals/Objectives Integrate existing purchasing and vendor activity to obtain efficiencies and economies of scale Address local market concerns re: “balance of trade” (vendors who are also bank customers) Reduce addressable spend by 2% YTY Increase spend under management to 50%+ 60%+ compliance with use of preferred suppliers Establish vendor management program to mitigate risk and address regulatory requirements29 © 2012 Ariba, Inc. All rights reserved.

The Story • Create (and sell) the vision • Identify best practices and map to them • Include your key stakeholders • Deliver quick wins • Develop and implement strategic systems plan • Measure and report • Become seen as consultants in the organization30 © 2012 Ariba, Inc. All rights reserved.

The Story • Create (and sell) the vision Be clear and compelling about what and why Articulate value in business terms ($, risk, P&L impact) • Identify best practices and map to them Leverage what others have done right (and wrong) Relevant examples to your industry and situation • Include your key stakeholders Voice of your customer is critical But don’t start with a blank sheet of paper…31 © 2012 Ariba, Inc. All rights reserved.

The Story • Deliver quick wins Address pain points, deliver savings Establish credibility and support continued investment • Develop and implement strategic systems plan Analyze, evaluate, improve process first Tools enable processes but are not the process itself32 © 2012 Ariba, Inc. All rights reserved.

The Story • Measure and Report Set, measure, and report against goals and progress Create accountability to deliver results “If you can’t measure it, you can’t manage it” • Become seen as consultants in the organization Becoming efficient at routine activity is table stakes Value comes from consultative role Creates ongoing linkage to business and opportunity for team members33 © 2012 Ariba, Inc. All rights reserved.

Results • Addressable spend down 24% vs. 2008 baseline • Spend down 3.6% most recent YTY • Spend Under Management at 54% (and rising) • Compliance at 50% (continued challenges) • Procurement function expense = 0.28% of spend • Vendor Management Program established • Over 2,000 suppliers enabled within system34 © 2012 Ariba, Inc. All rights reserved.

Conclusions • Change Management is critical to success • Establish and maintain executive support • Focus on processes, not events • Make your suppliers your partners – win/win • Create accountability across organization • Leverage great position that Procurement is in Easy to keep score, clearly understood, critical to org.35 © 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**36 © 2012 Ariba, Inc. All rights reserved.

Seven Habits of Highly Successful Procure-to-Pay Programs

by Ariba

Accessibility

Categories

Upload Details

Usage Rights

Statistics