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CombineNet: Adding Advanced Sourcing to SAP, Ariba, and Oracle Environments

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Amidst the recently announced merger and acquisition activity in the procurement applications space, "the show must go on" for those in strategic sourcing roles: sourcing plans must be executed, …

Amidst the recently announced merger and acquisition activity in the procurement applications space, "the show must go on" for those in strategic sourcing roles: sourcing plans must be executed, supplier bids collected, and decisions made to determine who is best suited to be awarded the business. Supply chains simply can’t wait for the dust to settle – and even more, the pressure keeps growing to find new areas of savings and innovation.

Yet despite investments already made in sourcing products from SAP, Ariba, Oracle, and others, procurement organizations largely report that only one-third of total spend is put through those e-sourcing tools. This reveals an opportunity for a better e-sourcing solution to help you get better results.

In this webcast, learn how advanced sourcing technology is used to create new value, quickly, and in the presence of existing investments. You'll hear:

What defines "advanced sourcing" and "sourcing optimization" -- and when these solutions should be added to or replace existing tools.

From Aberdeen Group, highlights from their annual strategic sourcing benchmark report, published June 2012, regarding advanced sourcing and optimization practices.

How Aberdeen's Best-in-Class compare to Industry Average and Laggards.

Real-world examples of how CombineNet's cloud-based advanced sourcing product is used in the presence of SAP, Ariba, Oracle, and sourcing suites.

More in: Technology , Business
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  • Whether it is compliance, cost- or a supplier-focused initiative, sourcing provides an opportunity to identify true spend requirements for an organization. As a discipline that has become more sophisticated over the past decade, sourcing is also becoming more vital in aligning procurement organizations with the best suppliers and supply channels for delivering the highest possible savings opportunities. But what makes sourcing "strategic" is the ability to adapt and adjust sourcing approaches that reflect these needs in an ever changing and increasingly global and competitive marketplace.
  • Based on the slide, it is clear that many have already adopted a strategic sourcing program - for instance we can that 37% have been using a formal process for more than 5 years, 29% 2/3 of the respondents having experience – many of them have also implemented eSourcing as part of this – for those in this category we see that a higher utilization of core sourcing technologies such as an ability to execute an event or run a reverse auction, with the former being a much more frequent occurrence.However we also see a small group less than 10% that do not have a formal process
  • Furthermore Figure 2 reflects the benefits of strategic sourcing. With a majority of respondents (66%) having a strategic sourcing program in place for at least three years, 72% of these organizations noted the key benefit of strategic sourcing was increased level of cost savings, followed by better alignment of sourcing and business goals (54%) and better management of key spend categories (49%). These stated benefits demonstrate that strategic sourcing approaches can help organizations move away from tactical short-term cost cutting to value creation that considers wider organizational objectives. But as an ongoing process, strategic sourcing today also requires the flexibility for adjusting to a more uncertain economic future.
  • So as we mentioned before we would visit the concept of formal sourcing - ……….Like many aspects of the procurement or sourcing world there are no set methodologies that everyone uses – case in point we can see an example that I used for the report that shows a seven step process – others use a six step process. One of the most noted ones was developed by AT Kearney was a seven step – above is a condensed example of this methodology. Moreover, as you can see the chart above shows a linear progression of typical steps in the “formal sourcing process”, however strategic sourcing is an institutional process that continuously improves and re-assesses the activities within the organization. For every new category of spend or supplier onboarding process this process is tweaked and re-tweeked. Regardless of how you specifically define each step, the whole process also invariably involves multiple disciplines – so when we say “strategic sourcing” – what do we really mean. For instance in looking at the process beyond technology or modules per se, we become well aware that sourcing is part of larger process that must include spend analysis, contract management supplier management, something Emily will talk about more in her presentation. If we look at the chart for instance – Step 1 – represents the need for spend analysis- this is a critical starting point to understanding what you are currently buying and how categories are defined.Step 2 – represents the importance of supplier management based on what data/intelligence you may already have and what market dynamics or trends exist within the universe of suppliers that will be evaluated – for instance are you dealing with a monopoly market, a competitive market or a commodity (unlimited number of competitors)?Steps 3 – 6 - Further demonstrates the reliance on eSourcing tools for generating eRFx or Reverse auctions – but it is in Step 5 that is also showing the usage of advanced techniques. For instance the different approaches used to evaluate cost and non-cost factors in making decisions comes here like using bid optimization - when evaluating bids here is where Total cost can be broken down into Material Cost, Transportation Cost, Labor Cost, etc… instance Step 6 is also where flexibility in the sourcing process allows suppliers to adjust to pricing, etc.Step 7 – Finally with Step 7 this takes us to the execution of sourcing through a contract and downstream from there.
