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Selling E-Commerce to Your Leadership

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Your customers are implementing a procurement solution. Learn how to change beliefs, shift thinking, and drive conversations and change within your company to shift from operationally focused e-commerce to customer-centric digital commerce and help your company flourish. You'll also gain insights into how to get to the future and create a change organization.

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Selling E-Commerce to Your Leadership

  1. 1. Grahame Davidson – Solutions Consultant, Private Digital Commerce; IBM A/NZ Hiroyuki Kaneda – General Manager, Open Network; Misumi Group Inc. August 31, 2016 Selling E-Commerce to Your Leadership Public
  2. 2. ©2016 IBM Corporation2 24 August 2016 IBM Grahame Davidson Solutions Consultant Client Success – IBM Digital Sales, IBM A/NZ  Collaborate with IBM internal stakeholders and clients to harness the knowledge and adoption of B2B e-Commerce and Collaborative Work Flow solutions.  Over 20 years expertise in strategic marketing and planning, product management, brand management, business development, business partner management, and project administration.  Master of Strategic Marketing, University of Wollongong (Australia)  Chartered Marketer, The Chartered Institute of Marketing (United Kingdom).
  3. 3. ©2016 IBM Corporation3 24 August 2016 Great photographers don’t wait for the moment, they anticipate the next moment. Innovators in e-Commerce don’t wait for things to happen. They have a good sense of industry trends and what’s happening around them.
  4. 4. ©2016 IBM Corporation4 24 August 2016 IBM and SAP Ariba • First SAP Ariba implementation in 2000 • IBM is an Ariba Ready Platinum Supplier • SAP Ariba is IBM’s largest e-Procurement vendor • Supporting more than 150 SAP Ariba customers • Almost $4B client spend per year • Processing more than 50,000 documents
  5. 5. ©2016 IBM Corporation5 24 August 2016 Why is E-Commerce Important? The compound annual growth rate for B2B e-Commerce between now and 2020 is growing 7.7% by which time it will be a $Trillion plus industry. At least 88% will use multiple devices at work. The fastest growing segment among this group are mobile phones.
  6. 6. ©2016 IBM Corporation6 24 August 2016 The digital revolution is changing the way B2B decisions are made and commerce is transacted: Digital is central, not secondary. Enterprise IT buyers execute the purchases via digital Companies that deliver great buying experiences grow twice as fast as those delivering average experiences Clients that are enabled for e-Commerce demonstrate a higher level of client satisfaction with IBM. Why is E-Commerce Important?
  7. 7. ©2016 IBM Corporation7 24 August 2016 Predictions of E-Commerce Trends B2B e-Commerce laggards will begin to see revenue decline as sales increasingly shift online3 PREDICTIONS Forrester Research confirms B2B e-Commerce will be twice the size of B2C e-Commerce in the U.S4. By 2020 US B2B e-Commerce will reach $1.13 Trillion and globally $6.7 Trillion5. 56% of enterprise IT buyers execute the purchases via digital. Companies that deliver great buying experiences grow twice as fast as those delivering average experiences. Research shows that the 3 most important benefit drivers for adopting e-Commerce are – efficiency gains, control, transparency, and client satisfaction. B2B companies are reporting that they’ve cut their costs to serve by 90% by moving customers into self service environments6.
