Using Collaboration for Buy and Sell Side Success - AGCO and SHI

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Analysts tout buyer and seller collaboration as the major aspiration of B2B e-commerce, but what does that actually mean? Two industry-leading Ariba customers – buyer and seller trading partners – explain how no-touch/low-touch collaboration on procure-to-pay and order-to-cash processes has reduced IT costs and manual work. This business process integration has helped AGCO gain more visibility and control in a multiple ERP environment, while also helping SHI International increase key operational and top-line metrics by more than 20 percent.

Eric Deese, Purchasing Analyst, AGCO
Tammy Wagner, Account Executive and John D’Aquila, eCommerce Operations Manager, SHI International

2012 Ariba Commerce Summit in Houston

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  • From Aberdeen Report: Supplier Networks v 2.0, dated April 201245% of supplier credentials and compliance documents exchanged on the network, which is 80% more than Laggards 46% use online supplier discovery over the supplier network, which is 60% more than Laggards. 60% of purchase orders are transmitted electronically through a supplier network, which is 62% more than Laggards From Aberdeen Report: AP Invoice Management in a Network Economy, dated May 2012 An average of 26% of BIC utilize some form of electronic invoice means such as Electronic Invoice Network, Procurement network with support for Electronic Invoices or Supplier Portals, which is and average of 3 times more than Laggards.
  • First and foremost is the idea of optimizing supplier collaboration (41%), which hinges on the ability to understand how to effectively communicate with suppliers and to optimize efficiency, accuracy and profitability. This collaboration starts with understanding supplier needs and priorities in allocating the proper resources with the buying organizations using supplier networks. If proper planning efforts are made, both buyers and suppliers can take advantage of integration infrastructure to accept and receive documents from one another in achieving a common goal of increasing commerce efficiency. Second, using a supplier network encourages suppliers to increase transactions in an automated electronic basis especially, P2P based transactions such as purchase orders, payments and change orders. For example, 72% of respondents indicated they are using purchase orders through a supplier network, 59% use invoices and 54% use change orders. As adoption looks to be increasing for supplier networks, electronic processes being considered in the next year include many non-transaction based areas such as sharing of compliance documents (e.g. sustainability, conflict minerals, other regulatory documents) (31%), use of sourcing/RFPs (25%) and dynamic discounting strategies (24%). Third, through the use of supplier networks, organizations create an audit trail of transaction activity that can be used for increasing transparency into a specific process status that can ultimately result in reduced costs and increased efficiencies (i.e. identifying where a payment is, finding an order number, recognizing a supplier ID). In terms of reduced cost, the cost to complete a single requisition to order cycle in ($USD) was $33.45 for those not using a supplier network compared to $22.30 for those using a supplier network. In terms of efficiency, the average number of days to complete a requisition to order cycle averaged 15.5 days for those not using a supplier network versus 11.2 days for those using one.
  • In addition to higher revenue and ROI, BIC respondents experienced notably better benefits from their e-commerce efforts than non-BIC companies in various qualitative areas (shown on Chart 2), including: Enhanced Customer Satisfaction: 84.6 percent of BIC companies reported that their online and e-commerce capabilities had improved customer satisfaction somewhat or greatly (50 percent said greatly) as opposed to 52.9 percent of others (only 15.1 percent of whom said greatly). In terms of the actual percentage realized—i.e., the degree to which customer satisfaction actually increased—BICs experienced a 57.7 percent gain, whereas others saw just a 26.7 percent improvement.Greater Customer Traction: 46.2 percent of BIC companies experienced an improvement in customer retention as a result of their e-commerce and online capabilities versus 20.1 percent of others, while the actual percentage of improvement was 48.3 percent for BICs as opposed to 35.1 percent for other companies.Higher Productivity in Sales and Account Management: A total of 34.6 percent of BICs stated that e-commerce had boosted their sales/account management productivity, whereas only 25.3 percent of others experienced a similar gain. While improvements in other categories were not as dramatic, BICs consistently reported a higher level of benefits than less mature organizations, bearing out the importance of a more comprehensive e-commerce strategy in driving greater overall ROI.