  • - Procurement professionals are increasingly relying on strategic sourcing to help avoid supply disruptions
  • Perhaps driven by concerns over diminished returns from repeated sourcing events on the same set of categories or lack of skills to execute on internal strategies in more complex categories, sourcing organizations continue to be pressured to find new approaches for reducing cost and identifying savings. External pressures from global markets are also increasingly adding a new dimension that force organizations to reassess their sourcing efforts. An example of this is how organizations today must reconsider global risk in Europe due to the Euro crisis, or the changing landscapes for low-cost competitiveness shifting from places like China to newer markets such as Vietnam or Indonesia. Given these pressures, Figure 3 shows organizations indicate that the corporate mandate to reduce cost / increase savings is the leading pressure for 69% of survey respondents. As many organizations reach a level of maturity and saturation point in achieving their goals with mature categories (i.e. low hanging fruit) they may lack knowledge for expanding into more complex ones due to insufficient category knowledge or the inability to improve sourcing performance required in this dynamic global environment. Furthermore, organizations today are becoming more aware of sourcing sustainability (i.e. ethical, environmental, social issues) as a critical aspect for sourcing and a theme of the advanced sourcing concept.
  • Mitigating these pressures requires an ability to improve supplier insights and improve sourcing performance. Based on this survey, however, it is clear that barriers to strategic sourcing revolve around the lack of advanced techniques such as supplier optimization and the inability to integrate sourcing initiatives with spend analytics and supplier management. For example, Figure 4 shows only 33% of respondents indicated a capability around supplier risk assessments, 29% indicated optimizing ideal (preferred) suppliers and 27% indicated the use of use of proactive data analytics for future sourcing projects. In recognizing the importance of better understanding the impact critical suppliers have on organizational spend and for improving techniques in these areas, 50% of organizations indicate they plan to implement proactive analytics for future sourcing projects, 50% plan to optimize ideal suppliers, and 43% plan to implement supplier risk assessments
  • Clear pattern where centralization follows a key pattern for Best-in-Class – and follows a center-led approach with a centralized souricng tram that managing all strategic sourcing projects.
  • As part of the functional criteria for getting the job done in sourcing, it is important that organizations align themselves with that of the wider organization. It is clear that Best-in-Class organizations demonstrate leadership here in their ability to coordinate both with the lines of business and areas like finance. Again when we look at the least collaboration it is no surprise that the Sustainability Officer is still an emerging area for most, where only 1/3 of Best-in-Class and 27% of All Others are collaborating here.
  • Best-in-Class shows the largest capability advantages with a majority of these being related to organizational factors such as the cross-functional coordination with various groups and the use of commodity councils.Yet two areas that also show gaps is in the ability to collect spend data from multiple sources and the ability to enrich spend and supplier data – a critical element in the initial stages of the formal sourcing process we shared earlier.
  • Advanced Sourcing Approaches - Total Cost of Ownership - a strategic sourcing approach that offers award scenarios by incorporating all elements of cost related to different suppliers, including cost of poor quality, cost of inspection and long lead times.Matrix pricing - used when price depends on a factor other than quantity (i.e. delivery date or geographic locations). Tiered pricing - used when price depends on purchasing volumeOptimization - used as part of advanced analytical tools to simultaneously negotiate and evaluate complex bid structures against a wide range of interdependent sourcing objectives, variables, constraints and potential scenarios Total Landed Cost – Tries to track all the costs (both costs of good sold, as well as supply chain and logistics costs) from the moment of purchase the raw material until it ships to the customer including all steps in the middle (and including inventory in different stages)______________________________________The importance of these areas is helping organizations better align their needs – an example of this is in the low-cost sourcing to places again like China where prices are rising and may not be a low-cost source. Through the use of Total Cost of Ownership and Total Landed Costs, organizations are better prepared to understand their true costs
  • It appears that on average the Best-in-Class are demonstrating an edge in the percentage of spend going through an eSourcing tool for all categories in both direct and indirect spend areas. The largest maturity differentials for direct, indirect materials and services spend is also revealing when looking at specific categories. For example, IT hardware is a mainstay commodity area and typically a low hanging fruit where many organizations have already seen the benefits of using e-sourcing. Based on the survey results, 50% of the Best-in-Class indicated using e-sourcing for IT hardware compared to 33% of Industry Average, but only 7% of Laggards. What is also revealing is the use of e-sourcing for services spend, where Best-in-Class show 3-times the use of automation in comparison to Laggards. A services spend category that showed the largest difference between the maturity classes was travel, where 42% of the Best-in-Class are using an e-sourcing tool compared to 26% of Industry Average and only 4% of Laggards.
