Winning Supplier Enablement Strategies

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Winning Supplier Enablement Strategies

  1. 1. MC Winning Supplier Enablement Strategies Chris Rauen, Ariba Mike Meiring, UPS Sean McDermott, GlaxoSmithKline Gerald Clarke, IBM
  2. 2. Supplier Collaboration: Controlling a Rogue Invoice Mary in AP receivesRon from a a call from Ron about Johnmarketing Invoice Ron calls him a missing payment. The There’s no PO # works in asking for acompany invoice never arrived, so on the invoice, marketing.submits an Invoice purchase Ron must send the so Mary must order.invoice. invoice again. contact Rob . Mary said “no PO, no pay”. Sept 5th Nov 20th Nov 25th Nov 28th Ron finally receives The invoice Unhappy, Ron Back from vacation arrives with prints and sends the the payment after John finally no GR. Mary invoice again, this time more than 4 completes the contacts John correctly with months! He GR. the PO #. is not happy. for the missing info. Jan 15th Jan 3rd Dec 5th Dec 1st So... • Ron (supplier) is feeling irritated and hassled...he will not forget this easily • John (requestor) is annoyed by „the bureaucracy‟ and disappointed that a promising relationship has been damaged • Mary (AP clerk) has to spend a lot of time sorting things out for Ron
  3. 3. Supplier Participation Is Key to Successful Automation Initiatives Value Drives Supplier Participation Top Reasons Suppliers Participate* Increased customer KEY FINDINGS* satisfaction Increased visibility via collaboration  Suppliers value top-line benefits over costs Increased revenues Decreased costs  55% recognize the value of process visibility Improved product / service quality Accelerated cash flows Competitive response *SOURCE: Ariba survey of 582 0% 20% 40% 60% suppliers; 50% Ariba and 50% non-Ariba suppliers3 © 2012 Ariba, Inc. All rights reserved.
  4. 4. Leading Technology The right tools for you and all your suppliers Supplier Analysis • Supplier data enrichment $100M - <$1B <$1B+ • Supplier matching • Value segmentation APAC 10% $10M - <$100M EMEA <$1M 27% $1M- North America 63% <$10M Buyer Tools Geographies Annual Spend • Self-service framework • Available services and tools 10.0% • Monitor and manage the process 5.0% Supplier Tools 0.0% e fg s es n s er m n l ia &D nc ai vc vc io tio lM cs he ed th ic et ra ct t/S t/S /A bu O rv Sv R ria C M ru su to Se Eq a/ Eq tri st st e In Au m is on ar du / ss g m D ce ar • tin C C In co ne Ph n Self-service administration lth pu na le si ea om Te Bu Fi H C • Real-time transaction status • Discovery for sales acceleration4
  5. 5. Expertise Global Community Expert Team Devoted to Your Success Services and Experienced team of dedicated program managers that Support Resources onboard track and educate suppliers Supplier Dedicated team of account, product and service managers Solutions Team focused exclusively on supplier satisfaction Operations Experienced operational team focused on adhering to Personnel a global SLA of 99.999% uptime Product Product managers and engineers deliver new Managers capabilities with valued input from supplier council 24x7 Global Experienced support team with ability to support Support suppliers in local language5 © 2012 Ariba, Inc. All rights reserved.
