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Procurement Excellence in the Energy & Natural Resources Industry


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With tumultuous economic times, Energy & Natural Resources companies look more into bottom line cost savings. Procure to pay optimization across key procurement spend categories can drive sustainable savings, from sourcing and contract compliance to dynamic discounting and working capital management strategies.

Attend this session to hear how Energy & Natural Resources companies have achieved procure to pay excellence. And learn more about Ariba LIVE at

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Procurement Excellence in the Energy & Natural Resources Industry

  1. 1. #AribaLIVE Energy & Natural Resources Industry Track – Ariba LIVE 2014 Tuesday, March 18 Brera 1 © 2014 Ariba – an SAP company. All rights reserved.
  2. 2. 3:00 PM – 3:15 PM Welcome – Ariba LIVE Energy & Natural Resources Track Overview Ron Calzolari, SVP South, SAP 3:15 PM – 4:15 PM Panel Discussion - Procurement Excellence in Energy & Natural Resources Industry Moderated by Rachel Barger, Regional Vice President, US Procurement Sales Jaime Bohnke, CPO and VP Supply Chain, PPL Cindy Dunham, General Manager, Global Process Architecture for Rio Tinto Procurement Lionel R. Jellins, Manager – Global IT Ventures and Operations, Exxon Mobil Kathryn Hinton Vice President Supply Chain Management, Tesoro 4:15 PM – 4:45 PM Networking Break 4:45 PM – 5:00 PM Innovation Showcase – Energy & Natural Resources Industry 5:00 PM – 6:00 PM Industry Roundtable for Energy & Natural Resources 6:00 PM – 7:15PM Energy & Natural Resources Networking Reception Energy & Natural Resources Industry Track Tuesday, March 18, Ariba LIVE 2014 © 2014 Ariba – an SAP company. All rights reserved.2
  3. 3. Introducing Customer Panelists © 2014 Ariba – an SAP company. All rights reserved.3 Jaime Bohnke CPO and VP Supply chain Cindy Dunham General Manager, Global Process Architecture for Rio Tinto Procurement Lionel Jellins Global IT Ventures and Operations Manager for Procurement Kathryn Hinton Vice President Supply Chain Management Tesoro Companies Inc. Exxon Mobil
  4. 4. #AribaLIVE PPL Jaime Bohnke, Chief Procurement Officer & VP Supply Chain © 2014 Ariba – an SAP company. All rights reserved. @ariba
  5. 5. © PPL Corporation 2014 Procurement Excellence Ariba Energy & Natural Resources Track Tuesday, March 18, 2014
  6. 6. © PPL Corporation 2014 Content  About PPL  Key Issues Driving Procurement Transformation  Procurement Strategy  Key Achievements / Success  Lessons Learned
  7. 7. © PPL Corporation 2014 PPL At a Glance  PPL Stats – Revenue: $11.9B – Total Assets: $46.3B – 18,108 employees – Major Business Segments: • Kentucky Regulated • U.K. Regulated • Pennsylvania Regulated • Supply – More than 10 million utility customers in the U.S. and U.K.  Supply Chain Stats – 2012 SC Spend: $2.2B – 262 employees – Center-led reporting with CPO reporting to CFO – Category-based sourcing strategy new to PPL (concept still rejected)
  8. 8. © PPL Corporation 2014 PPL Supply Chain Operating Model Sourcing & Supplier Management Procure-to-Pay Lean Six Sigma & Supplier Quality Logistics CoP’s - A Structured Approach to KM Transfer, Operational Excellence & Sustainable Results Business Plan Materials & Service Planning EU Supply Chain Generation Supply Chain Benefits: • Business needs shape SCM’s Key Initiatives & Goal Framework • Mitigates Cost, Schedule, Performance Risks • Assurance of Key Controls horizontal and vertical across the enterprise • Ensures Productivity, Innovation, Customer Satisfaction and Knowledge Management are institutionalized The platform and mechanism to increase efficiency and bring together like practitioners to collaborate, define and promote standards.