  • Looking at what feature sets are automated within an e-sourcing platform also provides insights into where the Best-in-Class are demonstrating advantages with their use of e-sourcing technology. The Figure shows six key features of e-sourcing tools today. In examining the figure it is clear the Best-in-Class are demonstrating advantages in their use of areas that can be considered more advanced. The Best-in-Class are 2 times more likely to be using sourcing optimization and bid analysis as a part of their strategic sourcing processes. A highly-automated aspect to strategic sourcing, sourcing optimization and bid analysis provide a potentially powerful combination of artificial intelligence to understand “what if” scenarios. By providing suppliers with a wider opportunity and freedom to express their bidding and preferences in a more sophisticated response for quotes, Best-in-Class sourcing organizations are better able to establish an enhanced ability to analyze disparate bids from their suppliers.
  • Finally – the last slide gives and idea of where organizations stand in their current perceptions in using eSourcing platforms. This shows Ease of Use at the highest level – but differences begin to show –for instance Best-in-Class are more likely to be concerned about the ease of integration with back end systems and up stream areas, and the ability to access complementary sourcing services available from the solution provider.

Transcript

  • 1. Adding Advanced Sourcing toSAP, Ariba and Oracle Environments Copyright © 2012. CombineNet, Inc.
  • 2. Speakers & Agenda Moderator: Greg Holt, Director of Product Marketing, CombineNet Constantine Limberakis, Senior Analyst, Supply Management, Aberdeen Group – 2012 Strategic Sourcing Benchmark Research Findings: Advanced Sourcing Jennifer Sikora, VP of Marketing, CombineNet – Company solutions for Advanced Sourcing in SAP, Ariba, and Oracle Environments – Customer Case Studies Q&ACopyright © 2012. CombineNet, Inc.
  • 3. Market Developments SAP announced acquisition of Ariba SAP, Oracle, and Ariba combine for nearly 50% of procurement software revenue (Source: Gartner, April 2011) Solution gaps remain in Sourcing: “Other vendors remain in a league of their own and we encourage Ariba and SAP customers and prospects to explore whether or not advanced sourcing/optimization capability is important based on their internal skill sets, spend profile and willingness to embrace alternative sourcing and negotiation approaches; if so, alternatives should be given top priority until SAP and Ariba catch up in advanced sourcing areas.” – Spend Matters, May 30, 2012Copyright © 2012. CombineNet, Inc.
  • 4. The Market Continues to Use Excel Polled 100 commercial organizations Conducted April-May 2011 Not currently CombineNet customers Procurement, sourcing, and supply chain roles Solutions Used to Support Sourcing (select all that apply) 70% 60% 50% 40% 30% 20% 10% 0% Microsoft Excel eSourcing & Microsoft Word Home-Grown Solutions Procurement Suites Source: CombineNet Market Survey, May 2011Copyright © 2012. CombineNet, Inc.
  • 5. The Market Continues to Use Excel Polled 100 commercial organizations Conducted April-May 2011 Not currently CombineNet customers Procurement, sourcing, and supply chain roles Solutions Used to Support Sourcing (select all that apply) 70% 60% 50% Still regularly use Excel for creating 40% RFPs and collecting bids: 30% 20% ERP/Procurement Suite users = 74% 10% 0% Microsoft Excel eSourcing & Microsoft Word Home-Grown Solutions Procurement Suites Source: CombineNet Market Survey, May 2011Copyright © 2012. CombineNet, Inc.
