Richard Beaumont, Global Procurement Development Executive at Rolls-Royce spoke at the CPO Event September 2013

1. Richard Beaumont
Enabling Purchasing eBusiness through
Global Transformation
Trusted to deliver excellence

2. Enabling Purchasing eBusiness through Global
Transformation

3. We will transform our purchasing experience through embracing eBusiness
Today
• Functional Portal
platform
• Basic user support
• Complex supplier
network
• Limited dedicated
resource to develop
applications
• Limited use by
suppliers
Vision
An effective work
space between
employees and
suppliers hosting
intuitive applications
Delivers
• Better control
• Improved decisions
• Reduced G&A cost
• Cost reduction
• Increased efficiency
• Fantastic user
experience
• A single supply
chain environment
3

4. Investment in eBusiness to make our supply chain as ‘easy to use as Amazon’
eBusiness creates competitive advantage through delivering a complete
Supplier and Buyer Portal that provides:
• Reduced Supplier costs that make Rolls-Royce their ‘Customer of
Choice’
• One portal workspace for buying teams, requisitioners, suppliers
and the wider Rolls-Royce community who need to buy
• Intuitive eTools using sound data
• A world class purchasing experience
• Self service for all users at appropriate authority level
• A common approach for direct and indirect

5. Data Integrity
‘Ensure purchasing data is consistent, accurate and accessible’
eTools
‘Develop eTools to enhance our process and provide excellent
support to all users’
Sourcing Process
‘Ensure our process is effective, efficient and agile’
eBusiness is dependent on 3 foundations

6. 2013 2014 2015 2016 2017
LevelofEfficiency
Data Integrity
Process Review
eBusiness
‘The Purchasing
efficiency of our
organisation will
increase through time’
Data clean up
Ownership of data
Robust Governance &
Compliance
Simplify key processes
Develop support
material
Support model and
training defined
Upgrade Portal
Contract management
Digitise legacy drawings
Launch SAP Sourcing
Customer portal
upgrade
Improve business
reporting
Simplify other processes
Update SAP Sourcing for
all sectors with new
process
Embed data integrity
Single sign-on to all
Portal applications
Full Integration of
engineering and
purchasing systems
‘Nextgen’ Customer
Portal
Consolidate software
provision
6
These foundations are linked and are planned to 2015+

7. Central
Resources
•Central team
•Work packages
•IT Function
Sector &
Regional
Resources
•Business leads
•IT teams
•Analysts
•Purchasing
Capital
Investment
•Changes to existing systems
•Decommissioning of legacy
systems
•Investment in new tools
 We talk across the
business to determine
what resources and
people are dealing with
issues today
 We ‘weave’ a
collaborative plan to
achieve our objectives by
enhancing existing
activity to achieve the
quickest and most
effective solution for all
Delivery is complex and our approach is to work collaboratively to enhance
‘business as usual’ activity

8. Data Integrity

9. Master
Data
SAP
Sourcing
Spend
Visibility
Web
monitors
Business
Warehouse
Automatically
bridged /
transmitted
BaaN
Legacy ERP
Systems
SAP
Clear
owner
Data integrity is the key to success: We are working to deliver a single
master data set for the business