  6. 6. Bottom Line Savings “Simple” • “Self-Explanatory” • “More valuable than anything” “In addition to improvements in cycle time and the percentage of 71% lower processing costs transactions conducted electronically, best-in-class 47% lower transaction costs enterprises also realize significantly lower costs.” 50% of suppliers enabled Aberdeen, “Supplier Enablement: Connecting with Suppliers to Build Lasting Relationships” CFOZone.com Smooth sailing for suppliers Cory Becker, CEO, Proforma Quicksilver Joy Stoelting, Finance Manager, Big Giant The enablement process is Ariba Supplier Enablement was simple and simple, managing electronic transactions self explanatory. Now, shortly after an with our customers is far superior to invoice is approved I get an email that tells me the scheduled payment date. That is managing paper, and we can increase our almost more valuable than anything. exposure to other customers on the Ariba6 © 2012 Ariba, Inc. All rights reserved. Network. The Hackett Group Procurement and Accounts Payable Benchmarks 2009
  7. 7. MC Winning Supplier Enablement Strategies Mike Meiring P2P Project Manager UPS
  8. 8. About UPS • Founded in Seattle, WA in 1907 • Corporate Headquarters: Atlanta, GA • Primary Business Units: Small Package Supply Chain Solutions (Logistics/Warehouse/Forwarding) UPS Freight • 2011 Delivery Volume: 4 billion packages/documents • 2011 Total Revenue: $53.1 billion ($44 billion small package)8 © 2012 Ariba, Inc. All rights reserved.
  9. 9. Drivers of Supplier Collaboration • More Efficient Catalog Management • Incorporate Useful Data into ERP System PO Acknowledgements Advanced Shipping Notices • Contract Management Tool Single repository of contract data Link to invoicing process • Reduce or Eliminate Standard Paper Invoicing Quicker processing via electronic methods Significant reduction in costs related to Local PO/Invoice transactions9 © 2012 Ariba, Inc. All rights reserved.
  10. 10. Supplier Enablement • Three Primary Categories of Suppliers Catalog Suppliers: Large Corporate suppliers for common commodities Local Service Suppliers: Small to medium-sized companies that provide local maintenance and repair services Large Corporate Service Suppliers: Corporately managed service commodities such as Consulting, Advertising, Sponsorships, Temporary Employment Services, etc.10 © 2012 Ariba, Inc. All rights reserved.
  11. 11. Supplier Enablement Strategy • Target Catalog Suppliers Early High-Transactional Volume and Largest Spend • Target Local Services That Fit “Contract Invoice” Model Landscaping, Pest Control, Fire Equipment Inspections, Vehicle Towing, Car Wash Services, Specific Auto Repairs, etc. Initially Grouped Suppliers Geographically Due to Internal Training Requirements11 © 2012 Ariba, Inc. All rights reserved.
  12. 12. Supplier Enablement Strategy • Target Larger Service Categories Later to Test Contract Invoice Process Corporate Advertising Corporate Sponsorships Medical Services (D.O.T. Physicals and Drug Testing) Corporate Janitorial and Uniform Cleaning Suppliers • In All Scenarios, Target Largest Spend or High Transaction Suppliers First12 © 2012 Ariba, Inc. All rights reserved.
  13. 13. Current Status of Project • Contract Management Fully Implemented • Primary Solution for Local Services Is Contract Invoicing • More than 2,500 Suppliers Have Been Invited to Join the Network • 12 Percent of Local Service Suppliers Have Accepted Early Payment Offers13 © 2012 Ariba, Inc. All rights reserved.
  14. 14. Positive Supplier Feedback • Visibility Into the Invoice Process Is Perhaps the Most Significant Benefit Status of invoices and payments Fewer inquiries to UPS regarding payment • Suppliers Appreciate Cash Management Flexibility via the Network • Ariba‟s Flexibility to Accommodate Virtually Any Processing Platform14 © 2012 Ariba, Inc. All rights reserved.
  15. 15. Lessons Learned • Engage With Your I.T. Function Early and Often • Cleanse Vendor File Before Initiating the Enablement Process • Identify “Out of Scope” Suppliers Early in the Process Develop a plan for exceptions before you start • Procurement Must Engage and Drive the Process UPS began the process as a system enhancement (F&A) Grew to a strategy-driven project later (Procurement) • NEVER Underestimate the Value of Communications Leadership Buy-in is essential…compliance message must filter DOWN15 © 2012 Ariba, Inc. All rights reserved.