  • 6. The Market Continues to Use Excel Polled 100 commercial organizations Conducted April-May 2011 Not currently CombineNet customers Procurement, sourcing, and supply chain roles Solutions Used to Support Sourcing (select all that apply) 70% 60% 50% Still regularly use Excel for analyzing 40% bids: 30% 20% ERP/Procurement Suite users = 85% 10% 0% Microsoft Excel eSourcing & Microsoft Word Home-Grown Solutions Procurement Suites Source: CombineNet Market Survey, May 2011Copyright © 2012. CombineNet, Inc.
  • 7. Excel Use Driven by ERP/Suite Limitations General sourcing tools designed for less strategic spends, smaller scale, and low business impact. Limited data collection from suppliers – Non-price components of bids are poorly supported – Lacks robust Cost Model components – Supplier Capacity not considered  Result: Price-focused RFPs that Leave Supplier Value and Innovation on the Table Limited support for size and scale – Smaller # of items/locations/suppliers (example: 1,000 bid elements = 200 items x 5 bid elements/item)  Result: Forces Lotting/Bundling Strategies and Reduced-Scope Events that Fail to Leverage Spend Volumes and Supplier Capabilities Very basic analytical capabilities – Lowest price/unit is often the deciding factor – Little ability to conduct “What if?” analysis  Result: Awards that Don’t Meet Real-World Requirements; Missed Opportunities for Savings and InnovationCopyright © 2012. CombineNet, Inc.
  • 8. Understanding “Advanced Sourcing” First-generation sourcing approaches only capturing up to 30% of spend under management – Focus mainly on lowest-cost results – Simple RFPs – Traditional E-auctions – Complexities handled via workarounds Next-generation sourcing means: – Advanced sourcing processes that involve total cost analysis, risk management, optimization, and innovation – Improved e-sourcing technology to remove current limitations on categories supported and event size, scale and flexibility – Stronger influence and business resultsCopyright © 2012. CombineNet, Inc.
  • 9. AberdeenGroup’s Latest Benchmark:Advanced Sourcing--Maximizing Savings Identification Constantine LimberakisPlease note: All data findings included in thispresentation are early representations of theStrategic Sourcing 2012 data pool. Copyright © 2012. CombineNet, Inc.
  • 10. Aberdeen Thoughts on SAP & ARIBA News provides an opportunity for organizations to reassess their current strategies Creates a new alignment of competitive marketplace Glaring redundancy and duplications of sourcing and contract management platforms for both on-Demand and on-premise components Hesitation on further deployment of existing sourcing platform Competitors reacting by providing discount to programs for signing up 10
  • 11. Aberdeen’s Research Methodology Web-based / online benchmark survey (35 to 40 questions) Analysis of data aggregate Dissection into Maturity Framework (Best-in- Class, Industry Average, and Laggard) Benchmark research reports 5-to-7 page research derivatives (Analyst Insights, Sector Insights, etc.) Follow-up discussions with select end-users for quotes and case studies Webinars, assessment tools, social media, etc. 11
  • 12. Latest Benchmark - Advanced Sourcing:Maximizing Savings Identification  Job title: The research sample included respondents with the following job titles: Manager (40%); Director (28%); VP / EVP / SVP (4%); C-level / executive office (3%), Consultants (8%), and Others (7%).  Industry: The research sample included respondents from the following industries: health/medical/dental (11%); industrial equipment/products (10%); financial services (8%); education (6%); consumer packaged goods (5%); and 28 others.  Geography: The majority of respondents (55%) were from North America. Remaining respondents were from the following regions; Europe (25%); Asia / Pacific (10%); Middle East and Africa (3%); and South / Central America (3%).  Company size: 25% of respondents were from very large enterprises (annual revenues above US $5 billion); 27% were from large enterprises (annual revenues between $1billion and $5 billion); 22% were from midsize-large enterprises (annual revenues between $50 million and $1billion); and 17% of respondents were from small businesses (annual revenues of $50 million or less). 12
  • 13. Importance of Strategic Sourcing in yourorganization Neutral role No role 4% 3% Moderately significant Critical role role 34% 25% Prominent role 34% (Percentage of survey respondents, n=146) Source: AberdeenGroup, May 2012 13
