Automate all spend and collaborate with all suppliers


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  • Build Your Business Case for Procure-to-Pay AutomationInsights from The Hackett Group, a Leader in Business Best Practices and BenchmarkingYou can cut costs, time, and risks by overcoming the barriers between you and your suppliers. Specifically, by automating and connecting your procure-to-pay (P2P) processes to their order-to-cash processes. Procurement and financial management experts from The Hackett Group and Ariba will share strategies and information you can use to:Set value-driving objectives for your P2P program, and measure results Benchmark your organization’s performance against industry and peer groupsEnsure compliance with processes, policies, and contractsLeverage your payables to optimize working capitalMitigate risk with greater visibility and controlImprove ROIP2P automation is critical for improving inter-enterprise collaboration. This webinar can help you build your business case to make it a reality. Register today.Featured Speakers: Kurt Albertson, Associate Principal, Procurement Advisory, The Hackett GroupJames Tucker, Director, Product Marketing, Network and Finance Solutions, Ariba
  • somehow common goals get lost in the clutter of the day to day operations and within the four walls of your organization
  • Nearly all customers have issues discovering with their trading partners, connecting with them and collaborating with them
  • So we have a collaboration imperative that is key for both process cost containment, cash flow control, as well as growth. In fact, a recent McKinsey study revealed that organizations using collaborative technology to connect internal efforts to customers, suppliers, and trading partners are 50% more likely to lead their market segments and achieve higher margins. These networked enterprises are enjoying a competitive advantage through inter-enterprise collaboration while those organizations relying on internal process automation alone are falling behind.  Let me share a few quick examples… 
  • A recent WSJ article shows that large corporate treasurers are keeping cash in highly liquid, highly secure short term securities at unprecedented levels while controllers are stretching supplier payment terms. At the same time, availability of credit for smaller and mid-size suppliers is very tight. This creates a serious tension between buying organizations and suppliers. Buyers are looking for higher-yield lower-risk returns on their growing pile of short term cash, and sellers are looking for liquidity relief from tight credit markets and extended payment terms. So many suppliers are looking to their customers flush with cash for early payment discounts and other supply chain financing options to provide them the liquidity relief they need, which ultimately reduces the buyer’s supply chain risk.   Here’s the article: A couple of key quotes: “Although the S&P downgrade threatens to dry up already thin trading in the investment-grade-bond market, rates remain relatively low on a historical basis for corporate borrowers, and their borrowing is likely to pick up, Mr. Bender said. Indeed, companies of all stripes moved to bolster their finances last week, prior to the downgrade. A raft of investment-grade companies including Coca-Cola Co., Hyatt Hotels Corp., J.P. Morgan Chase & Co. and Kinder Morgan Energy Partners LP sold about $5 billion of bonds.But rather than using these funds for hiring, capital expenditures, or even shareholder dividends, corporations are filling their coffers further, said Mr. Carfang of Treasury Strategies.” And this: Those hoping that executives are looking for an excuse to loosen the purse strings are headed for a disappointment, said Steven Lear, deputy chief investment officer at J.P. Morgan Asset Management."We see these large surpluses held by Asian countries and that's a natural response to the crisis they went through in 1997-1998, saying 'You know what, we're never going to be short cash again,' " Mr. Lear said."Corporate treasurers in the U.S. went through that in 2008, and their reaction is going to be the same."Companies are hoarding cash because interest is at historic lows. Coupled with the tight credit markets, this has created a liquidity problem and significant risk in the supply chain. How are corporations that have excess cash dealing with it in the current environment?To the extent we can, we are hoarding it a little, just like the banks are. People want to have a little something in their rainy-day fund because things are so volatile right now. Our investments are extremely conservative—bank deposits, treasuries—and we want to know more about what we are investing in. …
  • [walk through samples quickly]So how does your organization measure up?To help answer this, our guest speaker, Kurt Albertson,a senior advisor in The Hackett Group’s Procurement practice where he advises executives on strategic business decisions and promotes thought leadership through research and speaking on topics in the Procure-to-Pay and broader Supply Chain space, will provide the latest benchmarks across the procure-to-pay function to help your organization establish a business case for procure-to-pay automation and working capital optimization.
