Today’s Session<br />Challenges with traditional benchmark surveys<br />Innovation that is changing reporting and benchmar...
Who We Are<br />Ravi Thakur<br />Vice President of Services & Support<br />Coupa Software<br />Warren Ganda<br />Corporate...
About Coupa<br />Empowering organizations to:<br />Spend Less:  Reduce maverick spending by ~33% <br />Pay Less:  Lower av...
About Williams-Sonoma<br />The first store opened in 1956<br />Brand sells hundreds of products from around the world<br /...
The Thing About Traditional Benchmark Surveys<br />
They Can Tell You A Lot…<br />Market metrics and trends<br />Savings / spend  2 – 8%<br />Quality:  Rejection % 4.1%<br />...
…but what can you do with it?<br />High level data <br />Limited segmentation ability by role or industry<br />Insightful ...
A New Approach to Benchmarking         & Measurement<br />
Transactional – Not Survey – Driven Benchmarks<br />Necessary to track your performance and demonstrate success<br />Witho...
Establishing Transactional Benchmarks<br />Benchmarks are only as good as the data being collected!<br />The Cloud can hel...
Success in the Cloud<br />
Innovation in the Cloud<br />Traditional Dev Model<br />Lengthy Independent Upgrades<br />Difficult Independent Implementa...
The Cloud is the Most Cost Effective<br /><ul><li>IT Support
Maintenance
Upgrade
Professional Services
Software Fees
IT Support
Maintenance
Professional Services
Software Fees
IT Support
Maintenance
Professional Services
Software Fees
Implementation
Hardware
Database / Middleware
Software Fees
Implementation
Hardware
Database / Middleware
Software Fee
Implementation
Hardware
Database / Middleware
Software Fee
Services fees
Service fees
Service fees
Service fees
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SIG Global Summit 2010 - Williams-Sonoma - Beyond the Benchmark Survey

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SIG Global Summit 2010 - Williams-Sonoma - Beyond the Benchmark Survey

  1. 1.
  2. 2. Today’s Session<br />Challenges with traditional benchmark surveys<br />Innovation that is changing reporting and benchmarking<br />The 10 must measure metrics and KPIs<br />How to build a benchmarking and measurement strategy<br />
  3. 3. Who We Are<br />Ravi Thakur<br />Vice President of Services & Support<br />Coupa Software<br />Warren Ganda<br />Corporate Purchasing<br />Williams-Sonoma<br />
  4. 4. About Coupa<br />Empowering organizations to:<br />Spend Less: Reduce maverick spending by ~33% <br />Pay Less: Lower average order costs by ~25%<br />Reduce Cycle Time: Reduce time to get goods by ~30%<br />Reduce Operating Costs: Reduce time spent on purchasing / auditing by ~20%<br />Improve Spend Predictability: Increase spend under management by ~20%<br />Total Customers: 150+ including <br />Platform Spend: More than $2.5B through 35,000 suppliers<br />Spend Growth: 704% year-over-year<br />System Availability: 99.999% uptime<br />
  5. 5. About Williams-Sonoma<br />The first store opened in 1956<br />Brand sells hundreds of products from around the world<br />More than 250 stores nationwide<br />Direct-mail business that distributes millions of catalogs a year<br />Highly successful e-commerce site<br />Dedication to customer service and strong commitment to quality<br />
  6. 6. The Thing About Traditional Benchmark Surveys<br />
  7. 7. They Can Tell You A Lot…<br />Market metrics and trends<br />Savings / spend 2 – 8%<br />Quality: Rejection % 4.1%<br />Cost of Processing per Order / Invoice (USD) PO: $217 average<br />Spend Under Management 48% - 87%<br />Req Approval Cycle (Time) 5.79 - 9.35 days<br />Total Procurement Costs .34 -.38% of revenue, .80-.85% of spend<br /> (Source: AMR Research)<br />
  8. 8. …but what can you do with it?<br />High level data <br />Limited segmentation ability by role or industry<br />Insightful – but inactionable – findings<br />Promotes the results of “best-in-class”<br />But doesn’t tell you specifically how to get there<br />Data quality<br />Often collected 6-to-12 months prior to publication<br />Self-reported, survey data subject to interpretation<br />
