How To Build A Lean But Mean Purchasing Organization


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Operating a lean, efficient procurement department is critical as companies continue to tighten their belts while at the same time expanding procurement objectives. But it’s easier said than done. Join this session to hear how Storebrand, the leading life insurance company in the Nordic market, transformed its purchasing function from being an afterthought to being awarded the Nordic Swan “Best in Class” Procurement organization for two consecutive years, without extra resources. Learn how Storebrand upskilled its staff and empowered them through the methodical implementation of a cloud-based technology suite.

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  • Ariba’s On Demand applications and the Network generate measurable value to organizationsBuyer’s experience significant savings that fall right to the bottom lineSome savings are obvious (see above) but others less so. For example, a large Oil company was able to significantly cut inventory of replacement parts in its refineries due to the visibility into order status the network provided. This visibility not only enabled the managers to focus on the operations instead of whether a critical shipment was going to come, but also enabled them to reduce the excess inventory they needed as safety stock to ensure the refinery didn’t go downSuppliers experience savings through the automation of non-value added activities (like AR clerks having to call their customers each month to see when payments will be made)Suppliers also see top line growth from participation on the network – including net new business and increased wallet share with existing customers
  • Life and Pension: Sweden/Norway 42,2 million euros in premiumincome 300 million euros in customerfunds 30% marketshareInsurance: 26,5 million euros inpremiumincomeAsset Management: 558,5 million eurosBanking: 46,3 million euros in
  • How To Build A Lean But Mean Purchasing Organization

    1. 1. How to Build a Lean but MeanPurchasing OrganizationEllen- Carine MartinezProcurement/ Sustainability ReportingStorebrand© 2013 Ariba, Inc. All rights reserved.
    2. 2. #AribaLIVEDelivering Measurable BenefitsValue to Companies of All Sizes, Industries, Regions© 2013 Ariba, Inc. All rights reserved.2Supplier ValueBuyer ValueSourcingProcurementProcessAP ProcessComplianceWCM &Discount3-9%ProcessSavings$3-20Savings/Document1-8%SpendSavingsTotalSavingsFasterPaymentAR ProcessProcessingOrdersSales &MarketingIncreasedRevenue15-75%TimeSavings15-75%ProcessSavings5-32%RevenueIncreaseTotalSavingsSource: Ariba customer surveys and interviews
    3. 3. #AribaLIVEAriba Collaborative Value Chain – Direct,Indirect, Services© 2013 Ariba, Inc. All rights reserved.3•Spend DataEnrichment•SpendAnalysis• ContractCollaboration• Authoring• Repository• RequisitionOwnership• CatalogCompliance• ContractCompliance•ApprovalWorkflow•POCollaboration•POTransmission•Goods &ServicesReceipt• InvoiceReceipt• InvoiceCompliance• InvoiceApproval• ExceptionWorkflow•AwarenessMarketing• LeadCollaboration•ProposalCollaboration•BiddingOpportunity• ContractCollaboration• ContractRepository•CatalogCollaboration•CatalogSyndication•RequisitionCollaboration•SpecificationNegotiation• OrderCollaboration• OrderStatus• InvoiceDelivery• InvoiceCollaboration•Supplier Info;Performance Mgmt;Supplier Research• Company Profile Mgmt• Customer Account ManagementBuyer’s Processes: Analyze to PaySupplier’s Processes: Market to Cash•PaymentCollaboration•DiscountCollaboration• PaymentCollaboration• PaymentVisibility• WorkingCapitalCollaboration• Category /ProjectMgmt• RFI / RFP /AuctionCollaboration• SavingsTracking &Pipeline
    4. 4. #AribaLIVESpeaker Bio - Ellen-Carine Martinez• Ellen-Carine Martinez is a supply chain and spend analyst manager for StorebrandLifeinsurance. Ellen-Carine is also responsible for the sustainability reporting forthe company. Prior to working with procurement and sustainability she served as afinancial advisor for Storebrand followed by a manager role for the Sales andComissions report for her company. Ellen-Carine holds and MBA from St. JosephsUnivesity in Philadelphia and has been with Storebrand for 10 years.© 2013 Ariba, Inc. All rights reserved.4
    5. 5. Ellen-Carine MartinezStorebrand GroupBuilding a Lean but Mean PurchasingOrganization
    6. 6. #AribaLIVEAgenda• Company Overview• Challenges• Approach• Results• The New Normal – Key Takeaways6 © 2013 Ariba, Inc. All rights reserved.
