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Improve Your Bottom Line by Increasing MRO Spend Under Management

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MRO can be a messy category; estimates from industry analysts suggest that as many as 3,500 purchase orders, invoices and related documents are generated for every $1 Million in MRO spend. At an estimated average cost of $57 per document, this flurry of activity adds $200,000 in overhead – before factoring in the costs associated with managing an over-sized supplier base. Join Ariba partner ThomasNet to learn how to leverage your existing Ariba investments to capture more MRO as spend-under-management and improve your bottom line through the effective use of supplier catalogs and high quality procurement content.

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Improve Your Bottom Line by Increasing MRO Spend Under Management

  1. 1. Improve Your Bottom Line byIncreasing MRO Spend UnderManagementMRO can be a messy category; estimates from industry analysts suggest that asmany as 3,500 purchase orders, invoices and related documents are generated forevery $1 Million in MRO spend. At an estimated average cost of $57 perdocument, this flurry of activity adds $200,000 in overhead – before factoring in thecosts associated with managing an over-sized supplier base. Join Ariba partnerThomasNet to learn how to leverage your existing Ariba investments to capturemore MRO as spend-under-management and improve your bottom line through theeffective use of supplier catalogs and high quality procurement content.© 2013 Ariba, Inc. All rights reserved.
  2. 2. Improve Your Bottom Line by IncreasingMRO Spend Under ManagementClaudio PintoSr. Director, Business Development, ThomasNetSteve PateukStrategic Alliances & Business Development, Network & Financial Solutions, Ariba© 2013 Ariba, an SAP Company. All rights reserved.
  3. 3. © 2013 Ariba, Inc. All rights reserved.3As many as 3,500 POs, invoices and relateddocuments are generated for every $1 millionin MRO spend…At an estimated average cost of $57 each, thisactivity adds $200,000 in overhead – beforefactoring in the costs associated withmanaging hundreds of “informal” suppliers.
  4. 4. Agenda• Defining Industrial MRO as a category• Why its worth watching• A look at the Implications, if you don’t keep an eye out• “A day in the life …”• The value of it all• Putting it altogether and making it happen• What’s next?4 © 2013 Ariba, Inc. All rights reserved.
  5. 5. MRO as a Spend Category5Indirect SpendMaterials andconsumables purchasedthat do not become partof produced goods orservices that a companydelivers to the market forthe supporting operationsof a business.Indirect Spend – Industrial MROA subset of IndirectSpend, typically materialsthat specifically supportthe manufacturingprocess.Direct SpendDirect materials (rawmaterials, ingredients,standard parts,specialized parts) that gointo the manufacture of afinished good.© 2013 Ariba, Inc. All rights reserved.
  6. 6. Some Common Industrial MROCategories6CleaningHVACElectricalMaterialHandlingJanitorialEnergy/GreenSafetyPackagingPlumbingToolsLighting© 2013 Ariba, Inc. All rights reserved.
  7. 7. It’s Worth Watching…7ONLY50%of MRO parts available…in storerooms and inventory16%Of COGSAttributed to MRO$500KPER DAYCost of a broken gasketin a chemical plantUp to25%Of MRO spend leakage is dueto poor supply chain visibility© 2013 Ariba, Inc. All rights reserved.
  8. 8. The Procurement “Pain” with MRO© 2013 Ariba, Inc. All rights reserved.8Receive and Invoice ExceptionsLack of visibility, auditing and trackingHigh number of exceptions from APto procurementPO Transmit, Confirm and TrackHigh FTE costs doing re-issues &expeditingSupply chain riskRequest and Replenish, Catalog and ContractLack of controls risks compliance Maverick buying
  9. 9. The Financial “Pain” with MRO© 2013 Ariba, Inc. All rights reserved.9Timing and DiscountsSmall amount of payables under earlypay discountsInconsistent payment termsExceptions and ApprovalsAssuring proper approvalsKnowing if non-PO invoice pricesare correctReceipt and CaptureHigh paper entry costs High % of exceptions
  10. 10. A Day in the Life…10 © 2013 Ariba, Inc. All rights reserved.
  11. 11. A Day in the Life …revisited© 2012 Ariba, an SAP Company. All rights reserved.11
  12. 12. 50%NegotiatedSavingsLeakedThrough non-compliance, penalties andmissed discount opportunities64%Best-in-ClassOrganizations capture 64% ofsuppliers, representing 80% ofSpend Under ManagementThe Power of Procurement Content• Consumer-like buying experience• Reduces maverick spend• Drives contract compliance• Improves the spot buying process• Delivers a “Perfect PO”12 © 2013 Ariba, Inc. All rights reserved.
  13. 13. Let’s put this altogether now…13SupplierSupplierSupplierSupplierSupplierSupplierSuppliercXMLEDIEmailCSVHTMLcXMLAS2PaperSupplier SupportDiscount & PayPO & Invoice AutoCatalogs & ContractsPO ManagementInvoicingDiscount & PayCatalog ShoppingComponents• e-commerce Adapter for Ariba• Connectivity with the Ariba Network forPO & Invoice Automation, SMART Invoicing• Procurement content and catalogs, powered byThomasNet’s Marketplace SPEC• Integrated delivery methodology andimplementation services• Ariba software applications a la carte• Supplier enablement and support© 2013 Ariba, Inc. All rights reserved.
  14. 14. How ThomasNet Can Help…Known SuppliersUnknownSuppliersRecommend SuppliersStreamline your current MROsupplier relationships with PunchOutcatalogs to comply with your Aribarealm processes.Identify new suppliers currently beingviewed on Ariba.ThomasNet.com by yourcompany. Contact and PunchOut enablethose that are prioritized.Survey Ariba.ThomasNet.com andconnect you with suppliers in newcategories. Contract and PunchOutenable those that are prioritized.© 2013 Ariba, Inc. All rights reserved.14
  15. 15. ThomasNet’s Solution…• Customized for eachsupplier….• Pricing• Product selection• Compliance adherence• Easy and timelyimplementation forsuppliers• Supplier funded contentdevelopment© 2013 Ariba, Inc. All rights reserved.15
  16. 16. Making it happen…the process…STEP 1 – Contact Your Ariba CMO• Your CMO will collaborate with ThomasNet andyou to identify the MRO suppliers, current or new,that you’d like to get Ariba-ready.STEP 2 – ThomasNet Connects with YourTarget Suppliers on Your Behalf•ThomasNet’s project manager will coordinate withAriba and the supplier to ensure that we gather theappropriate set of products information andcontracted pricing details.•There will be a quality review process between thesupplier and you to ensure the accuracy of theproduct details and pricing.STEP 3 – ThomasNet Gets SupplierCatalogs Ariba-ready•Suppliers’ rich product data is made Ariba-readywith ThomasNet’s Marketplace SPEC technologyfor you to access within your Ariba realm.STEP 4 – ThomasNet EstablishesSupplier Network Connectivity•Your suppliers completed catalog is loaded to yourAriba realm so that you can begin procurementdirectly from their product information.•ThomasNet continues to maintain and update thesuppliers catalogs as required to continue to meetyour specific procurement needs.© 2013 Ariba, Inc. All rights reserved.16
  17. 17. Next Steps1. Complete the response card and leave it with us –we’ll follow up2. Contact your Ariba CEx or Account Executive17 © 2013 Ariba, Inc. All rights reserved.
  18. 18. 18 © 2013 Ariba, Inc. All rights reserved.
  19. 19. Questions?© 2013 Ariba, Inc. All rights reserved.

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