  • 14. Formal Strategic Sourcing program40% 37%35%30% 29%25%20% 15%15%10% 9% 5% 3% 3% 3% 0% More than 5 3 to 5 years 1 to 2 years Less than one None yet, but None yet, but None planned years year budgeted to under start within 12 consideration months (Percentage of survey respondents, n=146) Source: AberdeenGroup, May 2012 14
  • 15. Top Benefits recognized with Strategic Sourcing Increased level of cost savings 72% Better alignment of sourcing and business 54% objectives More robust management of key spend 49% categories 0% 10% 20% 30% 40% 50% 60% 70% 80% (Percentage of survey respondents, n=146) Source: AberdeenGroup, May 2012 15
  • 16. Question: How do you improve this process? 1 2 3 4 5 6 7 16
  • 17. Problem of eSourcing with just Traditional Means Evolution of Strategic Sourcing from being a savings concept to strategic importance Selection of suppliers beyond just cost criteria; need to adapt to complex, multi-variant scenarios Sourcing has been pulled into understanding the wider-organizational challenges Globalization creating inherent risks for managing supply chain Sustainability & CSR becoming more important factors in the context of strategic sourcing 17
  • 18. Pressures related to Strategic Sourcing Corporate mandate to reduce cost / increase 69% savings Need for more effective category management 36% strategies / knowledge Need to improve sourcing performance 21% Need to mitigate supplier risks due to supply 18% disruptions Stakeholder pressure for measuring against 14% sustainable sourcing initiatives 0% 10% 20% 30% 40% 50% 60% 70% 80% (Percentage of survey respondents, n=146) Source: AberdeenGroup, May 2012 18
  • 19. Key Capability Gaps in Strategic Sourcing Proactive data analytics for future 27% sourcing projects 50% 29% Optimization of ideal suppliers Currently Implemented 50% Plan to Implement 33% Supply risk assessment 43% 0% 10% 20% 30% 40% 50% 60% (Percentage of survey respondents, n=146) Source: AberdeenGroup, May 2012 19
  • 20. The Best-in-Class Maturity Framework T able 1: Top Performers Earn Best-in-Class Status Definition of Mean Class Performance Maturity Class  76% - percent of total spending sourced using Best-in-Class: a formal strategic sourcing process T op 20%  32% - percent total spending sourced based of aggregate on sustainable strategic sourcing approaches performance scorers  16% - average yearly savings identified by sourcing team  54% - percent of total spending sourced using Industry Average: a formal strategic sourcing process Middle 50%  21% - percent total spending sourced based of aggregate on sustainable strategic sourcing approaches performance scorers  8% - average yearly savings identified by sourcing team  29% - percent of total spending sourced using Laggard: a formal strategic sourcing process Bottom 30%  11% - percent total spending sourced based of aggregate on sustainable strategic sourcing approaches performance scorers  4% - average yearly savings identified by sourcing team Source: Aberdeen Group, May Source: AberdeenGroup, May 2012 20
  • 21. Organizational structure to address strategicsourcing Centralized sourcing team that manages all 46% strategic sourcing projects 20% Centralized or shared services sourcing team in 21% conjunction with business unit or regional teams 17% Formal company-wide sourcing or supply 21% management group 16% Centralized or shared services sourcing team 8% Best-in-Classwith power users dispersed across the enterprise 12% All Others Formal sourcing or supply management group 4%resides within individual business units or regions 18% No formal sourcing organization 0% 11% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Source: AberdeenGroup, May 2012 21
  • 22. Groups collaborating with Sourcing Team Finance (CFO) 92% 68% Operations (COO) 79% 72% Product development (VP PD) 67% 43% IT (CIO) 63% 57% Best-in-Class Manufacturing (VP SCM) 63% 49% All Others Executive office (CEO) 58% 42% Sales / Marketing (CSO/ CMO) 58% 44% Sustainability office (CSO) 33% 27% 0% 20% 40% 60% 80% 100% (Percentage of survey respondents, n=146) Source: AberdeenGroup, May 2012 22