  8. 8. ©2016 IBM Corporation8 24 August 2016 Key Issues Facing the Organization • Traditional processes incur high costs in IT, Procurement. • Inefficiencies decreases CRM. • Multiple touch points and parallel processes increases business risk. • Old fashioned organisations will not attract quality employees. • Low employee morale. • Cash flow issues. • Lower share of wallet. External Internal
  9. 9. ©2016 IBM Corporation9 24 August 2016 An Integrated Experience Creates Value Reduce Costs and Gain Efficiencies • Automate Transactions Reduce manual processing of orders and invoices • Automate Requisition Approvals preapprovals and exception routing embedded in system – freeing field sales time • Simplify contract management enable simple, repetitive transactions within complex deals and contracts • Enhance internal and external collaboration Build Strategic Partnerships • Create Competitive Advantage through shared investment of global, integrated processes • Create Differentiated Value demonstrate client value delivered by IBM as a preferred supplier who supports client goals for efficiencies • Create Client Loyalty by supporting client eProcurement strategy and improve ease of doing business
  10. 10. ©2016 IBM Corporation10 24 August 2016 Value Increases with Integration
  11. 11. ©2016 IBM Corporation11 24 August 2016 Digital Buying Journey Identify Discover Learn Try Buy Deploy Renew, Expand eProcurement eOrdering / eInvoicing eShops & Catalogs Buy Collaboration Portals Collaborate, co-work and share documents in a secure environment Share Contract Management Inventory Management SoW Management RFS Management Manage Contract Negotiation and Signing, RFQ & RFP Management Negotiate Smarter Sourcing Less time processing e-mail, leaving more time for actual work. Source
  12. 12. ©2016 IBM Corporation12 24 August 2016 Main Ariba Network Functions Start with CIF flat files, then move to PunchOut, Anything can be put into a catalog Ariba Network Portal & e-mail to cXML, EDI Integration for automation PO Flip to Integrated Invoicing via cXML/EDI Dynamic Discounting can be useful but check contract terms
  13. 13. ©2016 IBM Corporation13 24 August 2016 Examples of IBM SAP Ariba Implementations  Many IBM Integrated Account and Large Enterprise clients use SAP Ariba for e-PO, e-Invoicing, Payments.  Select government clients use SAP Ariba to send RFQ’s to IBM.  Catalogue integration.  We have implemented Ariba Supplier Information and Performance Management (SIPM) with a large financial institution in order to provide audit compliant supplier and client feedback via the system.  Monitor leads in Ariba Discovery application.
  14. 14. ©2016 IBM Corporation14 24 August 2016 Building the Business Case: B2B E-Commerce Value Proposition Moving transactional business such as re- ordering online frees up manual administration, and valuable sales rep resources. Best in class organisations will seek and be loyal to innovative partnerships. Reduce dependencies on manual resources. Factor in the cost of losing customers and expensive infrastructure will improve profitability. Staff should not purchase outside the approved process.
  15. 15. ©2016 IBM Corporation15 24 August 2016 Building the Business Case: Proof Points
  16. 16. ©2016 IBM Corporation16 24 August 2016
  17. 17. 17 Misumi Group Inc. Hiroyuki Kaneda General Manager, Open Network, Misumi Group Inc.  Leads “Misumi Open Network Strategy” as GM in Misumi Group Inc.  Prior to joining Misumi, Hiroyuki worked for SAP Japan for 15 years (SAP Global Top Talent for 7 consecutive years).  Executive MBA from INSEAD University.  Author of eight business-related books.  Received media coverage from “President”, “Diamond”, “Toyo Keizai”, Nikkei Business”, and “GQ JAPAN.  Lectures “Business Strategy” at Tokyo Metropolitan University.
  18. 18. 18 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 0 250 500 750 1,000 1,250 1,500 1,750 2,000 2,250 2,500 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 0 25,000 50,000 75,000 100,000 125,000 150,000 175,000 200,000 225,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 MISUMI Group Introduction • Total revenues in FY2015: 240 Billion Yen (approx. 2.3 Billion USD) • As a manufacturer’s supplier throughout the world, we quickly deliver our items to 220,000 customers annually MISUMI group’s revenues & # of employees (100Million) FY2015 240B Yen (2.3B$) 9,628 employees # of employees Revenues (#) # of MISUMI’s customers (machinery industry) FY2015 80,000 in Japan 140,000 in outside of Japan Total 220,000 customers(#) In Japan Outside of Japan
