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Analyzing Spend – You Can’t Fight What You Can’t See

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Supply chains across enterprises are infested with supplier risks, savings leakage issues, and sourcing inefficiencies which often go undetected due to the lack of good visibility in to spending data. By blending spend data with the right market intelligence, organizations stand to extract the best value from their sourcing initiatives.

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Analyzing Spend – You Can’t Fight What You Can’t See

  1. 1. Analyzing Spend: You Can’t Fight WhatYou Can’t SeeSpeakers:Phil Fisher – Dun & BradstreetBrian Delaney – MetLifeCraig Fischer – Las Vegas Sands Corp.Moderator:Keertan Rai – Ariba, an SAP Company© 2013 Ariba, Inc. All rights reserved.
  2. 2. #AribaLIVEAgenda• Overview and Introductions• Panel PresentationsPhil Fisher - VP, Strategic Alliance Partner Solutions - D&BBrian Delaney - Director, Technology Liaison - MetLifeCraig Fischer - Director, Business Strategy & Process - LasVegas Sands Corp.• Q&A© 2013 Ariba, Inc. All rights reserved.2
  3. 3. #AribaLIVEAnalyzing Spend: You Can’t FightWhat You Can’t See3• 12 Trillion dollars is total spendthrough global 2000 companieslast year• Enterprises are losing over USD260 Billion per year due to theinability to organize and analyzespend data1• To date, only 40% of thecompanies have good visibility ontheir spending2• 60% of the firms that analyzespend still rely on paper andspreadsheets3You Can’t Fight What You Can’t See1: Aberdeen Research: Best Practices in Spend Analysis : Cure for a Corporate Epidemic, 2004;2: SAP / Procurement Leaders Survey 20113: Spend Analysis : Working too Hard for the Money , 2007
  4. 4. #AribaLIVE© 2013 Ariba, Inc. All rights reserved.8PanelistsCraig FischerDirector - Business Strategy &ProcessLas Vegas Sands Corp.Phil FisherVice President, Strategic AlliancePartner SolutionsDun & Bradstreet, IncBrian DelaneyDirector – Technology LiaisonMetLife
  5. 5. #AribaLIVEAgenda• Overview and Introductions• Panel PresentationsPhil Fisher - VP, Strategic Alliance PartnerSolutions - D&BBrian Delaney - Director, Technology Liaison - MetLifeCraig Fischer - Director, Business Strategy & Process -Las Vegas Sands Corp.• Q&A© 2013 Ariba, Inc. All rights reserved.9
  6. 6. #AribaLIVESupplier and Spend Management –Moving Beyond the Numbers• D&B (NYSE:DNB) is the worlds leading source ofcommercial information on businesses, enablingcompanies to Decide with Confidence® for over 170years• The D&B database has information on 225+ millionbusinesses in over 190 countries• More than 100,000 companies rely on D&B to help buildstrong business relationships with theircustomers, suppliers and partners• Supply management-specific data expertise gives theinsights companies need for supply chain optimization© 2013 Ariba, Inc. All rights reserved.10About D&B
  7. 7. #AribaLIVESpending Clarity Starts with Askingthe Right Questions• How can I get more detailedinformation on suppliers?• How much am I spending withsuppliers at a corporate family level?• How diverse is my supply base? Andhow can I locate more diversesuppliers?• Where are the greatest risks in mysupply chain?© 2013 Ariba, Inc. All rights reserved.11
  8. 8. #AribaLIVEStay Ahead of the CurveKnow How Your Suppliers May Behave Tomorrow© 2013 Ariba, Inc. All rights reserved.12The Advantage• Get a sense of potential supplyinterruption before it can impact the:• Bottom line: through stock outs• Top line: through idling themanufacturing line• Brand: through damage to quality andproduct availabilityThe Results• Source from financially stable suppliers• Get advance notice to reduce risk andprotect supply chain continuity• Deliver consistent, objective treatmentof suppliers