10. Integration of legacy systems has led to data integrity challenges: we
established clear ownership, plans and milestones to address them
Current State Action Future State Metric
Action required to
remove duplicate
vendor codes
Cross-functional
engagement,
process definition
and execution led
by central team
Duplicates
eliminated,
governance in
place to avoid new
ones
Aero– <1%
Services – <1%
Energy – <1%
GI – <1%
Marine – <1%
Purchase Organisation
Material Group - Commodity
Export Control
Commodity Strategies
Purchase Orders
Material/Service Master
Vendor De-Duplication
Org & Vendor Owner
Contract Meta Data
Sector Priority Synthesis BAU Data
Day
Central
Team
Comments Jan Feb Mar Data
Day
Apr May
Aero
1 Y P Y S S S D W W
C.Marine
3 Y Y CH BELIEVED NO PROBLEMS C W W W W
N.Marine
2 Y P CH PRI 1 IF X-SECTOR INVOLVING AERO CODEC D W
Nuclear
2 Y P
As a priority where Nuclear vendors are
common with Aero and Marine: Nuclear
to be included in decision making as to
C D W
GRS
2 Y P Y PRI 1 IF X-SECTOR INVOLVING AERO CODEC D W
Energy
2 Y N Y PRI 1 IF X-SECTOR INVOLVING AERO CODEC W
Indirect
2 Y P Y PRI 1 IF X-SECTOR INVOLVING AERO CODEC D W
CH Check if Relevent 1 Priorty 1 C Consult
Y Yes: could do this 2 Priority 2 S Synthesis
N No: cannot do this 3 Priority 3 W BAU
P Could possibly do this D Data Day
NR Believed Not Relevent CT Central Team

11. Data Integrity Case Study –
Material Groups

12. Buyer’s Work
Queue
Drawings
Material
Group
MG is set
Buyer is looked
up from the MG
Parts are routed to
this buyer’s work
Queue
In a fully automated sourcing process, having the wrong MG could mean a
demand is transmitted to the wrong buyer using the wrong sourcing strategy
Material Groups (MG) drive work queue and are a hidden problem

13. • Identify and
fix all
workflow
items that
have an
incorrect MG
Work
Queue
• Maintain a watch to
catch incorrect MGs
Work
Queue
• Check all expiring supply
agreements and correct
them before renewal
Agreement
Expiry
• Ensure new products
are given the right MG,
right first time
New
Products
Fix Now Maintain through Shared Service
We are combining immediate fix and a Shared Service to resolve errors

14. Engineering
complete on-
line request
•Provide Engineering Commodity
•Solution Number
•Number of Parts
•List of part numbers
Shared
Service
allocates MG
•View drawing / discuss with
Engineering
•Decide MG using web tools
•Enter MG into Engineering ERP
Engineering
release parts
to SAP
•Release to
Business
A robust Shared Service process maintains integrity

15. eTools

16. Applications
User homepage
Exostar secure log in
Open access content
Supplier Portal homepage
16
eTools start with a Portal that provides both a ‘front desk’ and a gateway to
secure transactions for all users

17. We used the Innovation Portal to ask the people (including customers and suppliers) to draw
what their perfect Portal homepage might look like……
It would be great
to LOGIN once to
all applications
I need access to
Outlook email and
calendar
I want live task
updates from
all my tools
I would like
Quick links to
frequently
used
tools/sites
I want access to my
inboxes and workqueue
I want to be able to
search for parts as
easily as Amazon
I want to create
Widgets to allow me
to switch between
tools, dashboards and
web pages
We are designing our eBusiness Portal by listening to all users…..

18. We harness these ideas to design a new Portal
that becomes an intuitive focal point for all supply
chain activities and users
CUSTOMERS:
Customers can execute
purchases
SUPPLIERS:
LOGIN as ‘License to Supply’
allowing upload of product
information
PURCHASING:
‘Back office’ tools to manage
strategy, approve items and
execute purchases
OTHER FUNCTIONS:
Back office tools to manage
supply chain enablers, e.g.
ePO, eDrawings, ERS
MANAGERS:
View up to date reports,
dashboard and KPIs
EXTERNAL AUDIT:
Access all activity and
view/edit audit reports
COMPLIANCE:
Access all activity and
upload/manage audit
reports
New Portal
….because a perfect Portal works for everyone in the supply chain

19. %implementation
Perceived success of the application
%implementation
Perceived success of the application
2013
Delivery schedules
FAIRs
Catalogues
Spend Visibility
RFx
Contracts
ePOs
Scorecards
ERS
Invoicing
2015
Schedules
eFAIRs
Spend Visibility
RFx
Contracts
ePOs
Scorecards
eInvoicing
19
We aim to increase usage of these
applications and fully embed
them in our automated processes
Today we have a range of
applications, available to parts
of the business, which have
mixed functionality
2013 - Priority
Drawings
Catalogues
Behind the Portal sit the applications that enable eBusiness