  9. 9. © PPL Corporation 2014 Key Procurement Transformation Issues  Internal Issues – Various processes, tools, and stakeholder interactions across operating units – Manually intensive processes for sourcing, contracting, and requisitioning • Multiple contracts with same supplier – Ineffective processes for monitoring spend/contract and supplier compliance • Tracking Tier 2 Supplier Diversity Spend – Low e-Invoicing and significant exceptions which increase processing time – No visibility to discounts taken or available, or effective program to maximize discounts  External Issues – Electric Utilities: • Sharing visibility of demand changes for project materials during growth period – Generation: • EPA restrictions on coal plants changing spend requirements • Maintaining high level of service while decreasing overall cost to the business line Spend Visibility eSourcing Contract Mgmt. Req/Cat/PO PO to/from Supplier Invoice from Supplier Invoice Approval /OK to Pay Dynamic Discounting SiPM Manual Process; gap identified Div #1 existing system Div #2 existing system
  10. 10. © PPL Corporation 2014 PPL Procurement Strategy Spend Visibility eSourcing Contract Mgmt. Req/Cat/PO PO to/from Supplier Invoice from Supplier Invoice Approval /OK to Pay Dynamic Discounting SiPM Ariba Sourcing Pro / Discovery Ariba Discount Pro Ariba Spend Visibility Ariba Contract Mgmt. Ariba PO & Invoice Automation Ariba SiPM Ariba Procure to Order Ariba Invoice Pro Comprehensive Category Management • Execute identified FY14 category initiatives to meet savings objectives. • Continue the development of robust category strategies aligned with key stakeholders/internal customers. • Resulting in a well-balanced project portfolio of initiatives for leveraged spend, competitive bidding, supplier initiated cost reductions, rebates, low value purchase order efficiency, process/product engineering improvements, etc. Supplier Relationship Management • Deepen relationships with critical suppliers to maximize value. • Utilize supplier segmentation, internal coordination, supplier performance measurement and improvement, and supplier collaboration. Early Payment Discounts • Automate early discount management from initial offer to agreement, including prorate or dynamic discounting. • Implement platform to dynamically capture early payment discounts to increase revenue generation and cash flow. Risk Management • Institute a repeatable and sustainable risk management program to assess and detect early warnings of potential supply disruptions. • Establish the process to manage the risk based upon likelihood and severity of impact Supplier Performance Management • Improve supplier performance and meet internal customer business expectations by focusing on performance results through a Results Oriented Performance Management (ROPM) program. • Proactively identify supplier expectations (safety, cost, quality, service, innovation, etc.) upfront during the scope of work versus just scorecard reporting at the end of the service or material delivery. Utilizing Ariba’s fully integrated and scalable enablement tool, execute a strategy that is aligned on opportunities around process, technology and organizational structure focusing on:
  11. 11. © PPL Corporation 2014 Key Achievements / Success  Opportunity assessment completed.  Revitalized and enhanced enterprise spend analytics.  Deployed category assignments and accountability via category workbooks and playbooks.  Increased strategic focus, including business needs like demand management.  Early payment discounts prgram and DiscountPro in process of being deployed.  Continue deployment of Ariba solution to continue to aggregate like spend across the enterprise in order to leverage opportunities, optimize the buy, enhance supplier relationships, improves supplier performance, manage risk and drive efficiency.
  12. 12. #AribaLIVE Rio Tinto Cindy Dunham General Manager, Global Process Architecture for Rio Tinto Procurement © 2014 Ariba – an SAP company. All rights reserved. @ariba
  13. 13. Ariba LIVE Procurement Excellence in Energy & Natural Resources Industry Cindy Dunham Rio Tinto Procurement
  14. 14. Safety Share
  15. 15. Agenda 1. Personal Overview 2. Introduction to Rio Tinto 3. Challenges in our Business 4. How Ariba is supporting our Business
  16. 16. Personal Overview • Procurement Career in Mining • Education in Commerce and Law • Passionate about promoting the profession and social welfare
  17. 17. Rio Tinto Business and Procurement
  18. 18. Overview of Volume
  19. 19. Challenges for Procurement 1. Making it easy to do business with us 2. Skillsets required for Procurement are changing 3. Building Agile Strategies (Market Conditions) 4. Knowing your Supply Chain intimately 5. Reducing the business exposure to Risk 6. Identifying Innovation Opportunities and supporting 7. Keeping across Market Conditions 8. Working to support local Industry 9. Operationalizing Global Processes around the world Underpinned by core values of Safety, Environment and Social Licence.
