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Stretch Ariba Commerce Strategic Procurement
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Stretch Ariba Commerce Strategic Procurement

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  • Visons, Objectivs and KPI´s

Stretch Ariba Commerce Strategic Procurement Stretch Ariba Commerce Strategic Procurement Presentation Transcript

  • Real solutions for real needs Suzana Drakulic November 29th 2011 Setting high ambitions for your Strategic Procurement investment
    • Stretch deliver consulting services and solutions within business process management and IT. We help our customers to optimize and implement processes and related IT solutions within supply chain, procurement, finance and customer relationship management.
    Stretch company presentation
    • Start up in 2002
    • 130 employees today
    • 2011 estimated turn over 130 MSEK
    • Awards
      • Gasell
      • Superföretag
      • Great Place to Work
  • Setting high ambitions We care about results. To set a high ambition for your Strategic Procurement initiative is a challenging starting point, where to start? Best practices A top performer >50% >95% 37% >75% High Procurement Operations
    • Utilization of formal internal customer satisfaction surveys
    • Formal service level agreements established with internal customers
    • Percent of time performing analysis and making recommendations (versus collecting, verifying and compiling data)
    • Extent to which total cost of ownership is measured
    • Extent that best practices are shared with your strategic partners
    • Extent comprehensive analytical tools are used to perform spend analysis
    Risk Management and Decision Support Yes Yes 65% High Best practices A top performer High High
    • Percent of suppliers that send invoices electronically
    • Percent of total annual spend purchased from approved suppliers
    • Percent of suppliers that use self-service over the Internet
    • Percent of RFI/RFQ/RFPs that are submitted electronically from suppliers
    • Extent a formal on-line process is used to proactively track, target and resolve root causes to problems
    • Number of suppliers covering 90% of spend
    Low
  • Organization maturity and savings achievement … .directly correlates with achieved savings Maturitylevel in a procurement orgnization... Source: Excellence in Purchasing and Supply Management (joint survey ECB/SMI with McKinsey ” Best-in-class” procurement teams generate up to 270% higher yearly savings compared to those in lower maturity grade within same industry . 1.8% 272% Best-in-class 4.9% High 3.9% Mid 3.2% Low 2.2% Laggards Best-in-class 90 High 83 Mid 72 Low 65 Laggards 58
  • Key activities Procurement Transformation Spend Optimization Gather, refine and analyze spend data to understand savings potential and realize targets. Clean Data, categorize supplier base and set approach based on strategic importance Organizational Maturity Analysis of the companies KPI´s, tools, processes, spend portfolio and the organization maturity level. Create program based on vision and objectives. Category Optimization Implement best in class category approach on relevant categories to optimize relationships and organization Demand Management Optimize requirement process ensuring we get what we really need in time at appropriate service level. Sourcing & Assessment Set processes, strategies and system support for securing a appropriate contribution and evaluation of the supply market. Contract and Risk management Streamline the contract management process with a common process, templates and Repositories. Get early alerts on expiring contracts. Spread supplier risk based on indicators such as financial data and quality integrated to the procurement process. Commercial and legal negotiations Understand current sourcing process and define a best practice with increased efficiency and increased results. Process optimization / automation Optimize the procurement related processes, such as procure-to-pay, supplier on boarding or sourcing with best practice business solutions, templates and KPI:s. Compliance Raise the internal awareness of the procurement function to increase spend under management and improve compliance to existing “procure to pay” agreements.
    • Create a tailored ”procurement academy” build the base for your Strategic Procurement investment.
    • Define the skill matrices, example Category Management skill here with 4 levels, example ‘Basic’, ‘Intermediate’, ‘Full’ and ‘Expert’.
    • Launch the activity of
      • Define desired skill level per role
      • Capturing the teams current skills
      • Development of Uplift Program
      • Launch on individual & team level
      • Measure the outcome