  9. 9. #AribaLIVESustain Your Success Down theRoad with These Tips• Identify the categories your companycares about• Instill a cross-functional processProcurementFinanceOperations• Establish processes for approving/managingsuppliers© 2013 Ariba, Inc. All rights reserved.13
  10. 10. #AribaLIVEAgenda• Overview and Introductions• Panel PresentationsPhil Fisher - VP, Strategic Alliance Partner Solutions - D&BBrian Delaney - Director, Technology Liaison - MetLifeCraig Fischer - Director, Business Strategy & Process -Las Vegas Sands Corp.• Q&A© 2013 Ariba, Inc. All rights reserved.14
  11. 11. #AribaLIVEChallenges Ahead© 2013 Ariba, Inc. All rights reserved.15Drive DownExpenses by 2016Better leveragevendoragreements in amore globalmanner to drivedown costMore efficient inthe technology weuseIncreased globalsavings targetsover $200M$600M$200M
  12. 12. #AribaLIVEMetLife’s Current State© 2013 Ariba, Inc. All rights reserved.16Manual Dataextractsand Review(Excel)…Control TablesBusiness Rules18 countriesAuto & Home(CAF)InternationalFinancialsTreasuryWorkstationComputronPeopleSoftAribaMS AccessDB’sSharedDrive
  13. 13. #AribaLIVEWhy Spend Visibility• MetLife’s recent acquisitions have given us presence inover 60 countries globally• Gain the same visibility into each of the key markets spend, so we couldapply the same principals to drive expense reduction• Need to converge multi-currency, multi-language data into singlereporting environment• Automate as much of this process as possible – need to get out of thebusiness of maintaining databases and into the business of providing theanalytics (Shift from transactional to strategic)© 2013 Ariba, Inc. All rights reserved.17
  14. 14. #AribaLIVEMetLife’s Future State© 2013 Ariba, Inc. All rights reserved.1822 DataSourcesD&BParentageRationalizationData Transformation & EnrichmentAriba Spend VisibilityAuto & Home(CAF)InternationalFinancialsTreasuryWorkstationComputron PeopleSoft
  15. 15. #AribaLIVEAgenda• Overview and Introductions• Panel PresentationsPhil Fisher - VP, Strategic Alliance Partner Solutions - D&BBrian Delaney - Director, Technology Liaison - MetLifeCraig Fischer - Director, Business Strategy & Process -Las Vegas Sands Corp.• Q&A© 2013 Ariba, Inc. All rights reserved.19
  16. 16. #AribaLIVELas Vegas Sands CorporationLas Vegas Sands Corporation (NYSE: LVS)• Leading global developer and operator of destination integrated resorts (IRs)• Properties include Las Vegas, Macao, Singapore and Bethlehem, PennsylvaniaGross Floor Area of IRs is 60,000,000 sq. ft.Total Hotel Rooms is 19,800 roomsTotal Retail Mall Space is 4,500,000 sq. ft.Total MICE (Meeting, incentives, conferences and exhibitions) Space is 5,200,000sq. ft.Total Gaming Space is 1,660,000 sq. ft.• Net Revenue for the past 5 years from LVSC’s 2012 10-K© 2013 Ariba, Inc. All rights reserved.20Who We AreYear 2008 2009 2010 2011 2012Net Revenue $4.38B $4.56B $6.85B $9.41B $11.13B
  17. 17. #AribaLIVESpend Strategy at LVSCThree – step process to develop a sourcing strategy:1. Identify Spends by Category / Sub – CategoriesDetermine which spends are Procurement Influenced vs.Non- Procurement Influence2. Align Sub – Categories into a Segmentation QuadrantImportant factors are the Y – Axis and X - Axis3. Develop Sub – Categories Strategies to sourceKey elements that must be understood and will drive a sourcing strategy© 2013 Ariba, Inc. All rights reserved.21