  20. 20. How is Ariba Supporting our business
  21. 21. #AribaLIVE Procurement Highlights Lionel R. Jellins Manager – Global IT Ventures and Operations ExxonMobil Global Procurement
  22. 22. Internal Antitrust Reminder All discussions will strictly conform to the antitrust and competition laws. If anyone is unsure as to whether a topic or a question is appropriate, they should not raise the topic or question until they have had an opportunity to discuss it with counsel. If an inappropriate topic or question is raised, please immediately object and that topic/question will not be discussed. 23 © 2014 Ariba – an SAP company. All rights reserved.
  23. 23. Internal Sourcing and Acquisition COE Planning & Reporting Vice President Procurement Efficiency Contracting & Controls Payables Strategic Procurement Supply Chain Global IT Ventures and Operations Fuels, Lubes, and Corporate Refining & Supply Projects, Drilling, & Exploration Production Chemicals Sourcing Procurement National Content & Supplier Diversity ExxonMobil Procurement Organization • Became a global organization since merger in 2000 • Under Procurement Leadership Team organized along the business clients, focusing on unique Sourcing Categories • Total 2,600 people, 1/3 of which are in Business Service Centers at locations in Prague, Buenos Aires and Bangkok. 24 © 2014 Ariba – an SAP company. All rights reserved.
  24. 24. Internal Who We Are, and What We Do We provide expertise in procurement, materials supply chain management and payables so that the B/L’s can focus on their core business 160K active suppliers 37 countries $55G actionable spend $528G disbursements 2600 People: 40 average age 51 nationalities 73 languages $2.9G inventory © 2014 Ariba – an SAP company. All rights reserved.25
  25. 25. Internal Procurement Vision • A world-class procurement organization that is: indispensable to internal business partners; known for its integration with customers’ strategic business plans, break through cost-reduction and revenue-enhancing solutions, and sound controls that protect the corporation’s assets and flawless execution of service offerings, the pacesetter in the procurement industry; known as the leader for commodity expertise, market knowledge, focused skills with core business processes, constructive supplier relationships, operational efficiency, and technological superiority in electronic transactions, a great place to work; where employees have impact and are valued. 26 © 2014 Ariba – an SAP company. All rights reserved.
  26. 26. Internal Sourcing Contract Management Procurement Invoice Management Buyer; T&ESourcing Contract Mgt Ariba Network 4,000 RFxs annually 15,000 agreements T&E: 70,000 users Buyer: $350M in annual spend $6B automated spend 1.1M transactions Global users Global users T&E: Global Buyer: Global; primarily Corp/IT North America Only (95%) Buyer (5%) SolutionUsageScope suppliers On Premise Solution and Ariba Supplier Network Customer 13-Year SAP Ariba Relationship 27 © 2014 Ariba – an SAP company. All rights reserved.
  27. 27. Internal Touch-less Intuitive Connected Cost Effective T&E Mobility SAP eCatalogs eEnablement Expansion Detailed Services Solution Dynamic Discounting Key ProjectsVision User Experience Future Vision, Projects, and Experience 28 © 2014 Ariba – an SAP company. All rights reserved.
  28. 28. Internal • Procurement IT solutions often driven by User Experiences at Home • High level of Cyber-security required for Commercial Transactions • Integration of eCommerce solutions with Large O&G ERP systems required • Ability to perform Cross-catalog searches across eCatalogs, Inventory, and Material Master components • Enhance IT Competence of Procurement Professionals • Supplier Partnerships required to implement new systems (i.e. eCatalogs) • Ability to facilitate full PtP Systems in remote ventures Industry Challenges 29 © 2014 Ariba – an SAP company. All rights reserved.
  29. 29. #AribaLIVE Tesoro Kathryn Hinton Vice President Supply Chain Management © 2014 Ariba – an SAP company. All rights reserved. @ariba
  30. 30. Questions for Our Panelists © 2014 Ariba – an SAP company. All rights reserved.35