    Learning Organization (1) Procurement Discipline Skills Description   Level         Basic Intermediate Full Expert Category Management Builds knowledge & understanding of relevant category & supplier strategies . Able to produce relevant strategies to meet business needs Able to manage basic commodity low value, low risk supplier markets & identify appropriate Category strategy. Has a level of knowledge about the category - Knows who the suppliers are - Understands the basics of the marketplace Understands and develops category strategy for high value, low risk supplier markets & implements appropriate strategy - Has a high level of knowledge about the category - Is aware of the current supply base, both local and international - Starting to apply strategic analysis tools in order to leverage this knowledge Develops, communicates & implements supplier Category strategies for performance partners & strategic alliance suppliers - Has a high level of knowledge of the category and marketplace - Is aware of potential emerging suppliers and replacement technologies as well as the current situation - Links Category Knowledge to use of Strategic Analysis tools and insight to create sourcing strategy Undertakes 'make v buy' assessments and develops outsourcing / JV strategies; Capable of moving the market place where appropriate
  • Learning Organization (2)
    • In Your Organization...
    • The average buyer scored 66.7 %
    • The average buyer saves $1,760,000 per year
    • Four (4) buyer had an overall rating of RED
    • Two (2) buyer had an overall rating of YELLOW
    • Benchmark - Among All Organizations...
    • The average buyer scored 60.2%
    • The lowest scoring company with at least three participants had an average score of 23.2%
    • The average buyer saves $955,347 per year
    • The average reported savings are 2.31% of a company's annual cost
    • Buyers with an Overall rating of YELLOW saved $465,536 more per year than buyers with an Overall rating of RED
    • Buyers with an Overall rating of GREEN saved $1,038,719 more per year than buyers with an Overall rating of RED
  • Supplier Categorisation & Relationship
    • Commodity Vendor ( 600-800 )
    • Very low company dependency
    • Simple products / services
    • Product / service has many sources of supply
    • Low impact on company revenue / operating costs if failures
    • Cost and impact of switching is quite low
    • Transactional focus
    Strategic Supplier 50-100 Partner 5-10 Specialist 200-300 Relationship = Distant Contract Management - simple metrics / automated Opportunity Management - rare / by exception Supplier Contact - minimal / transactional Customer / Supplier Contact - leave it alone Supplier Development - unlikely (except ‘e’) Revenue Generation - assist by invitation only Business Risk Low High Opportunity High
    • Top performing procurement organizations generate three times the value of their peers by creating breakthrough category management strategies that sustain value in the long term and aim to changing external environments and conditions . Source: Procurement strategy board®
    • Category managers in these organizations focus on two key activities:
      • Balancing their project mix to include bigger, bolder projects that influence the company’s cost structure, brand, and products
      • Proactively preparing for change, allowing category strategies to adapt and win among varying circumstances
    Bigger Bolder Category Projects
  • Maturity - Contract Management
    • Little formal process
    • Manual and email based
    • Unclean Data
    • Continues evaluation with improvement effort
    • Optimal system support
    • Cross Functional active participation
    • TCO embedded
    • Process integrated end to end
    • Collaborative contract creation and management extended
    • TCO approach
    • Central Procurement
    • Good system support
    • Formalized Processes with mandate and follow up
    • Clear accountability
    • Basic Processes in place such as storage and approval.
    • Limited ownership & tracking
    Laggard Basic Medium Best in class High
    • Compliance with contracts and procurement policies is a basic practice which is required in any organization. It is needed for deriving maximum benefits of sourcing and to improve chances of achieving the goals of an organization
    • The key to acquiring best practices with compliance management in an organization is to combine efficiency of people, processes and technology, example for KPI “on-contract spend”
      • Key Enabler for compliance;
    • Complaince on the Leadership team agenda , define measure and actively foster culture of compliance – behaviour needs to be challanged at top level.
    • This delivers a vairaty of advantages including :
      • 10-year shareholder returns that are as much as 16% higher than companies with low cultures of integrity
      • 67% decrease in the most significant forms of business misconduct
      • up to 12% higher employee discretionary effort Source; The Corporate Executive Board
    Culture of Compliance
    • Long-term plans and a clear roadmap ensuring timely and cost effective supply of the goods and services that are critical to your ability to meet the firm’s core business objective
    • Communicate well and often
    • Appropriate capabilities in terms of setting up a organization, processes and support systems with a strong ”know how” on change management and execution, function needs to cope with “business as usual” and transformation
    • This is an investment! A well worked through business case with approved budget and aligned activities and savings targets with the business and thereby embedded TCO
    • Have fun and celebrate small wins continuously
    Transforming Procurement - key success factors
  • Real solutions for real needs. THANK YOU! Contact details; [email_address] +46720013500 www.stretch.se