  • 23. Capability Gaps with Best-in-Class Cross-functional coordination with line of 88% business and sourcing groups 67% 33% Cross-functional coordination with 83% 63% finance, product, and sourcing groups 30% Ability to collect spend data from multiple 79% Best-in-Class 55% sources 28% Industry Average Laggards 67% Ability to enrich spend and supplier data 37% 24% Commodity councils actively engaged in 63% 33% sourcing process 15% 0% 20% 40% 60% 80% 100% (Percentage of survey respondents, n=146) Source: AberdeenGroup, May 2012 23
  • 24. Top Six (6) Stated Sourcing Strategies 80% 75% 71% 70% 67% 67% 63% 63% 59% 58% 60% 54% 51% 50% 42% 40% 31% Best-in-Class 30% All Others 20% 10% 0% Total Cost of Matrix or tiered Payment terms Optimization Multi-stage Total Landed Ownership pricing sourcing Cost (Percentage of survey respondents, n=146) Source: AberdeenGroup, May 2012 24
  • 25. Strategic Sourcing versus eSourcing 62% IT hardware 27% 51% Transportation / logistics services 23% 40% Temporary labor 15% Strategically-Source 21% Legal services Using eSourcing 8% 0% 10% 20% 30% 40% 50% 60% 70% Source: AberdeenGroup, April 2012 25
  • 26. Percent of Spend through eSourcing 40% 35% Best-in-Class 35% 33% 29% Industry Average 30% 29% 28% 27% 28% Laggards 25% 22% 20% 15% 12% 9% 9% 10% 10% 5% 0% % of total spend % of direct materials % of total non- % of total services spend production / indirect spend materials spend (Percentage of survey respondents, n=146) Source: AberdeenGroup, May 2012 26
  • 27. Automated Sourcing Attributes 33% Event management 36% 9% 38% Event templates 40% 13% 42% Event creation 40% 9% Best-in-Class 46% Industry Average Bidding collection / aggregation 37% Laggards 11% 46% Event analysis / reporting 33% 11% 50% Sourcing optimization / bid analysis 26% 7% 0% 10% 20% 30% 40% 50% 60% (Percentage of survey respondents, n=146) Source: AberdeenGroup, May 2012 27
  • 28. Preferred Deployment Approach foreSourcing Deployed on-demand, Software-as-a- 46% Service (SaaS) 36% 29% Installed on-premise 25% Best-in-Class 13% All Others Hosted by a 3rd party provider 13% 8% No preference 17% 0% 10% 20% 30% 40% 50% (Percentage of survey respondents, n=146) Source: AberdeenGroup, May 2012 28
  • 29. Key Criteria for eSourcing Selection 42% Ease of use (usability) 39% Ease of integration with back-end 42% systems (ERP, MRP, PLM) 23% 38% Core functionality 37% Ease of integration with upstream 29% spend areas 21% Best-in-Class 25% Others Advanced functionalities within the eSourcing application 28% Solution provider experience (i.e. 25% industry) 16% Complementary sourcing services 25% available from solution provider 6% 0% 10% 20% 30% 40% 50% (Percentage of survey respondents, n=146) Source: AberdeenGroup, May 2012 29
  • 30. Recommendations for Action Continue to invest in diverse skills and capabilities on the strategic sourcing teams Improve supplier assessment capabilities for strategic sourcing efforts Develop the ability to enrich spend and supplier data for use in sourcing Improve the usage of optimization tools and techniques Increase the use automation in strategic sourcing tools particularly for complex spend Implement sustainable/csr sourcing strategies across more categories 30
  • 31. CombineNet Advanced Sourcing Solution & Customer Results Copyright © 2012. CombineNet, Inc.
  • 32. Strategic Sourcing Not Constrained by Technology… “What We Have is Working Good Enough.” You can drive clear improvements where sourcing involves any of the following: – Business-critical spends/categories – Larger-sized RFPs – Non-price data that must be collected and analyzed – Supplier collaboration – Risk mitigation – Multiple decision stakeholders before awarding – Deeper analytics needed at faster speed – Aggregation of regional or lotted spends – Improved e-sourcing cycle times (speed, productivity)Copyright © 2012. CombineNet, Inc.
  • 33. CombineNet Company Overview The Company The Technology Customer Value Established in 2000. Best of Breed Solutions that Capture >2X spend under E- improve Strategic Sourcing. Sourcing management Global: Offices in 21 U.S. Patents. Pittsburgh, PA; London, UK; Manage supply risk with Hamburg, Germany. Software-as-a-Service (SaaS) Cost-Risk-Benefit analysis Partners for Latin delivery model for ease of America, Middle East, APAC adoption and scale Fast implementation and broad adoption for any type Customers: Global 2000 Easy integration into your of user spanning CPG, Food & environment to complement Bev, Retail, Manufacturing, existing applications Nearly 100% see full payback Transportation, and more after 1st sourcing eventCopyright © 2012. CombineNet, Inc.
