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Collaborative Sourcing - Unlocking Greater Savings and Value for You and Your Supply Chain

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Collaborative Sourcing - Unlocking Greater Savings and Value for You and Your Supply Chain

  1. 1. B Collaborative Sourcing – Unlocking Greater Savings and Value for You and Your Supply Chain Sundar Kamakshisundaram – Ariba Chuck Wright – TopSource Ted Artemiou – JM Family Kate Abbruzzese – Nestle© 2012 Ariba, Inc. All rights reserved.
  2. 2. AgendaIntroductionPanel Discussion Top Source – Chuck Wright Ted Artemiou – JM Family Kate Abbruzzese – NestleQ&A2 © 2012 Ariba, Inc. All rights reserved.
  3. 3. Procurement Gains Recognition As a StrategicFunction, But Expectations Are Higher than Ever… Expectations of today’s purchasing organizations Transparency of actual spend, visibility Visibility and Cost into sourcing pipeline and resourcing Management requirements Effective common process applied to Improve process all procurement activity, with efficiencies appropriate approvals Deliver fast results Faster turnaround times and rapid transitions to new supply with sustainable long-term relationships …all on a limited budget Full payback in 4 – 8 mos. Add more value… More spend under management, more process coverage, more strategic impact3 © 2012 Ariba, Inc. All rights reserved.
  4. 4. There’s Savings…and Everything Else Top 2 CPO Pressures Source: Ardent Partners, 20114 © 2012 Ariba, Inc. All rights reserved.
  5. 5. Collaboration Is King Top 2 CPO Strategies Source: Ardent Partners, 20115 © 2012 Ariba, Inc. All rights reserved.
  6. 6. How We Collaborate Has Changed Source: Comscore, June 20116 © 2012 Ariba, Inc. All rights reserved.
  7. 7. Evolution of Sourcing Community Technology Capabilities CollaborativeBusiness SourcingValue Strategic Sourcing eSourcing Manual Sourcing Timeframe7 © 2012 Ariba, Inc. All rights reserved.
  8. 8. Collaborative Sourcing Framework Spend Sourcing Analysis Technology Contract Management SIPM8 © 2012 Ariba, Inc. All rights reserved.
  9. 9. B Chuck Wright Director – Procurement and Sourcing© 2012 Ariba, Inc. All rights reserved.
  10. 10. TopSource Overview TopSource is a wholly owned subsidiary of Topco Associates LLC and provides not-for-resale (NFR) spend management. For 65 years, Topco has leveraged the scale with its members in procurement to lower product costs. For-Resale Programs NFR Spend Programs  Frozen  Construction  Dairy/Bakery  Equipment  Grocery  Hired Services  HBC/GM  IT Telecom  Rx  Logistics & Distribution  Fresh Meat  Marketing  Branded Meat  Office Products & Supplies  Produce  Packaging & Supplies  National Brands  HR Benefits  Fuel  Utilities10 © 2012 Ariba, Inc. All rights reserved.
  11. 11. TopSource Overview TopSource customers represent over $150 billion in sales collectively. Our customer network includes grocery retailers, wholesalers, food manufacturers, food services providers, convenience stores, drug stores and other retail businesses.11 © 2012 Ariba, Inc. All rights reserved.
  12. 12. TopSource Overview TopSource manages not-for-resale spend on behalf of our wholesale and retail customers. In addition, TopSource conducts auctions on behalf of all customers across for-resale and indirect spend.  Retail and Distribution Strategic Sourcing Professionals  Broad Scope Spend  Sourcing Leverage – over $13 Billion in potential indirect spend Management  Proven Sourcing Process  Enabling Technology (Spend Analytics, eSourcing, and Contract Management)  Dedicated Auctions team Auction Center  Robust automated online auction capability Of Excellence  Mature process and capabilities  Experience across multiple commodities12 © 2012 Ariba, Inc. All rights reserved.
  13. 13. Sourcing Process – eSourcing TopSource utilizes a number of esourcing technology tools to conduct its strategic sourcing process more effectively and to institutionalize their learning. Contract Supplier Sourcing Auction Management Management  Issue RFx and  Negotiate  Standardize  Measure collect responses price contract creation supplier performance  Store profile  Maximize  Store all contract information competition related documents  Drive continuous  Create category  Increase  Generate improvement specific templates speed to notifications to savings buyers and teams  Monitor  Drive process supplier adoption  Consider  Provide robust financials alternative search and price scenarios reporting  Manage price changes13 © 2012 Ariba, Inc. All rights reserved.
  14. 14. Implementation - Auctions14 © 2012 Ariba, Inc. All rights reserved.
  15. 15. Implementation - RFx15 © 2012 Ariba, Inc. All rights reserved.
  16. 16. Implementation – Contract Management16 © 2012 Ariba, Inc. All rights reserved.
  17. 17. B Teddy Artemiou Senior Procurement Analyst© 2012 Ariba, Inc. All rights reserved.
  18. 18. • JM Family Enterprises, Inc. is a diversified automotive corporation The worlds largest independent distributor of Toyotas and Scions A diversified financial services company One of the largest providers of finance and insurance products in the industry The worlds largest-volume Lexus dealership • Recognitions Number 17 on Fortune’s list of 100 Best Companies to Work For (14th consecutive year on list) Number 27 on Forbes list of America’s Largest Private Companies18 © 2012 Ariba, Inc. All rights reserved.
  19. 19. Challenges• Centralized Procurement not mandated Department created in 2003 For 35 years purchasing was done at business unit level• Hard to break old habits Internal customers used to doing things their own way Hesitant to change or challenge suppliers• Getting internal customers to embrace process and technology Show benefits of centralized procurement Change from manual processes to online solutions19 © 2012 Ariba, Inc. All rights reserved.