  9. 9. A New Approach to Benchmarking & Measurement<br />
  10. 10. Transactional – Not Survey – Driven Benchmarks<br />Necessary to track your performance and demonstrate success<br />Without true measurement, you cannot quantify results or define action plans<br />Tremendous value to measure oneself against other organizations by industry, employees, spend, etc.<br />
  11. 11. Establishing Transactional Benchmarks<br />Benchmarks are only as good as the data being collected!<br />The Cloud can help organizations incorporate benchmarks as a part of business flows<br />Multi-Tenant architecture on one code line allows for the same set of measurements for the same metrics<br />Instant scaling and load balancing for real-time data collection and calculation<br />
  12. 12. Success in the Cloud<br />
  13. 13. Innovation in the Cloud<br />Traditional Dev Model<br />Lengthy Independent Upgrades<br />Difficult Independent Implementations<br />Multiple Code Bases<br />Non-viable long-term business model<br />Cloud Dev Model<br />Quick and Simple Upgrades<br />Rapid Implementation<br />One Optimized Code Base<br />Sustainable Business Model<br />VS<br />Cloud Platform<br />
  14. 14. The Cloud is the Most Cost Effective<br /><ul><li>IT Support
  15. 15. Maintenance
  16. 16. Upgrade
  17. 17. Professional Services
  18. 18. Software Fees
  19. 19. IT Support
  20. 20. Maintenance
  21. 21. Professional Services
  22. 22. Software Fees
  23. 23. IT Support
  24. 24. Maintenance
  25. 25. Professional Services
  26. 26. Software Fees
  27. 27. Implementation
  28. 28. Hardware
  29. 29. Database / Middleware
  30. 30. Software Fees
  31. 31. Implementation
  32. 32. Hardware
  33. 33. Database / Middleware
  34. 34. Software Fee
  35. 35. Implementation
  36. 36. Hardware
  37. 37. Database / Middleware
  38. 38. Software Fee
  39. 39. Services fees
  40. 40. Service fees
  41. 41. Service fees
  42. 42. Service fees
  43. 43. Service fees
  44. 44. Service fees</li></ul>Year 2<br />Year 3<br />Year 1<br />
  45. 45. 10 Must Measure Metrics & KPIs<br />
  46. 46. How To Demonstrate Success<br />Spend management success measured by improvement in:<br />Efficiency<br />Removing road blocks that cause delays<br />Eliminating need for manual intervention<br />Driving user adoption of system<br />Effectiveness<br />Ensuring purchase policy compliance<br />Moving toward 100% of spend under management<br />Delivering savings to the organization’s bottom line<br />
  47. 47. 10 Must Measure Metrics<br />Efficiency<br />Req & PO Approval Cycle (Time)<br />Orders & Invoices Processed per FTE (#)<br />Purchasing Operating Costs (USD)<br />Days Payable Outstanding (DPO)<br />‘Touchless’ Procurement<br />Effectiveness<br />Savings / spend<br />Quality - Rejection %<br />Cost of Processing per Order & per Invoice (USD)<br />Spend Under Management<br />Customer Satisfaction Ratings<br />
  48. 48. Ways to Improve <br /><ul><li>Allow for mobile approvals
  49. 49. Provide pertinent information in requisition emails
  50. 50. Give real time budget information to approvers</li></ul>Requisition Approval Cycle Time<br />Requisition Approval Cycle Time<br />Amount of time taken to approve a requisition from the time it is submitted<br />Important to track the velocity of business<br />
  51. 51. % of Requisitions Rejected<br />Percentage of Requisitions Rejected<br />How many requisitions are being rejected to eliminate wasteful spend<br />High percentage could indicate: <br />Poorly documented/visible <br />A lot of off contract spend that is reigned in via the approval process<br />Ways to Improve <br /><ul><li>Policies available at time of requisition
  52. 52. Flexible catalogs and e-forms to drive employee request process </li></li></ul><li>Number Processed per FTE<br />Ways to Improve <br /><ul><li>Streamline processes with advanced approval workflows, contract checks, etc.