    7. 7. #AribaLIVEStorebrand Group7The Group’s activities are carried out through four main business areas:Storebrand is the leading provider of life insurance andpension fundsin the Nordic marketVision"Recommended by our customers"Life and Pension Insurance Asset Management Banking© 2013 Ariba, Inc. All rights reserved.
    8. 8. #AribaLIVE• Storebrand have for more than 15 years had focus onSocially Responsible Investment (SRI)More than 120 companies worldwide excluded frominvestmentsEight people focus on and manage SRI and the dialogue withthis companiesSustainable Asset Owner of the Year 2011• Focus on CR in all purchases from the groupAll companies excluded from investments also excluded frompurchasing• Qualified for Dow Jones Sustainability IndexListed on the DJSI 14 consecutive yearsCO2 neutral since 2008Global 100 - world leader in clean capitalism• Member of United Nations Global CompactCorporate Responsibility (CR) Is aMain Driver in Everything We Do.8
    9. 9. #AribaLIVENew Financial IndustryRequirements Dictated Changes inStorebrand9• Financial industry not know to havehigh focus on procurement in theirorganizationStorebrand was not much better than theaverage financial institution.Started its procurement initiative in 2008 and bybuilding an organization.• More competition in the market requiresmore focus on costChanging regulation from the ministry of finance isforcing more standardised products in the marketMore focus on procurement cost and not onlysales in the industryCosts increasing – especially in IT – as newrequirements emerge• Storebrand established groupprocurement function to meetthe challengesReduce procurement cost by 10%in three-year periodEnsure that new purchases are managedprofessionallyEnsure control of all procurementin the organisation© 2013 Ariba, Inc. All rights reserved.
    10. 10. #AribaLIVEConstraints Required a Lean andMean Strategy10Constraint Mitigating StrategyPeopleLimited purchasing headcountLack of internal resources w/necessary skills• Process standardization for efficiency• Recruit high caliber staff• Ensure flexibility across the team to limitcompetence risk and knowledge• Integrated suite (including networkintegration) for seamless processesTimeSavings timeframe aggressiveNo time for multi-year system deployments• SaaS / Cloud solutions to min deploymenttime and IT requirements• Prioritized, phased deployment of solutionsLimited ability to change suppliersMost procurement are IT systems andoperations with long term contractsNo purchase of direct material in production• Leverage spend analysis to identify allpossible opportunities© 2013 Ariba, Inc. All rights reserved.
    11. 11. #AribaLIVEStrategy - Systems• SaaS / Cloud model:Minimizes time to valueMinimizes upfront effort / costs and IT requirements• Closed-loop, integrated source-pay suiteEnsure seamless, efficient processesImprove complianceSingle vendor point of contact• Vendor selected = AribaBest-in-class, integrated suite of Cloud solutionsClose customer engagement model (ongoing)Network enables better supply-base collaboration11 © 2013 Ariba, Inc. All rights reserved.
    12. 12. #AribaLIVEDeployment Approach• Objectives:Minimize time to valueMinimize internal resources required (small team)• 3-Phased Approach12Sourcing / Contracts• Fastest deployment• Start driving savings quickly• Increase team efficiencySpend Visibility /Supplier Management• Drive ongoing pipeline• Monitor performanceProcure-to-Pay(under investigation)• Drive process savings• Ensure compliance• Close loop1 2 3© 2013 Ariba, Inc. All rights reserved.