  • Now let me introduce our buyer – Paul Luckey Paul is the Strategic Systems Lead for BP’s Upstream segment. He has been with BP for 4 years and leading the Upstream Ariba deployment for the last 3. Branded internally as OneSource, the Ariba platform plays a key role in Supplier Enablement (catalog) activities and overall compliance within Upstream BP. Paul is the OneSource Deployment Team Lead, responsible for the Systems introduction of Ariba Sourcing, Contracts and Supplier Management activities. Integration of Supplier Enablement and Collaboration activities is a key focus are of the deployment.  Now, let me introduce our sellers –  Mr. Joseph McNally has over 30 years experience in the Environmental Services industry, mostly with Clean Harbors. Joe has a B.S. degree in Analytical Chemistry from Framingham State University. His career has spanned laboratory chemist to facility General Manager, Director of Transportation, Vice-President of Clean Harbors Chicago operations and VP of MIS. The managing and directing Clean Harbors systems development as VP, MIS for 6 years was a natural fit for Joe to undertake a newly developed role within the company, Non-Standard Billing. Clean Harbors has seen the volume of invoicing being done “Non-Standard” double in the past 18 months and is projecting it to double again within the next 18 months. Traditional paper invoicing is being replaced with a variety of electronic options. Joe is directly responsible for developing and implementing the company strategy to take advantage of technologies and collaboration partners that will drive down costs and improve invoicing timeliness and accuracy.
  • Now let me introduce our buyer – Paul Luckey Paul is the Strategic Systems Lead for BP’s Upstream segment. He has been with BP for 4 years and leading the Upstream Ariba deployment for the last 3. Branded internally as OneSource, the Ariba platform plays a key role in Supplier Enablement (catalog) activities and overall compliance within Upstream BP. Paul is the OneSource Deployment Team Lead, responsible for the Systems introduction of Ariba Sourcing, Contracts and Supplier Management activities. Integration of Supplier Enablement and Collaboration activities is a key focus are of the deployment.  Now, let me introduce our sellers –  Mr. Joseph McNally has over 30 years experience in the Environmental Services industry, mostly with Clean Harbors. Joe has a B.S. degree in Analytical Chemistry from Framingham State University. His career has spanned laboratory chemist to facility General Manager, Director of Transportation, Vice-President of Clean Harbors Chicago operations and VP of MIS. The managing and directing Clean Harbors systems development as VP, MIS for 6 years was a natural fit for Joe to undertake a newly developed role within the company, Non-Standard Billing. Clean Harbors has seen the volume of invoicing being done “Non-Standard” double in the past 18 months and is projecting it to double again within the next 18 months. Traditional paper invoicing is being replaced with a variety of electronic options. Joe is directly responsible for developing and implementing the company strategy to take advantage of technologies and collaboration partners that will drive down costs and improve invoicing timeliness and accuracy.
  • Now let me introduce our buyer – Paul Luckey Paul is the Strategic Systems Lead for BP’s Upstream segment. He has been with BP for 4 years and leading the Upstream Ariba deployment for the last 3. Branded internally as OneSource, the Ariba platform plays a key role in Supplier Enablement (catalog) activities and overall compliance within Upstream BP. Paul is the OneSource Deployment Team Lead, responsible for the Systems introduction of Ariba Sourcing, Contracts and Supplier Management activities. Integration of Supplier Enablement and Collaboration activities is a key focus are of the deployment.  Now, let me introduce our sellers –  Mr. Joseph McNally has over 30 years experience in the Environmental Services industry, mostly with Clean Harbors. Joe has a B.S. degree in Analytical Chemistry from Framingham State University. His career has spanned laboratory chemist to facility General Manager, Director of Transportation, Vice-President of Clean Harbors Chicago operations and VP of MIS. The managing and directing Clean Harbors systems development as VP, MIS for 6 years was a natural fit for Joe to undertake a newly developed role within the company, Non-Standard Billing. Clean Harbors has seen the volume of invoicing being done “Non-Standard” double in the past 18 months and is projecting it to double again within the next 18 months. Traditional paper invoicing is being replaced with a variety of electronic options. Joe is directly responsible for developing and implementing the company strategy to take advantage of technologies and collaboration partners that will drive down costs and improve invoicing timeliness and accuracy.
  • Using Collaboration for Buy and Sell Side Success - AGCO and SHI