  19. 19. 19 Misumi Brand Product Line (Misumi as Manufacturer) • Product lineup of 16 million products supplied by more than 2,700 makers • Product information for each item is offered through the E-catalog (Unit Price, Lead time, specifications) • Each product is designated a part number that is used to place orders without drawings • Meet customer requirement of the shorter delivery globally Product Category 16 Million Mechanical Components Major Products Carried by the MISUMI Group
  20. 20. 20 550 BrandsMechanical Components 300 BrandsElectronics Components 821 BrandsTools and Consumables 1,050 BrandsMRO Misumi Brand Product Line (Misumi as a Distributor)
  21. 21. 21 320 45 0 50 100 150 200 250 300 350 Direct Indirect Our Challenge of Indirect Production Materials • Indirect production materials cost only 36% of total purchase amount but 80% of total purchase-related workload • As a result, 7.1 times more inefficient and reducing its workload is big challenge for many manufactures Indirect 36% Direct 64% Purchase amount Indirect 80% Direct 20% Purchase related workload Efficiency (Amount/Workload) 7.1 times Source: Caps Research “Critical Issues Report” Indirect Spend
  22. 22. 22 Key Issues of Indirect Materials Procurement 70% of workload is spent for low frequent purchase items in indirect production materials Total purchase-related workload cannot be improved unless reducing workload for low frequent items Catalog items 60% 30% Fixed price Replace brand One-off items 40% 70% Quotation/Operation Workload E-procurement Purchase amount Workload Challenge Countermeasure Purchaseamount Items Higher frequent item Lower frequent item Source: Spent analysis result of a MISUMI customer
  23. 23. 23 Benefit in Connecting to E-Commerce (Our case: MISUMI e-Catalog integration with customer) • 13 minutes can be reduced per 1 order and more benefit in large order transactions • MISUMI’s 16 million stock + 80 thousand trillion MTO* items can support reducing customer’s workload (10K) All can be purchased in MISUMI E-com Comparison of e-Catalog in Japan Source: MISUMI’s (As of Mar 16) Benefit in connecting to e-Catalog Spent time for quotation/order Quote 5 min PO 5 min Acceptance 7 min 3 min 2 min 1 min-2Min -3Min -6Min 13 min reduction Select item 5min 5 min -2Min Spent time for order by system Total 22 min. Total 9 min. 107 7 2 891 198 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 MISUMI TRUSCO As One Midori Monotaro amazon 1,600+800垓(受注製作品)16 million stock + 80 thousand trillion MTO *MTO: Make to Order CompA CompB CompC CompD CompE
  24. 24. 24 Procurement Integration Creates Value for Buyer/Supplier (minimizes the workload, cost, and speed) System Integration minimizes customers procurement efforts and activities PunchOutEDI Customer Misumi Benefit • Limit the number of approved suppliers to minimize cost • Promote and drive compliance • Automates procurement most processes. Increases efficiency. • Minimize manual errors when ordering/ invoicing etc. • Increase sales by gaining visibility to customers users Send Order Detail (PO) Receive Order Detail (PO) Acknowledge Price/LT Send Shipment Information Upload Order(SO) Customer Misumi Check Out PunchOut cXML (OCI/CIF) Search Product Click Misumi Link B社 C社 Select Product Request Order cXML (OCI/CIF) Internal Approval Search Select Order Confirm Receive Request EDI Automation Receive Shipment Information • Automates procurement most processes. Increases efficiency. • Minimize manual errors when ordering/ invoicing etc. 1. 2. 1. 2. 3. PunchOut allows easy access to, and simple product selection from pre-approved suppliers EDI Integration allows buyers to centralize purchasing activities among various suppliers Procurement activities can be easily standardized by utilizing Procurement Service Providers
  25. 25. 25 Lessons Learned (Misumi as Supplier) Project (Execution) • Project Team Structure (Cross Function by IT/ Business) • Project Scope Definition (for Process Automation) • Supplier On-Boarding Strategy (Plan) • Simplify the Objectives and ROI • Quick Win Goal Setting • Top Management Engagement
  26. 26. 26 Coming Soon… Ariba Spot Buy with MISUMI Supports Your Global E-Procurement Collaboration of SAP Ariba/MISUMI supports your global E-Procurement, especially your Asian Market by Spot Buy Customer Benefits Realizing Global E-procurement - Reduce non-core works - Visualize/Integrate/Consolidate - Procurement globally Misumi Custo mer Ariba Spot Buy Misumi Custo mer Misumi Custo mer Misumi Custo mer MISUMI MISUMI Group Inc. MISUMI Corporation SURUGA Production Platform Co., LTD. SURUGA SEIKI CO., LTD Dayton Progress Corporation Anchor Lamina America, Inc.