  • Automate all spend and collaborate with all suppliers

    1. 1. Automate All Spend and Collaboratewith All Suppliers Dominic Franey John Lark S2P Programme Director Director of Marketing Astra Zeneca Ariba
    2. 2. “He who fails to plan is planning to fail” - Winston Churchill © 2011 Ariba, Inc. All rights reserved.
    3. 3. Today’s Plan:• True or False• The Vision• The Business Drivers• Where Top Performers Focus• Q&A© 2011 Ariba, Inc. All rights reserved.
    4. 4. True or False? Sourcing = Savings© 2011 Ariba, Inc. All rights reserved.
    5. 5. True Sourcing = Savings + Compliance •Vendor •Terms •Invoice© 2011 Ariba, Inc. All rights reserved.
    6. 6. The Vision© 2011 Ariba, Inc. All rights reserved.
    7. 7. The NEXT WAVE of productivity will happen beyond the four walls of a single enterprise…  Technology  Community  CapabilitiesProductivity 2010s – “Inter-Enterprise productivity” with Collaboration between Enterprises 2000s – “Enterprise productivity” with corporate ERP 1980s – “Employee productivity” with the Desktop Time7 © 2011 Ariba, Inc. All rights reserved.
    8. 8. Creating a Vision: Buyers and Sellers Have Common Goals and Intertwined Processes Source Procure Pay (Settle) Maximizing Risk Process ContinuousMatchmaking Negotiated Compliance Management Efficiency Improvement Value Invoice & Sell Fulfill Collect
    9. 9. Intertwined processes are hard to manage … Source Procure Pay Delayed Wasted Lost Poor Manual Limited payment; time and negotiation visibility into ad hoc visibility Cash resource history compliance collaboration and risk “mis-mgmt” Invoice & Sell Fulfill Collect
    10. 10. The complexity of the business problem quickly demonstrates itself when you visualize the flows (products, information, money) between a single business and upwards of 100,000+ suppliers… Buyer 1 Supplier 1 Sourcing Sales Procurement Order Mgmt Finance Finance Sales Supplier 2 Order Mgmt Finance Supplier 3 Sales Order Mgmt Finance10 © 2011 Ariba, Inc. All rights reserved.
    11. 11. The problem becomes unworkable once the challenge is expanded to reflect the volume of transactions and interactions that occur across an industry’s ecosystem…. Buyer 1 Supplier 1 Sourcing Sales Procurement Order Mgmt Finance Finance Buyer 2 Sourcing Sales Supplier 2 Procurement Order Mgmt Finance Finance Buyer 3 Supplier 3 Sourcing Sales Procurement Order Mgmt Finance Finance11 © 2011 Ariba, Inc. All rights reserved.
    12. 12. The rationale for pursuing Collaborative Commerce… With an ERP system in place and a Supplier Portal enabled, your company has successfully automated key internal processes and some supplier elements … Where you’d like to be 100% -- Complex Collaboration Challenge -- ! % of Total Spend Where you probably are today with an ERP & Supplier Portal approach % of Total B2B Trading Partners 100% Questions: •How to automate ALL spend types? •How to automate ALL supplier relationships?12 © 2011 Ariba, Inc. All rights reserved.
    13. 13. The Collaboration ImperativeThe Rise of the Networked Enterprise SuppliersOne that uses collaborativetechnology to connect internalemployee efforts to customers, 700K+ Supplierssuppliers, and partners. $193B+ Spend 30M+ POs/Invoices 50% more likely to: • Be a Market Leader Buyers • Gain Market Share Partners • Achieve Higher Margins • Increase sales Source: “The Rise of the Networked Enterprise”, December 2010, McKinsey Jacques Bughin and Michael Chui © 2011 Ariba, Inc. All rights reserved.
    14. 14. The Vision:A Comprehensive, Collaborative Network The Network SELLERS BUYERS • Sourcing / Discovery • Contracts • Catalogs / Maintenance Billing ARFinance Indirect AP • Approvals Back Office Back Office Systems Systems Services • Documents: POs, ASNs, etc… SRM MRO SRM • Invoices Buyer/P2P Others Buyer/P2P Others Direct • Payments • Dynamic Discounting • Cash Management IT Order MgmtProcurement IT • Visibility Disbursing Bank Merchant Bank © 2011 Ariba, Inc. All rights reserved.
    15. 15. The Business Drivers© 2011 Ariba, Inc. All rights reserved.