  • 34. CombineNet ASAP® for Advanced Sourcing Key Differentiators: SaaS-based Best-of-Breed product used Optimization Engine handles extensive by sourcing teams and their suppliers. data inputs; 21 patents. Speeds, simplifies, and centralizes the Scenario Builder enables rapid and creation and management of sourcing advanced ‘what-if’ analysis. events of any size, scale, or complexity. Expressive Bidding® supports an For any spend category (direct expressive, collaborative marketplace materials, indirect between buyers and suppliers. materials, transportation, services). Fast Implementation – 1 ½ day Complements and enhances existing training, quick-start wizards, template solutions and processes. uploads, event editing, etc. enable fast, smooth adoption, and immediate ROI.Copyright © 2012. CombineNet, Inc.
  • 35. Our Advanced Sourcing Product: ASAP® Create Bid Analyze & Award RFxpress Scenario BuilderSM (RFI, RFP, E- Auction) Expressive Bidding® Optimization Templates Expressive Feedback Reporting & Dashboards Event Quick-Start CombineNet ASAPCopyright © 2012. CombineNet, Inc.
  • 36. Typical CombineNet Customer 70% of Customers Use CombineNet ASAP alongside ERP/Suites Already have ERP/E-Sourcing Suite in place, but: – Multiple categories unaddressed by E-Sourcing – need a more flexible, robust technology solution to support. – Reached a savings plateau in mature categories – need more innovative E-Sourcing to drive savings. – Struggle with bid analytics – need ability to identify best sourcing decision based on “what if?” scenarios. Selected or are in process of implementing ERP/Suite, but: – Significant sourcing events are on the horizon – Need near-term value creation for supply chainsCopyright © 2012. CombineNet, Inc.
  • 37. We Do this for Companies Just Like Yours A Wide Variety of Customers across All IndustriesCopyright © 2012. CombineNet, Inc.
  • 38. Where Do Our Customers Use Us Today? Across All Spend Categories: Direct, Indirect, Transportation, Packaging, Services - Spends Sourced (sampling) - Chemicals Capital Expenses Air Freight Bottles/Vials Advertising Commodities Construction Mat’s Drayage Cans Facility Services Fats & Oils Displays Ocean Cartons Labor Food Ingredients Fleet Vehicles LTL Corrugate Legal Services Raw Materials Office Supplies Parcel Flexible Films Meetings Resins Marketing/Media Truckload Printed Labels Printing Steel Telecom Rail/Intermodal Secondary Pkg Treasury/Finance From the Routine… - 51% had <100 items … To the Complex  20% had >1,000 items  20% had >50 suppliers  18% had >10,000 bids Based on FY2011 dataCopyright © 2012. CombineNet, Inc.
  • 39. Large European Conglomerate $ Billion in Spend Managed Customer Profile: Annually >1,000 e-sourcing events 8 annually 7 Ariba user since 2007 6 Adopted CombineNet in January 5 2011 4 More than 2X Increase in 3 Corporate Spend Managed via E- 2 Sourcing in year 2 with 1 CombineNet ASAP 0 2010 2011 2012 $7.5 Billion E-Sourced in 2012 (projected) Ariba CombineNetCopyright © 2012. CombineNet, Inc.
  • 40. Case Study – Foodservice Operator Client Profile: First Event: CombineNet and Ariba User ROI: >100X Payback : Immediate CombineNet Details – Implementation: < 1 wk – Training: 1 day Sample Categories in First 6 – In the first 6 months: Months Using CombineNet  10 Events Opened Bags Bread  9 Awarded Eggs Buns Tortillas Bakery Needs Chicken DistributionCopyright © 2012. CombineNet, Inc.
  • 41. Case Study – Foodservice Operator (continued) Opportunity: 2 RFPs run in existing suite – Analyzed for 2 weeks & awarded manually Loaded same data into CombineNet – Analyzed multiple possible award options in a few hours (all in the product) Result: 2X in savings 2 weeks in time savingsCopyright © 2012. CombineNet, Inc.