  53. 53. Enable invoice submission vis cXML or EDI
  54. 54. Utilize a supplier network to flip PO’s into invoices</li></ul>Number of requisition / invoice line items processed per FTE <br />A large amount of requisitions / invoices should be processed by each FTE <br />Should not touch each requisition / invoice, simply review exceptions<br />
  55. 55. Total Cost of Procurement<br />Ways to Improve <br /><ul><li>Do more with less resources
  56. 56. Streamline processes with advanced approval workflows, contract checks, etc.</li></ul>Total Cost of Procurement<br />How much of your revenue and spend go to cover procurement costs, including:<br />Soft costs: FTEs<br />Hard costs: applications, hardware, maintenance costs, software, etc.<br />TCO should be as low as possible<br />
  57. 57. Days Payable Outstanding<br />Days Payable Outstanding<br />Time from Invoice Receipt to Invoice Payment<br />Need to balance cash on hand vs. payment terms vs. early payment discount opportunities<br />Ways to Improve <br /><ul><li>Integrate finance / invoice management as a part of process
  58. 58. Take advantage of favorable payment terms and discounts</li></li></ul><li>‘Touchless’ Procurement<br />Ways to Improve <br /><ul><li>Reduce manual intervention points
  59. 59. Move processes online when possible
  60. 60. Leverage workflow automation</li></ul>‘Touchless’ Procurement<br />The efficiency of your procurement process<br />Should require as little manual processing as possible<br />Manual handling should be the exception, not the rule<br />
  61. 61. Cost of Processing<br />Cost of processing requisitions / invoices<br />Based on the loaded cost per FTE and the number of requisitions / invoices processed<br />This number should be as low as possible<br />Ways to Improve <br /><ul><li>Utilize automation to continually move this metric down</li></li></ul><li>Savings Percent of Spend<br />Ways to Improve <br /><ul><li>Understand why employees are not using negotiated pricing
  62. 62. Sole-source or find two or three vendors that can fit your needs
  63. 63. Negotiate with vendors to gain favorable pricing
  64. 64. Put controls in place to route employees to use the new negotiated pricing</li></ul>Savings as a % of spend <br />Total amount saved through discounts, negotiated prices, avoidance, etc. across all spend<br />Low percentage would indicate that certain areas of spend are not being covered by strategic activities<br />
  65. 65. Spend Under Management<br />Ways to Improve <br /><ul><li>Drive user adoption
  66. 66. Ensure all spend goes through one centralized system
  67. 67. Include all spend: POs, expenses, indirect, etc.</li></ul>Spend Under Management<br />How much of your spend is visible to the appropriate decision-makers<br />Defines spend visibility and impacts the ability to properly control spend<br />100% spend under management means no spending surprises<br />
  68. 68. Customer Satisfaction<br />Ways to Improve <br /><ul><li>Continuously collect feedback and measure
  69. 69. Let customers provide input into the process</li></ul>Customer Satisfaction Ratings<br />How is the process impacting the ability to meet customer needs<br />Employees get what they need to meet customer needs<br />Negotiated pricing, discounts, etc. help keep customer costs low<br />
  70. 70. Develop a Metrics Strategy<br />Plan: Develop migration plan for the metrics with timeframes and milestones<br />Scope: Define feasible and actionable scope, by supply chain, end-to-end<br />Process: Pay attention to ownership, roles, responsibilities, and structure<br />Culture: Manage the culture and motivation<br />Tools: Invest in the tools that will enable repeatability<br />Pilot: Use pilots to test the approach<br />Tradeoffs: Beware of tunnel vision and understand the interdependencies <br />Turning data into action: Identify conclusions using patterns and levers, prioritize results, and manage the communication<br />Power through Process: Institutionalize the measurement program through a business process (e.g., S&OP/Procurement) to make it “sticky”<br />
  71. 71. Williams-Sonoma<br />Building a benchmarking and measurement strategy<br />
  72. 72. The Benchmarking Challenge in Retail<br />A distributed model<br />Each brand operates “independently” <br />Limited consistency in process, spend categorization and suppliers<br />Difficult to access complete spend data by category<br />