20. Implementation plan and deliverables
▪ The customer is anyone who uses a purchasing
application or processes
▪ The model will provide both reactive
support/advice and proactive continuous
improvement for tools and processes
▪ There will be a single point of contact “triage”
▪ The model will include some form of business
representation
▪ A tool will be used to log all calls
▪ There will be clear pathways for issue
resolution
▪ There will be clear roles and responsibilities for
and between; the business, the function and IT
Support Model Principles Future Operating Model
20
Business Process
Owners
- Process Change
(L3)
Business
Implementation
PDM
Exostar
Sector Key Users / Change
champions
Knowledgeable colleague
REGIONS
Service
Desk
(L1)
- Log &
Refer
MYIT/phone/email
Business Change
- Training
- Communications
FUNCTION
Asia
Europe
NA
Proposed Future OM - Purchasing Process and IT Support
Application Support & System Development (L2 – 3)
- Technical support
- Technical change
Purchasing
Intranet
Informal
RR CoC/IT/EXTERNAL
Users
Suppliers
Internal
Transformation/Large Project Delivery
CRs
SRs
CoC (L4)
Business Support &
Administration (L2)
- How do I? Process Support
- How do I? App Support
- Change request review
- Minor development
- New users
- Data Administration
Business support
PDL (L2)
Using eTools requires effective Business Support

21. Process
Improvement

22. 2
2
4 Control
3 Ownership
2 Allow Flexibility
1
Process, People, Guidanc
e & Training
▪ Allow new workflow
▪ Cross functional cooperation
▪ Compliance
▪ Cross functional cooperation
▪ Clear responsibilities
▪ Links to other processes
▪ Ease of use
▪ Fit for purpose
▪ For use across the business
▪ Enabling people to work
▪ Ease of automation
▪ Process training
By following four key principles we are significantly improving our
purchasing process

23. 2015
Legacy
library of
guidance
material
Level 1
Support
Material
2012 2013 - 2014
Develop sector specific
support material
Level 2
Full automation of
steps
Complete integration
with eTools
Electronic library of
knowledge
2
3
▪ Video interviews
▪ Interactive demonstrations
▪ Fully integrated training
▪ Comprehensive guidance
▪ Best practice “Gold” examples
72%
reduction
in
process
flow map
Global engagement has led to great progress

24. Implementation plan and deliverablesAchieving the right engagement……. …..led to a significant reduction in steps
24
Collaboration was the key to successful process improvement
Before After
SB2
SB4
72%
Held a 5-day workshop in November 2012 for 36 people
from different regions, sectors and functions
Workshop
Launched a Process Walkthrough for volunteers to
syndicate the new process around the business
Walkthrough
Presented progress update Process Council and received
green light to continue.
Approvals
Re-wrote the current core processes with the aim of
reducing complexity and duplication
Improvement

25. Process Structure Core Guidance Sector Guidance
+
11th February – 22nd March 8th April – 21st May
Sector:
Aero
Marine
Nuclear
Energy
Global Indirect
Regional Input
“Streamlined and optimised” “Relevant, usable and
effective”
“Acknowledges sector specific
requirements”
We made sure the Process was global at its core but with ‘flavours’
SB4:
Step 1
Step 2
Step 3
Step 4
Step 5
Step 6
Step 7
SB4:
Step 1
Step 2
Step 3
Step 4
Step 5

26. • Enabling eBusiness requires global transformation of data, eTools and
process
• Starting from a clean sheet is unlikely: existing activity, resources and
people need to be marshalled
• Collaboration leads to the quickest and most effective solution that is
fully bought into across the business
• One size does not fit all; solutions must allow for the „flavours‟ of the
business
Summary