  • 42. Case Study – Major U.S. Retailer Client Profile: Customer using ERP procurement solution and CombineNet CombineNet Details Sample Categories in First 6 – Implementation: < 1 mo Months – Training: 1 day Ocean Freight Air Freight Recycled Trash Removal – Ran >8 events in CombineNet Corrugate Network in first 6 months Treasury Batteries ServicesCopyright © 2012. CombineNet, Inc.
  • 43. Changing the Way You Think about e-Sourcing Existing Tools Are Limiting Your Sourcing Strategy – Restrictions on size and scope require lotting, or breaking events into smaller pieces – Rigid bidding mechanisms deprive you of supplier Don’t let your innovation and value creation technology define – Price-focused analysis reduces options for real change your strategy!Copyright © 2012. CombineNet, Inc.
  • 44. Advanced Sourcing Helps Reduce Supply Risk Cost-Risk-Benefit Decision Making Identify and evaluate the risk factors of your supply decisions, and understand the cost impact of risk mitigation strategies Geographical Risk Mitigation Example Limit Japanese supply volume to 25% Limit S. Korea supply volume to 40% per plant At least 30% supply from China for each item There is a cost tradeoff for every decision; Optimization helps you quantify the cost-risk-benefitCopyright © 2012. CombineNet, Inc.
  • 45. Advanced Sourcing Drives Next-Generation E-Sourcing Value Conquer Complex Spend Categories Proven results provide confidence in conducting the largest and most complex e-sourcing events Improve Results in Mature Spend Categories Get beyond “savings plateaus” with advanced capabilities to find new supplier-driven savings and efficiencies Speed Up the e-Sourcing Process Quick on-boarding and faster time-to- award improves sourcing team productivity and Return on ProcurementCopyright © 2012. CombineNet, Inc.
  • 46. CombineNet ASAP Provides a Clear Path to Execute Your Sourcing Strategy Execute Any Bidding Strategy with the Most Flexible and Scalable RFX platform – Unlimited event size and scope – Robust options for RFI, RFP, E-Auction event types – Expressive Bidding® for price and non-price bid elements, supplier information, innovation, and value-add Explore All of Your Options with Industry- Leading Bid Analysis – Fast, easy “What If?” scenario optimization – Combine RFI, RFP/Q, E-Auction responses, business preferences and constraints for a complete understanding of sourcing decisions – Uncover hidden savings opportunities and find the best sourcing solution fasterCopyright © 2012. CombineNet, Inc.
  • 47. Fast Value Creation – Speed to ROI Nearly all customers get Rapid on-boarding and 100%+ payback after first implementation = online CombineNet ASAP event bidding in days Across ALL spends: 80% of our customers use Average 10% savings us to fill gaps in existing against spend size e-Sourcing/ERP suites (ranges of 5-60%)Copyright © 2012. CombineNet, Inc.
  • 48. Strategic Sourcing Not Constrained by Technology… “What We Have is Working Good Enough.” You can drive clear improvements where sourcing involves any of the following: – Business-critical spends/categories – Larger-sized RFPs – Non-price data that must be collected and analyzed – Supplier collaboration – Risk mitigation – Multiple decision stakeholders before awarding – Deeper analytics needed at faster speed – Aggregation of regional or lotted spends – Improved e-sourcing cycle times (speed, productivity)Copyright © 2012. CombineNet, Inc.
  • 49. What Next? Look for an email with: – Copy of the Aberdeen 2012 Sourcing Benchmark Report – Link to CombineNet ASAP® for Advanced Sourcing White Paper Contact Us to compare results for key spends: – info@combinenet.com – Jennifer.sikora@combinenet.com – www.combinenet.comCopyright © 2012. CombineNet, Inc.
  • 50. Reach Out! Twitter: @ABG_SpendMngmt LinkedIn: http://www.linkedin.com/in/climberakis Aberdeen Group GSM Research Group  Aberdeen Group GSM Research Advisory Council (RAC) Aberdeen Research Blog: blogs.aberdeen.com 50
  • 51. Thank You. Questions & DiscussionJennifer Sikora Constantine LimberakisVice President of Marketing Senior Research AnalystCombineNet, Inc. AberdeenGroupwww.combinenet.com www.aberdeen.com constantine.limberakis@aberdeen.cominfo@combinenet.com Twitter: @ABG_SpendMngmtPhone: +1 877-293-5480 Phone: +1.312.470.6071 Copyright © 2012. CombineNet, Inc.