  18. 18. #AribaLIVEIdentifying Spends by Categoriesat LVSCProcurement Influenced (2012- 40%) Non-Procurement Influenced(2012-60%)Food & BeverageOperating SuppliesMarketing / Advertising / PrintFacilities & ServicesOutside ServicesGamingSurveillanceTechnology & ITDevelopment & ConstructionFF&EFerryUtilitiesEmployee BenefitsRetailTotal8.5%5%4.5%4%7.2%6%.5%8%33.5%4%4.8%8.8%4.7%.5%100%EntertainmentLegalLeasesInsuranceFinancial ServicesAviationCommissionsTaxesThird-Party Charges© 2013 Ariba, Inc. All rights reserved.22* Areas in blue did not have Procurement & Supply Chain involvement prior to 2009
  19. 19. #AribaLIVE2012 LVSC Procurement InfluencedSpend AnalysisMarketing, Advertising & Print(MAP) 4.5% Beverage 4.5%Facility & Facility Services4%FF&E 4%Food 4%Gaming 6%Operating Supplies 5%Outside Services 7.2%Pre-Development & Design &Construction 33.5%Surveillance 0.5%Employee Benefits 4.7%Ferry 4.8%Technology 8%Utilities8.8%Marketing, Advertising & Print (MAP)BeverageFacility & Facility ServicesFF&EFoodGamingOperating SuppliesOutside ServicesRetailPre-Development & Design &ConstructionSurveillanceEmployee BenefitsFerryTechnologyRetail 0.5%© 2013 Ariba, Inc. All rights reserved.232012 Procurement Influenced Spend: 40% of total spend
  20. 20. #AribaLIVE2012 LVSC Non-ProcurementInfluenced Spend AnalysisTaxes 78%Entertainment 2.5%Legal 2.0%Intercompany Charges9.0% Other 3.0%Insurance 1.0%Financing 2.0%Aviation 1.0%Commissions 0.5%Other 1.0%TaxesEntertainmentLegalIntercompanyChargesThird-PartyChargesInsuranceFinancingAviationCommissionsOther© 2013 Ariba, Inc. All rights reserved.242012 Non-Procurement Influenced Spend: 60% of total spend
  21. 21. #AribaLIVEAligning Sub – Categories intoa Segmentation Quadrant© 2013 Ariba, Inc. All rights reserved.25CustomerImpactHighLowLow HighCategory SegmentationSwitching CostsStrategicTactical CriticalAlliance
  22. 22. #AribaLIVEDevelop a Category Sourcing StrategyLVSC Category Strategy Template© 2013 Ariba, Inc. All rights reserved.26Category: Duration:Scope:Competitor BenchmarkingWho / What / SupplierAnnual Spend -CurrencyAnnualized Savings -Currency2012 A 2013 F TotalUSAsiaTotal2012 A 2013 F TotalUSAsiaTotalCategoryPicturesSegmentationStrategic AllianceTactical CriticalCategory AnalysisCost Structure, Benchmarking, SupplierComparison, Index Data, EtcGlobal SpecificationValue Chain InformationTechnology and MarketChangesKey Cost DriversCategory Description /ScopeSupplier Scoring(5 Highest , 1 Lowest)Cost (xx%) Quality (xx%) TotalSupplier ASupplier BSupplier COthersCategory Strategy /Sourcing RecommendationCurrent Situation:Strategy:
  23. 23. #AribaLIVELVSC Category Strategy TemplateExcel based – 11” by 17”© 2013 Ariba, Inc. All rights reserved.27
  24. 24. #AribaLIVEThe Exciting World of SlippersCategory sourcing strategy – Part 1© 2013 Ariba, Inc. All rights reserved.28
  25. 25. #AribaLIVEThe Exciting World of SlippersCategory sourcing strategy – Part 2© 2013 Ariba, Inc. All rights reserved.29Category Analysis
  26. 26. #AribaLIVEThe Exciting World of SlippersCategory sourcing strategy – Part 3© 2013 Ariba, Inc. All rights reserved.30
  27. 27. #AribaLIVEAgenda• Overview and Introductions• Panel PresentationsPhil Fisher - VP, Strategic Alliance Partner Solutions - D&BBrian Delaney - Director, Technology Liaison - MetLifeCraig Fischer - Director, Business Strategy & Process -Las Vegas Sands Corp.• Q&A© 2013 Ariba, Inc. All rights reserved.31
  28. 28. Questions?Contact info:Keertan Rai : krai@ariba.com© 2013 Ariba, Inc. All rights reserved.32

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