  20. 20. Effects on Company• Limits savings opportunities Pricing from current suppliers was not benchmarked to other suppliers Limited volume discounts and rebates• Business units would cut corners to speed up process Rush contracts through legal review Bypass risk review• No formal approval process No formal contract authorization policy Approvals received after purchases were made• No historical records to refer to No central repository for contracts or sourcing events20 © 2012 Ariba, Inc. All rights reserved.
  21. 21. Introduction of Technology • A lot of changes in technology in a short period 2008 – Contract Management and Purchase Requisition systems 2009 – E-Sourcing and Spend Analysis 2010 – Migrate to Ariba Contract Management • A lot to take in for our internal customers Change to centralized procurement and new system to work with • Needed to educate internal customers on benefits of systems Communication was key21 © 2012 Ariba, Inc. All rights reserved.
  22. 22. How to Win Them Over• Show added value of centralized procurement Do leg work – research, working with legal and risk, negotiate pricing and performance Challenge supplier pricing and consolidate supplier base Perform financial review of perspective suppliers• Collaboration With internal customers With suppliers• Show benefits of using systems Responses received quicker for sourcing events Auctions drive more savings Access to supplier networks Contract negotiations and approvals are in system Historical information is available22 © 2012 Ariba, Inc. All rights reserved.
  23. 23. Continue winning them over?• Spend Analysis Information by suppliers – global supplier information Information by commodities• Supplier information On-going financials evaluations of critical suppliers Evaluate supplier performance• Innovation Bring new ideas to customers Continue to find ways to improve systems• Collaboration With other procurement groups With internal customers With suppliers23 © 2012 Ariba, Inc. All rights reserved.
  24. 24. Results• Internal customers want to use us Increased spend managed by centralized procurement from 40% in 2007 to over 60% today Percentage of Spend Influenced to Total Spend 65% 63% 60% 55% 56% Percentage 50% 49% 45% 41% 40% 35% December 31, 2008 December 31, 2009 December 31, 2010 December 31, 201124 © 2012 Ariba, Inc. All rights reserved.
  25. 25. Results• Driving more savings Consolidating supplier base Use of e-Sourcing and auctions result in more savings 26,000,000 Cost Savings 22,000,000 18,000,000 Amount 14,000,000 10,000,000 6,000,000 2,000,000 December 31, 2008 December 31, 2009 December 31, 2010 December 31, 2011• Reporting capabilities help management make more informed decisions Spend analysis reports help upper management see how much is being spent with suppliers• Financial Risk Internal customer request more analysis25 © 2012 Ariba, Inc. All rights reserved.
  26. 26. Future• Maintaining high level of service to our customers• Generate savings to the company• Innovation• Keep doing it better26 © 2012 Ariba, Inc. All rights reserved.
  27. 27. B Kate Abbruzzese Procurement Excellence, eSourcing Manager© 2012 Ariba, Inc. All rights reserved.
  28. 28. Agenda • Introduction to Nestlé • Key Requirements in our global, dynamic environment • Further Opportunities28
  29. 29. Nestlé at a Glance  CHF 83.6 billion in sales in 2011  328,000 employees  461 factories  10,000 brands  1 billion Nestlé products sold every day29
  30. 30. The Nestlé story30
  31. 31. Key Requirements in Unlocking Greater Value Globally • Ease of Adoption, Implementation, Sustainability • Appearance about the process, not the tool • Robust Functionality • RFx, eAuction, Collaborative events • Lean • Standardization without limitation in customizations • Broad, Transparent Collaborative Environment • People & Information31
  32. 32. Key Requirements in Unlocking Greater Value Globally (continued) • Comprehensive Template Library • Structure, Content - core, customizable, consistent, versatile • Globally Inclusive • Currency, Language Translations, Support • Drives & Further Enables Business Continuity • Auditable & Traceable32
  33. 33. Opportunities • Global eSourcing Program Refresh Training & Communication • Core Functionality Enhancements • Reporting Insights • Optimize, Anticipate, Execute, Measure33
  34. 34. Results and Early Successes34
  35. 35. Questions? Thank you35
  36. 36. Summary and Key Take-aways Align Results Align Results to Objectives Executive Obtain Executive Sponsorship from senior leadership Sponsorships (e.g., CFO, Business Unit GM and or Functional Leaders) Collaborative Work on building collaborative relationships with partner Relationships functional groups (particularly Finance) Be Flexible Be willing to make difficult choices and do more with less Take on aggressive goals beyond sourcing Add more value… More spend under management, more process coverage, more strategic impact36 © 2012 Ariba, Inc. All rights reserved.
  37. 37. Q&A Contact info: Sundar Kamakshisundaram: sundar@ariba.com37 © 2012 Ariba, Inc. All rights reserved.
  38. 38. Share This Session…NOW…from your mobile! • All presentations are posted: Guidebook mobile app – Search Apple or Android app store for Guidebook – Enter code “collabor8” Or at Slideshare.net/Ariba • Share via email or social media **Come back soon – we are syncing #AribaLIVE audio and video interviews to the presentations**38 © 2012 Ariba, Inc. All rights reserved.

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