    16. 16. Compliance Metrics Top Performers Measure and Report Savings Delivery Automated Compliance (ex. 9-13%) Sourcing Negotiated Savings Half the Negotiated Realized (ex. 20-25%) Savings is Lost Without Savings the Automated Compliance Without Automated Compliance (ex. 11-12%) Source: Customer audits and Ariba data based on specified sourcing savings levels16 © 2010 Ariba, Inc. All rights reserved.
    17. 17. The Vision: The Cash Flow Imperative There is growing demand for alternative sources of lending as corporates hoard cash Buyers Tension Between Buyers and Sellers Suppliers Large buyers • Looking for better returns on growing pile of short term cash • Stretching supplier payment terms Suppliers • Looking for liquidity relief from tight credit markets • Working hard to accelerate order- to-cash cycle – lower DSO “Corporations “The market is ripe fordepositing 42% of dynamic discounting andtheir short-term cash in trading partner bank accounts” Supply Chain Risk! collaboration” Wheres Corporate Cash? In the Bank, CFO Magazine August 3, 2010 © 2011 Ariba, Inc. All rights reserved.
    18. 18. “Value Drivers are broader than ProcessCost Reduction” Current process baseline cost~$26 million Source: The Hackett Group Advisory Webcast 7.21.11© 2011 Ariba, Inc. All rights reserved.
    19. 19. What are Your Value Drivers? - Working Capital / Cash Mgmt - Invoice Compliance / Contract Leakage Business Case - PO Delivery & Process - Order & Approval Process - Compliance (Term, Vendor) - Catalog Maintenance - Supplier Enablement Sources: Hackett Group Delivering on the Evolving Value Proposition of Procurement 2008; Aberdeen e-Procurement Benchmark 2008. The Hackett Group 2011 P2P Benchmark Report and Ariba Results ; Ariba customer reports in public forums; Ariba Benchmarks19 © 2011 Ariba, Inc. All rights reserved.
    20. 20. Each case is Different! EQUIPMENT MANUFACTURER GLOBAL INVESTMENT BANK Before After Before After• Huge A/P staff for manual • 75% reduction in A/P headcount • High cost of paper- • Enabled 4K suppliers onto Network P2P processing • 90% global spend Networked based, manual invoice • Reduced BPO costs by 35%• Large volume of non PO • Improved price, vendor, and VAT processing • Now processing ~ 500k invoices/year invoices compliance • Difficulty in managing orders electronically• Lack of global spend visibility generated by SAP• Risk over ability to conform to • Capturing prenegotiated • Interest in improving system • Went from 100% paper to nearly 60% VAT requirements discounts ease-of-use e-invoicing with goal of 80% electronic• Lost discounts • Reduced vendor management • Drive 70% of invoice transactions off costs POs WATER TREATMENT HOUSEHOLD PRODUCTS Before After Before After• Lack of visibility into orders and • Reduced Days Sales • Paper invoice costs too high • 970 supplier relationships established invoices Outstanding (DSO) by 5 days • Unable to deliver and monitor in < 1 year • Improved PO and contract • Handling 12K POs and 15K invoices• 5% lost POs PO’s through SAP per month matching to invoice• 7 FTEs just to track orders • Too many missed discounts • Self-service Supplier Portal reduces • Redeployed 6 employees costs• Order/Invoice process delays due to long invoice process revenue • Eliminated vendor credit holds times • PO-Flip® option virtually eliminating since all POs and invoices now invoice exceptions• Invoice exceptions cause raw visible and managed • Poor on-time payment • 99% straight-through processing materials or equipment delays • Expanding solution deployment statistics • “much better option than build solution to Europe • Need one global system ourselves in SAP” © 2011 Ariba, Inc. All rights reserved.
    21. 21. Where Top Performers Focus© 2011 Ariba, Inc. All rights reserved.
    22. 22. Top Performers are focused on:• Vision Alignment • Adoption Source-to-Settle Collaboration Effective usability All Spend Types Coverage Global: Buyer AND Supplier Sustainability• Beyond “process cost” • Compliance Value proposition Vendor Strategic enablement Terms Invoice• One size does NOT fit all Better understanding of supplier and • Global Visibility transactional profile Processes Systems• Re-assign resources to high- Suppliers value activities
    23. 23. • What is YOUR Vision?• Where will YOU Begin the journey? “Even a 4,000 km journey begins with a single step” - Sun Tzu © 2011 Ariba, Inc. All rights reserved.