  73. 73. Benchmarking Today<br />3 BIG challenges<br />No spend visibility<br />Information “after the fact”<br />No spend control<br />Spend not approved prior to purchase<br />Lost opportunity<br />Limited ability to act based on insights available<br />
  74. 74. A New Approach<br />Cloud spend management <br />One platform for all brands to manage spend<br />Real-time data, benchmarks, alerts, action<br />Starting with the end in mind<br />Benchmarking is to key to long-term success<br />Must be included as a part of upfront implementation efforts – you can’t go back after the fact to get the data you need! <br />
  75. 75. Developing the Strategy<br />Step 1: Identify Key KPIs<br />Step 2: Establish a Baseline<br />Step 3: Align Process, Technology & Measurement<br />
  76. 76. Identify Key KPIs<br />Spend category measures<br />Commodities, supplier contracts, brands<br />Efficiency measures<br />Time / cost to process PO / invoice<br />Effectiveness measures<br />Savings vs. spend, rejection / approval rate<br />Retail measures<br />Store / warehouse inventory, sales vs. operating costs<br />
  77. 77. Establish a Baseline<br />Review: requisitions and categorize spend appropriately<br />Calculate: spend by category, spend by budget, effectiveness metrics<br />Review: existing processes and resource requirements<br />Calculate: processing time, efficiency metrics<br />Review: supplier contracts and spend compliance<br />Calculate: % of spend that is on contract, preferred supplier savings, most favorable payment terms <br />
  78. 78. Align Process & Technology…<br />Stakeholder <br />Requirements<br />Supplier<br />Relationship<br />Management<br />Category <br />Planning<br />Contract<br />Negotiations &<br />Management<br />Requisition Issued<br />Requisition Approval<br />PO Issued to Supplier<br />Items Received<br />Purchase Need<br />Invoice Matching<br />Invoice Received<br />Invoice Matched to PO<br />Item Receipt Confirmed<br />Invoice Paid<br />
  79. 79. …and Technology & Measurement<br />Stakeholder <br />Requirements<br />Supplier<br />Relationship<br />Management<br />Category <br />Planning<br />Contract<br />Negotiations &<br />Management<br />Requisition Issued<br />Requisition Approval<br />PO Issued to Supplier<br />Items Received<br />Purchase Need<br />Metrics: Goods & Services, Suppliers, Amounts, Budget, Submission Timestamp<br />Metrics: Accepted / Rejected Status, Approval / Rejection Timestamp<br />Metrics: PO Number, Issue Timestamp, Supplier Transmission Timestamp<br />Metrics: Receipt Timestamp, Supplier Ratings<br />Metrics: Billed Amount, Budget, Invoice Timestamp<br />Metrics: Final Amount Paid, Budget, Payment Timestamp<br />Metrics: Discount Rate, Preferred Suppliers, Payment Terms<br />Invoice Matching<br />Database / Reporting Engine<br />Invoice Received<br />Invoice Matched to PO<br />Item Receipt Confirmed<br />Invoice Paid<br />
  80. 80. Fully Equipped for Effective Spend Management<br />Real-Time Executive Dashboards<br />Up to the minute views into spend and budgets, real-time savings and performance reporting <br />Real-Time Transactional Benchmarks<br />Performance comparison with others in the market based on actual transactional data and trends <br />Database / Reporting Engine<br />Monthly / Quarterly Performance Review<br />In-depth spend / performance review, identify areas for long-term improvement, adjust accordingly<br />
  81. 81. Ambitious Goals & Targets <br />Get 100% spend under management<br />Regain spend visibility and control<br />Drive 100% user adoption<br />Phased rollout with 150 initial users, then company wide<br />Cut process costs<br />Continue to fine-tune for efficiency and resource optimization<br />Consolidate to suppliers / category<br />Reduce category overlap for the best deals and discounts<br />Put an emphasis on expense management<br />Drive savings not just through purchasing, but tighter expense management<br />
  82. 82. A Plan for Success<br />Baseline benchmark for comparison<br />Data collection and metrics are a part of implementation <br />Real-time data access through dashboards<br />Periodic reports and reviews to identify areas for improvement<br />
  83. 83. Q<br />&<br />A<br />
  84. 84. THANK YOU!<br />Ravi Thakur<br />Vice President of Services & Support<br />Coupa Software<br />ravi.thakur@coupa.com<br />Warren Ganda<br />Corporate Purchasing<br />Williams-Sonoma<br />WGanda@wsgc.com<br />

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