  16. 16. Building on Our Success • Processes in Place to Transition “Non-compliant Suppliers” Enlisting the support of local “owners” • Supplier Enablement Self-service Tool (AN49 Release) Facilitates Supplier Tracking and Status More effective management of the enablement process Looking forward to future releases for enhanced reporting16 © 2012 Ariba, Inc. All rights reserved.
  17. 17. Building on Our Success • Broadening Scope of Available Commodities for Supplier Transitioning to the Network Corporate Services Capital Expenditure Project Suppliers 3rd-Party Transportation Suppliers Automotive Parts • 2012 Goal: Transacting with More than 3,000 Suppliers by Year End17 © 2012 Ariba, Inc. All rights reserved.
  18. 18. MC Winning Supplier Enablement Strategies Sean McDermott Manager, North America Accounts Payable GlaxoSmithKline
  19. 19. Who Are we?• World-leading research-based pharmaceutical and healthcare companies• Leading the way in Consumer Healthcare for our OTC, oral care and nutritionals products• 2010 total company sales £28.4bn• Emerging Markets: 24% of total GSK turnover• One of the largest development pipelines in the industry with approximately 30 late-stage assets* Our Mission* As of March 2011To improve the quality of human life domore feelbetter livelonger19 © 2012 Ariba, Inc. All rights reserved.
  20. 20. The Problem • Challenge: Invoice mix was consisted of half paper and half electronic. Processing cost of paper significantly more expensive. Expansion of existing electronic solution not cost effective. BPO solution required document conversion of paper to electronic image. • Solution: Automate invoice processing and increase PO usage • Why Ariba: ♦ 60% Match on Suppliers that made up 80% of existing paper volumes ♦ GSK already using Ariba Buyer module for Purchase Orders ♦ Integration with JDE (E1) System (one pipeline forward) ♦ Flexibility of submission option for suppliers (PO flip, EDI/CXML and CSV)20 © 2012 Ariba, Inc. All rights reserved.
  21. 21. Vendor Enablement Ariba GSK supplier network size 11,366 (vendors) Supplier network overlap with 2,763 vendors (~60% invoice match) Ariba Vendors targeted for enablement 1,500 vendors 75% spend 85% transactions Match among Targeted vendors 815 vendors (~60% match) Enablement timeline 1,500 vendors in 9 months; 85% e-invoice penetration by May 1st21 © 2012 Ariba, Inc. All rights reserved.
  22. 22. Success to Date Paper vs Ariba Inflows Total e-invoicing Penetration 20,000 100% 18,000 90% 16,000 80% 14,000 70% 12,000 60% 10,000 50% Paper EDI % 8,000 40% Ariba e-Invoices Total e-Invoices 6,000 30% 4,000 20% 2,000 10% 0 0% 1,500+ suppliers enrolled in 9 months; Net Ariba inflows outstrip paper inflows in May‟ 1122 © 2012 Ariba, Inc. All rights reserved.
  23. 23. Targeted Supplier Group • Communicate early (Internal and External) It‟s GSK‟s way of working Benefits • Strong Compliance Message (Internal and External) Signoff was from the executive leaders (CFO & CPO) • Existing suppliers difficult to change Cycle time is 60-90 days23 © 2012 Ariba, Inc. All rights reserved.
  24. 24. Existing Supplier On-boarding Process • Identify target supplier base for period bulk ramp • 7 waves with approximately 300 suppliers per wave. • Send communication (AP and Procurement sign-off) • Include strong message on supplier compliancePre-work • Ariba match with existing customers • Conduct supplier training sessions • Supplier sign-up and account creation • GSK trading relationship initiated • Supplier notified of week grace period for paper • Open purchase orders loaded Go-Live • New purchase orders sent • Start paper rejection processPost-Live • Educate supplier on vendor portal24 © 2012 Ariba, Inc. All rights reserved.
  25. 25. Dealing with Supplier Objections • Benefits to Vendor (educate) ♦ Payment Terms (receipt of invoice) ♦ Payments received 7-10 days sooner • High-volume suppliers – little resistance (realize benefits) • Low-volume suppliers – almost free • Medium volume – most objections (educate fee structure/rationale) • Annual fee broken down to cost per invoice • Multiple connectivity to reduce / eliminate vendor rework • Escalate “inactive” suppliers to Procurement25 © 2012 Ariba, Inc. All rights reserved.