  27. 27. Thank you Contact information: Grahame Davidson Solutions Consultant IBM Australia Limited 55, Coonara Ave, West Pennant Hills NSW 2125. +61 405576884 #SAPAribaLive Hiroyuki Kaneda General Manager, Open Network Department, Misumi Group Inc. Hiroyuki.f3ky.Kaneda@misumi.co.jp +818097118064 #SAPAribaLive
  28. 28. © 2016 SAP SE or an SAP affiliate company. All rights reserved. 28Public Please Complete Session Survey Locate Session Click Surveys Button Select Breakout Survey Rate Session
  29. 29. © 2016 SAP SE or an SAP affiliate company. All rights reserved. 29Public Appendix
  30. 30. 30 Driving Future Business Integration With the external environmental change, business collaboration/ integration is key for our success 1. Business integration in the variety of business process (order automation, replenishment, etc.) 2. Business Process outsourcing with the customer value chain 3. Business Collaboration with external players (Customer, Supplier, Service Provider) × × × × ×× × × × × × × Companies who cannot integrate independently =“Dropout Cluster” Industrial Ecosystem (Business Driver) Product development Product designing Production Marketing Sales/ Logistics R&D Value Chain Service Component manufacturing R&D Institution OEM/ EMS Discrete manufacturing Master Data Information Production/ Logistics quick delivery distribution Sourcing Fulfillment Portal Marketing Commerce Platform Service Companies who can integrate independently Industie4.0 3D Printer Industrial robot External environmental change (Innovation) Emerging country etc… Screen Only
  31. 31. 31 Our Strategy Level P1. Punch Out Level1 (No Punch Out) P2. Punch Out Level2 (Original Format/ Simple Function) P3. Punch Out Level3 (Original Format/ High Functionality) P4. Punch Out Level4 (Standard Format/ SimpleFunction) P5. Punch Out Level5 (Standard Format/ High Functionality) E5. EDI Level 5 (Real Time) E4. EDI Level4 (Standard Format/ Automation) E3. EDI Level3 (Original Format/ Automation) E2. EDI Level2 (Semi Automation) E1. EDI Level1 (Manual) Punch Out LevelLow High Low High ManualSemi Automation Automation No Punch Out (Limited business opportunity) Punch Out with Original Format (Increase business opportunity, but take Cost and Time Punch Out with Standard Format (High business opportunity, Easy to expand sales opportunity) ③ ④ EDI Level SAP SRM Integration with Customers Existing EDI integration with Customers Japan Supplier Network Integration (with Customers) Screen Only ①② Ariba Integration with Customers Our top priority Acceleration with Ariba Our top priority is to focus on the High Level* Punch Out/ EDI segment to increase our business opportunity (SAP Ariba is the best partner for our strategy) * Misumi Original Study: Classification of our customer segment with Punch Out/ EDI Level
  32. 32. 32 0 250,000 500,000 750,000 1,000,000 1,250,000 1,500,000 1,750,000 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 CY2014 CY2015 CY2016 0 100 200 300 400 500 600 700 800 900 1,000 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 CY12014 CY2015 CY2016 MISUMI E-Catalog Growing • MISUMI customer’s E-procurement has been increasing Y-o-Y due to their transformation to IT-based manufacturing • E-procurement for indirect production materials is even more increasing Number of companies connecting with MISUMI E-catalog (Mainly Large accounts) (# of company group) 885 groups globally as of Mar. 2016 Number of MISUMI E-catalog users (Mainly SMB) 1.5M users globally as of Mar. 2016 (Users)
  33. 33. 33 Screen Add “MISUMI” to the Punch-Out catalog list! Misumi to Start Integration with SAP Ariba ①Keyword/Part # ②Product Category ③Supplier Name Easily search though 16 Million products! Flexible Spec search (material/surface treatment/dimensions etc.) 1 2 E-catalog is equipped with various search methods, allowing users to easily find what they need. Keyword/Part #/Product Category/Supplier Name Flexible product specification with on the spot quote ! Eliminate time wasted on waiting for quotes.
  34. 34. 34 Quote Receive Quote Enter QT Details to System Order Accept Before Integration with Misumi ・Enter order details to system After Integration with Misumi Minimize Quoting/Order Processing Time Minimizing overall time spent on processing quotes and completing orders Enter Order to System Quote Receive Quote Enter QT Details to System Order Accept Enter Order to System ・Quote with multiple suppliers ・Wait till all suppliers reply ・Check Price/Delivery date ・Enter quote result into system ・Order out to multiple suppliers ・On-spot quotes available ・Eliminate waiting time ・Eliminate entering order detail to system ・No price/LT adjustments ・Eliminate entering quote result ・One-stop shopping experience Minimize quote requests! Eliminate double entry!
  35. 35. 35 Procurement Monitor Global Procurement Integration ProcurementEngineer & Production Select products Request QT Answer QT Receive QTConfirm QT Apply PO PO Answer Delivery Date Inform Delivery Date Confirm Delivery Date Ship products Receive products Customer MISUMI Engineer & Production Select products Answer QT Confirm QT PO Answer Delivery Date Confirm Delivery Date Ship products Receive products Customer MISUMI Current procedures New procedures Lots of check and adjustment work occur For example, the lead time* was shortened from 2days to 5 min. * From “Select products” to “PO”. MISUMI Punch Out and EDI solution cuts processes like liaisons between the engineer and the supplier

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