    13. 13. #AribaLIVESourcingIncreased Throughput and Competitiveness• Increase our reach when we seek new suppliersAble to manage more suppliers in an RFx event with less resourcesNew opportunities have come across that would not have beeninvestigated before• Standardized processes increase efficiency = more categories sourcedStandardised templates allows us to build to RFx in limited timeRisks mitigated by standardised question, included those that usuallywas forgotten• Everything is possible to Source through AribaManagement of Shopping malls – Storebrand the second biggestowner in NorwayComplex IT systems and operationSale of credit portfolio from Storebrand BankConsultants with competition inside established frame agreements13 © 2013 Ariba, Inc. All rights reserved.
    14. 14. #AribaLIVEContract ManagementEnsuring Control of all Commitments• Contract repository ensures good control of our contractsAll agreements in the organisation is stored in the systemGives good control of the internal users of the contractNotifications used correctly gives us enough time to startre-negotiations in good timeMitigation of risks for the group• Templates ensures Lean process for new contractsNew contracts established on limited time with new suppliersClause Library gives good control of changes accepted with suppliersNegotiation functionality gives good control of any changesHealth servicesAuto claims14 © 2013 Ariba, Inc. All rights reserved.
    15. 15. #AribaLIVESupplier Management and SpendVisibilityDriving Sustainability• Supplier Management ensures lean monitoring of suppliersEstablish standardised KPIs across all suppliers or areas gives us betterinsight to the delivery we receive – and where we have issuesEnsures CR requirements on suppliers actually are monitored and delivered• Ensures that all information on a supplier is stored in one placeImportant to get one common repository of each supplier to ensure access forthe teamEstablish one common view of all activities with supplier in Ariba• Spend Visibility gives us better insight to our purchase volumeMultiple GL account systems made it hard to consolidate spendGives us insight to where the costs are and who is purchasing outsidecontractsIdentify / prioritize areas where new Sourcing initiatives should be established15 © 2013 Ariba, Inc. All rights reserved.
    16. 16. #AribaLIVEProgress to Date• Winner of the Nordic Swan ”Best in Class” Procurement organization fortwo consecutive years, nominated since 2009.Good control of Spend and capability to monitor suppliersEstablished obligations given in the contract by suppliers monitored through SIPM & SV• Realization of cost reduction targetsCost reduction targets met and delivered according to planAdditional initiatives on cost reduction – now challenging health care services• Procurement organization established as an important business partner withinStorebrandEfficient organization that delivers value to the rest of the group and able to executequicklyBuilt competence on business needs and how to utilize supplier capability instead ofusing resources on standardized tasks• Next steps– Continued work on standardized and Lean processes in procurement– Continue to work on P2P possibilities and integration with this suite– Systematic monitoring of suppliers and their efforts towards sustainable business practices16 © 2013 Ariba, Inc. All rights reserved.
    17. 17. #AribaLIVEThe New Normal Changes theWay Storebrand Thinks aboutProcurement• Corporate Responsibility will play a more important role in the futureStorebrand well positioned already – but need to act on the whole value chain• More focus on Lean operation to be cost efficientImportant to do More with Less – require efficient process and standardsin placeTo be efficient we need efficient tools to support the operation as FTEsare limited• Efficient or automated processes with the suppliers are importantEnsure that we get the right data on time at limited cost for both partiesImportant with automated processes to monitor how the suppliers areperforming• More focus procurement on costEfficient processes to put needs out on the marked for bid – limit Single SourceAcceptance in the organisation that cost is more important –whats good enough?17 © 2013 Ariba, Inc. All rights reserved.
    18. 18. Questions?© 2013 Ariba, Inc. All rights reserved.18
    19. 19. #AribaLIVEPlease Complete Session Survey© 2013 Ariba, Inc. All rights reserved.19Find Sessionin ScheduleClickChoose oneRateSessionThank you for joining usClick Survey andSelect BreakoutSession Survey