• Share
  • Email
  • Embed
  • Like
  • Save
  • Private Content
 

Spend Analysis: Let Your Numbers Do the Talking

on

  • 410 views

Good spend management begins with good spend visibility. Your spend data holds the key to unlock hidden opportunities on maximizing savings, improving compliance and mitigating risks in your supply ...

Good spend management begins with good spend visibility. Your spend data holds the key to unlock hidden opportunities on maximizing savings, improving compliance and mitigating risks in your supply chain. Discover through customer stories on how spend analysis unravels actionable insights to drive confident and trusted business decisions in their organizations.

Statistics

Views

Total Views
410
Views on SlideShare
410
Embed Views
0

Actions

Likes
0
Downloads
0
Comments
0

0 Embeds 0

No embeds

Accessibility

Categories

Upload Details

Uploaded via as Microsoft PowerPoint

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

    Spend Analysis: Let Your Numbers Do the Talking Spend Analysis: Let Your Numbers Do the Talking Presentation Transcript

    • Spend Analysis: Let the Numbers Do the Talking Speakers • Karen Westbrook – Walt Disney Company • David Chesnut – R.J. Reynolds Tobacco Company • Tony Verheggen – Air Products and Chemicals, Inc. Moderator • Keertan Rai – Ariba, an SAP Company #AribaLIVE @ariba © 2014 Ariba – an SAP company. All rights reserved.
    • Agenda • Overview and Introductions • Panel Presentations - Karen Westbrook - <Designation > Walt Disney Company - David Chesnut - Senior Manager of Procurement, R.J. Reynolds Tobacco Company - Tony Verheggen - Sourcing Process Owner, Air Products and Chemicals, Inc. • 2 Q&A © 2014 Ariba – an SAP company. All rights reserved.
    • Spend Analysis: Let Your Numbers Do the Talking < Opening slide to be added > 3 © 2014 Ariba – an SAP company. All rights reserved.
    • Panelists Karen Westbrook <Designation > The Walt Disney Company 4 David Chesnut Senior Manager of Procurement R. J. Reynolds Tobacco Company © 2014 Ariba – an SAP company. All rights reserved. Tony Verheggen Sourcing Process Owner Air Products and Chemicals, Inc.
    • Agenda • Overview and Introductions • Panel Presentations - Karen Westbrook - Walt Disney Company - David Chesnut - Senior Manager of Procurement, R.J. Reynolds Tobacco Company - Tony Verheggen - Sourcing Process Owner, Air Products and Chemicals, Inc. • 5 Q&A © 2014 Ariba – an SAP company. All rights reserved.
    • Agenda • Overview and Introductions • Panel Presentations - Karen Westbrook - Walt Disney Company - David Chesnut - Senior Manager of Procurement, R.J. Reynolds Tobacco Company - Tony Verheggen - Sourcing Process Owner, Air Products and Chemicals, Inc. • 6 Q&A © 2014 Ariba – an SAP company. All rights reserved.
    • About Reynolds American, Inc. Parent Company of R.J. Reynolds Tobacco Company Major Brands • • • • 7 Camel Pall Mall Winston Kool © 2014 Ariba – an SAP company. All rights reserved. Santa Fe Natural Tobacco Company American Snuff Company Major Brands • • Grizzly Kodiak Major Brands • Natural American Spirit
    • Spend Analysis Journey • Procurement department had implemented spend analytics solutions using prior e-procurement systems Data clean-up and categorization had been completed several years earlier Procurement staff accustomed to custom taxonomy and categorization • • 8 Data extracted from SAP and Pcard systems Business case based on replacing existing e-procurement system with Ariba suite © 2014 Ariba – an SAP company. All rights reserved.
    • Implementation • • Used the “self-implementation” model using internal resources and phone support from Ariba Implemented four modules simultaneously Ariba SIPM – Supplier Information and Performance Management Ariba Sourcing Professional Ariba Contract Management Professional Ariba Spend Visibility Professional 9 © 2014 Ariba – an SAP company. All rights reserved.
    • Spend Visibility Implementation • • • • 10 Most recent four quarters of spend data Utilized existing taxonomy Data validation required review and input from entire Procurement staff Several iterations of validation required to correct taxonomy issues © 2014 Ariba – an SAP company. All rights reserved.
    • Go-live and Optimization • Training Conducted several training sessions for Procurement Buyers, Finance, Internal Audit While system was somewhat intuitive, most people required additional “re-training” to fully understand system • Center of Excellence Approach Developed subject matter experts on Ariba Spend Visibility system Empowered tactical staff with responsibility of becoming Ariba Spend Visibility SMEs 11 © 2014 Ariba – an SAP company. All rights reserved.
    • Return on Investment • Improved knowledge by Buyers of spending trends Review of historical spend data to identify potential future opportunities Procurement focus on spend areas not previously managed • Credibility based on improved business function knowledge via detailed spend analysis Improved relationships with client areas Identification of potential sourcing opportunities More strategic approach, partnership and collaboration with client areas 12 © 2014 Ariba – an SAP company. All rights reserved.