    1. 1. Collaborative Commerce: ABuyer/Seller PanelA Panel Discussion © 2012 Ariba, Inc. All rights reserved.
    2. 2. Leveraging Supplier Networks Profiling BIC vs. Laggards * * * **2 © 2012 Ariba, Inc. All rights reserved. *Source: Aberdeen Research, “Supplier Networks v2.0” April, 2012 ** Source: Aberdeen Research, “AP Invoice Management in a Networked Economy” May 2012
    3. 3. Buyer Goals Buyers’ Top Strategic Goals for Supplier Networks 41% 37% 31%3 © 2012 Ariba, Inc. All rights reserved. Source: Aberdeen Research, “Supplier Networks v2.0” April, 2012
    4. 4. Financial Rewards to BIC approach Has e-commerce efforts increased Has e-commerce efforts increased revenue with new customers? revenue with existing customers? (% answering Yes) (% answering Yes) 60.0% 60.0% 50.0% 50.0% 40.0% 40.0% 65.4% 65.4% 30.0% 30.0% 20.0% 37.8% 20.0% 33.3% 10.0% 10.0% 0.0% 0.0% Best-in-Class* All Others Best-in-Class* All Others BIC companies realized an BIC companies realized an average of 36.1% higher average of 39.8% higher revenue in new accounts as revenue in existing accounts as opposed to 29.5% for other opposed to 29.4% for other *Segmentation driven by • Revenues derived through online channels • Self-reported sophistication N=624 © 2012 Ariba, Inc. All rights reserved. Source: Selling Power Survey, 2011
    5. 5. Happier Customers, Stronger Relationships5 © 2012 Ariba, Inc. All rights reserved. Source: Selling Power Survey, 2011
    6. 6. Introductions • bp Paul Luckey, Global Sourcing Director • Clean Harbors Joseph McNally, Vice President, Non- Standard Billing • Questions6 © 2012 Ariba, Inc. All rights reserved.
    7. 7. BP • Oil and Gas Major • Primary Segments: Upstream, Refining and Marketing Operations on 6 continents, in 80 countries Regionally: – Gulf of Mexico (GOM), North American Gas (NAG) – Brazil, Alaska – Texas City Refinery Most of World (MOW) – Azerbaijan, Angola, Oman, Iraq • > 250 BB Market Cap, >83K employees/contractors • Ariba OneSource is the standard BP common solution for Sourcing, Contracts and Supplier Management7 © 2012 Ariba, Inc. All rights reserved.
    8. 8. Clean Harbors • Clean Harbors Vision is to be the premier provider of environmental, energy and industrial services • Safety is the #1 priority within the company and is a critical factor in our industry • Founded in 1980 Clean Harbors is a ~$2B company with over 60,000 customers in North America (including a majority of Fortune 500 companies) • The company is publicly traded on NYSE (CLH) • The company continues to make improvements in operating and financial performance through investments in technology and asset optimization. • We generate approximately 40,000 invoices per month and have a goal of making this a paperless process. Nearly 50% of our invoicing today is classified as Non-Standard. Paperless will become the “New” standard! • We currently interact with >50 Electronic Invoice systems (like Ariba) to support our customer requirements8 © 2012 Ariba, Inc. All rights reserved.
    9. 9. Introductions • bp Paul Luckey, Global Sourcing Director • Clean Harbors Joseph McNally, Vice President, Non- Standard Billing • Questions9 © 2012 Ariba, Inc. All rights reserved.
    10. 10. Safety Moment10 © 2011 Ariba, Inc. All rights reserved.
    11. 11. Introductions • bp Paul Luckey, Global Sourcing Director • Clean Harbors Joseph McNally, Vice President, Non- Standard Billing • Questions11 © 2012 Ariba, Inc. All rights reserved.

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