  26. 26. New Suppliers • New supplier setup process Onboarding needs to be part of the process • New / Renewed Contracted Spend Needs to be part of the commercial negotiations • Non-procurement spend Requisitions for new suppliers are stopped until supplier agrees to e-invoicing Current success rate >90%26 © 2012 Ariba, Inc. All rights reserved.
  27. 27. New Supplier Onboarding New Supplier identified at purchase order requisition Contracting process Invoices received and T&C‟s include electronically e-invoicing requirement Supplier agreement Purchase order to transact via released e-invoicing with GSK27 © 2012 Ariba, Inc. All rights reserved.
  28. 28. Project Outcomes Lessons Learned Benefits Executive sponsorship is critical Enrolled ~2300 suppliers Change Management Champion Reduction in pending volumes Procurement buy-in and support by 40% New vendor enablement at the Vendor Portal (self service) – outset (avoids post facto chasing) call/query reduction by 30% Paper rejection for all “enabled” Ariba is flexible; faster suppliers implementation at lower cost EDI/cXML implementation process at the outset (dedicated Major contribution to 20% resource) savings goal in GSK Shared Dedicated and trained team to Financial Services manage on-going enablement Strong support from Ariba and supplier issues implementation team28 © 2012 Ariba, Inc. All rights reserved.
  29. 29. Next Steps • Identify working capital solutions • Increased compliance in new service regions29 © 2012 Ariba, Inc. All rights reserved.
  30. 30. MC Winning Supplier Enablement Strategies Gerald Clarke Program Manager, eProcurement, Online Commerce IBM
  31. 31. “Smarter Commerce” Purchasing Experience with IBM What IBM Sells What IBM Does IBM Client Smarter Planet IBM online commerce Buy Market Applying a consultative approach to ‘how’ clients buy, electronically integrating “Source to Pay” Smarter Client processes, globally Commerce Service Sell31 © 2012 Ariba, Inc. All rights reserved.
  32. 32. Best Practices: Client/Supplier Enablement For Clients: • Take advantage of your most “experienced” suppliers first • Business processes and IT capabilities can vary widely among suppliers • Establish a supplier enablement program, including dedicated staff & concise documentation • Have clear end to end (P2P) requirements & share how they link back to your overall strategy and goals • Don‟t create new ANIDs for your suppliers • Create your Ariba profiles with your suppliers in mind For Suppliers: • Don‟t immediately accept relationship requests without talking to your clients first • Clearly understand client requirements • Discuss entire P2P landscape early in the discussion For Both: • Talk about the process as much as the IT. Seek to understand the “why?” and the “how?” • Jointly establish a project plan early in the discussion to better manage expectationsSource: If applicable, describe source origin32 © 2012 Ariba, Inc. All rights reserved.
  33. 33. What’s Next for Suppliers? • Increased Focus on Value Increasing levels of integration, through both process and technology, will drive true collaboration in client/supplier relationships allowing both to attain greater value from the pairing Increased volume of transactions and data will be exchanged Better tracking of the „cost of doing business‟ electronically vs. other methods • Increased Focus on Services Brands Improved adaptation/application of traditional supply chain concepts and P2P automation for all services purchases • Technical Standardization Large multinational clients‟, suppliers‟, third-party vendors‟ and government regulators‟ support of select protocols and formats will drive adoption33 © 2012 Ariba, Inc. All rights reserved.
  34. 34. Successful Supply Chain CollaborationRelies on Commitment and Communication Define Success from both points of view  Buyer Joint plan  Supplier Measure Success Communicate Focus on process improvement, then apply technology34 © 2012 Ariba, Inc. All rights reserved.
  35. 35. 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**35 © 2012 Ariba, Inc. All rights reserved.

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