    • Agenda • Overview and Introductions • Panel Presentations - Karen Westbrook - Walt Disney Company - David Chesnut - Senior Manager of Procurement, R.J. Reynolds Tobacco Company - Tony Verheggen - Sourcing Process Owner, Air Products and Chemicals, Inc. • 13 Q&A © 2014 Ariba – an SAP company. All rights reserved.
    • About Air Products and Chemicals, Inc. • • Leading suppliers of industrial gases, performance materials, equipment and technology Air Products is the world’s largest supplier of hydrogen and helium and has built leading global supply positions in growth markets such as semiconductor materials, refinery hydrogen, coal gasification, natural gas liquefaction, and advanced coatings and adhesives. Air Products by the numbers 21,600 employees | 73 years in business | Headquartered in Allentown, PA | Operations in 50+ countries | 750 production Facilities | 30+ industries served Financial performance 2013 10 billion revenue | $1.6 billion operating income | $2 billion capital expenditures | 33 percent total shareholder return | 31 years of consecutive dividend increases 14 © 2014 Ariba – an SAP company. All rights reserved.
    • Importance of Data Quality • • UNSPSC categorization helps segment our spend into categories that can be better managed. • Supplier Enrichment helps us understand the breadth and depth of our relationships with our suppliers. • 15 Ariba Spend Visibility helps find hidden opportunities in the company’s costs and expenses. Improving Data Quality accuracy helps make these opportunities visible and credible. Without it, the picture becomes confusing. © 2014 Ariba – an SAP company. All rights reserved.
    • Data Enrichment Journey • • • Began in 2010 $8 Billion Spend Large Energy Spend Easily classifiable • Smaller Categories Difficult to Classify Indirect Spend Non-PO Spend Text Descriptions 16 © 2014 Ariba – an SAP company. All rights reserved.
    • Early FY10 Enrichment Efforts • • Found that small spend categories were getting short changed, while large categories exceeded agreement minimums • Needed to improve the overall classification in order for these small categories to be well classified • 17 Met agreement minimums of 90% Set higher goals than 90% to achieve this © 2014 Ariba – an SAP company. All rights reserved.
    • Early FY10 Enrichment Efforts and Results New Construction 74% 99.9% Construction Maintenance 74% 99.9% Mechanical Parts 38% 44% Mechanical Equipment 34% 45% Business Services 74% 85% Consulting (ex IT) 70% 79% (Energy & Non PO Payments) 93% 97.5% Potential Improvement 18 FY10 Improvement Material Group F Y10 Beginning 91% 94.5% © 2014 Ariba – an SAP company. All rights reserved.
    • Spend Visibility Key Takeaways FY12 Year FY10 FY11 Prior Overall 91.8% 94.3% 95.4 % | Current 98.6% FY13 96.7% Moved Target Goal to 96% Steady Improvement > Goal Added acquisition data from two acquisitions to Ariba Spend Visibility in FY13 with some loss in data accuracy, but to take advantage of rapid analysis of acquisition synergies – Acquisition A (Two successful auctions on cylinders) – Acquisition B (Benchmarked fuel savings rapidly) Online rule improvements retroactively improved FY12 data from 95.4% to 98.6% SAP Classification Accuracy > 98% 19 © 2014 Ariba – an SAP company. All rights reserved.
    • How Did We Achieve This? • • • Provided Ariba with UN mapping of all material masters that were unclassified (400,000 materials) Provided Ariba with clarification rules on all 188 material groups mapped to UN codes Created 820 online rules for weak material groups and non-PO payments using G/L Account, Supplier and other hint fields E.g. Approximately ½ of Business Services is GO Plant Maintenance ,which belongs to CPF, not Corporate • Added 28 new fields G/R Date and Quantity for Chemical Raw Materials Project Details and Activities Improved Profit Center Hierarchy 20 © 2014 Ariba – an SAP company. All rights reserved.
    • Progress in Categories Since FY10 Material Group F Y10 Category FY10 unclassified FY10 % Classified FY13 Category FY13 unclassified FY13 classified New Construction $250MM 0 99.9% $331MM 0 99.9% Complete Construction Maintenance $214MM 0 99.9% $360MM 0 99.9% Complete Mechanical Parts $99MM $55MM 44% $113MM $.2MM 99.8% 96% Mechanical Equipment $85MM $46MM 45% $157MM $.5MM 99.7% 96% Business Services $140MM $21MM 85% $72MM $0MM 100% 96% Consulting (ex IT) $63MM $13MM 79% $41MM $0MM 100% 96% None (Energy & Non PO Payments) $3.2B $77MM 97.5% $3.1B 115MM 96.3% 99% 21 © 2014 Ariba – an SAP company. All rights reserved. Goal
    • Forward Plan • • Add new Material Groups to SAP to provide more descriptive classification • Revise Classification Rules to reflect new G/L Accounts for non-PO Spend • Improve PCard classification by mapping Material Groups to UN Code and investigate if Level II Amex data can be added • Take advantage of SAP’s HANA technology to speed up reporting • 22 Maintain current levels of data quality Use 10K for US Suppliers to improve Supplier Partnering © 2014 Ariba – an SAP company. All rights reserved.
    • Agenda • Overview and Introductions • Panel Presentations - Karen Westbrook - Walt Disney Company - David Chesnut - Senior Manager of Procurement , R.J. Reynolds Tobacco Company - Tony Verheggen - Sourcing Process Owner, Air Products and Chemicals, Inc. • 23 Q&A © 2014 Ariba – an SAP company. All rights reserved.
    • Q&A Contact Information: 24 © 2014 Ariba – an SAP company. All rights reserved. <Feedback Call to Action>