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Closing the gap between Spend Analytics & Category Management_Weatherford

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Consistent, accurate, timely, detailed spend analytics are just a starting point for Weatherford. This session by Procurement/SCM Director Michael Lariviere will focus on the collaboration he undertakes with Weatherford's spend category managers to ensure that spend analytics are being used to shape category management strategies and to drive outside-the-box thinking around how spend categories can be segmented and addressed by procurement.

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Closing the gap between Spend Analytics & Category Management_Weatherford

  1. 1. Closing The Gap Between Spend Analytics & Category ManagementHorizon 2012New Orleans, LAMike LariviereDirector, Business Process
  2. 2. About Weatherford Weatherford International Ltd. (NYSE:WFT) is an oilfield service and equipment company dedicated to helping clients maximize the value of their oil and gas assets Headquartered in Switzerland, we currently operate in more than 100 countries across the globe A multinational organization, we are committed to pursuing the highest standards of excellence in all of our business processes and partnerships Vital Statistics – 2011 Revenue $13 Billion – Employees 60,000+ – Service Bases 929 – Manufacturing Facilities 100+ 3
  3. 3. Infrastructure Reach 4
  4. 4. Spend Analytics Solution Success! Need identified for spend analytics solution in 2008 – Refresh timing capabilities Formal RFP process – Currency and global scope capabilities performed – Proposed implementation plan – Knowledge of Weatherford systems & data Sample data provided to – Pricing ‘down selected’ providers Zycus solution selected in Selections based on 2009 Weatherford has been using the Zycus iAnalyze solution for the past 4 years, we continue to extend scope and capabilities, and the solution is considered ‘must have’ functionality that supports our ongoing Category Management activities.
  5. 5. Requirements, Key Decisions & Challenges Requirements for implementing a spend Key Design Decisions Development challenges analytics solution Fragmented spend data across  Maintain standard UNSPSC  Internal support from IT to multiple systems taxonomy support data extract and validation process Lack of consistent, consolidated  Identification of key reporting and timely spend data data points (dimensions)  Internal support from user groups/SMEs to validate solution Required to identify and confirm  Mapping significant data items test results strategic sourcing opportunities across multiple systems, including Pcard data  Creating ad hoc data items to allow flexible user defined taxonomy  Focused pilot on specific Weatherford operating regions  Reclassification refresh cycle time  Center-led organization alignment around proposed Category Management model
  6. 6. The GapsThe journey to implementing formal spend analytics capabilities, linking this capability toprioritized sourcing opportunities while transitioning from traditional procurement to formalCategory Management roles and responsibilities presented some challenges, or process gaps.Specific challenges included; Spend categories recognized, but not clearly defined UNSPSC classification did not align with our spend categories or user expectations Identification, engagement and alignment with spend owners Significant unclassified spend in the ‘To Be Categorized’ category Fundamental shift from Sourcing to Category Management roles and responsibilities 7
  7. 7. Closing The Gaps Spend categories • Focus on North America regions and Indirect Spend categories initially recognized, but not • With time, additional review and rationalization of categories was performed clearly defined UNSPSC classification • Use ad hoc fields in Zycus to define Weatherford specific categories did not align with our • Create Weatherford category/supplier taxonomy alignment, this met user spend categories or user expectations expectations Identification, • Engage spend owners during spend verification phase (perception alignment) engagement and • Engage spend owners during category strategy development process alignment with spend • Engage spend owners, or delegates, during sourcing event execution process owners Significant unclassified • Enlist 3rd party support to review and reclassify top spend to Level 2 sub- spend in ‘To Be categories Categorized’ category Fundamental shift from • Engage 3rd party alliance partner(s) to bridge resource requirements Sourcing to Category • Implement formal Category Management people, process and technology Management roles and methodology responsibilities
  8. 8. Organization / Category Structure Procurement Specialist Category Manager Region Indirect Categories & Sub-Categories Country Lead HR Services & Information Telecoms & Travel Services Contracted Technology Networks Labour • Technical • Hardware • Fixed / Wired • Airlines • Administration • Software • Mobile / Wireless • Accommodation • Relocation • Maintenance & • Audio Visual • Car Rental Services Support • Maintenance & • Ground • Recruitment Support Transportation • Training • Specialized Fleet • Travel Agencies Director • Insurance Monitoring • Conferences and Global • Benefits • Telco Management Events VP GlobalSupply Chain Indirect Administration Procurement Facilities & Real Professional Marketing Services Fleet Management Estate Services • Facilities • Legal Services • Marketing Agencies • Lease / Buy (OEM) Management • Accounting & Audit • Advertising / Media • Fuel Services • Management • Printed Materials • Up-fitting • Office Services Consultancy • Reprographics • Tires • Office Equipment • Architects & • Promotional • Glass • Office Supplies Engineers Products • Maintenance • Couriers • QHSSE • Forklifts • Utilities Electric / Gas / Water
  9. 9. Sample Global Indirect Spend by Customer Type Indirect: $2B Manufacturing: $0.2B Non-Manufacturing: $1.8B 10% 90%N.A. $137M, Remaining Regions $25M N.A. $877M, Remaining Regions $623M
  10. 10. High Level Operating ProceduresGeneral Category Management Sourcing Budget Management Category Strategy Sourcing Pipeline Performance Market Intelligence Management Management QBR/SPM Pipeline Execute Sourcing Management Events Annual Workplan Execute QBR Events Negotiate Savings Recruitment / Retention Targets/Actual/Rebates Resource Management Training & Development Resource Management Spend Analytics Stakeholder Activities Contract Upload Management Implementation & Contract Management Special Projects Compliance Compliance Management Plans Policy & Procedures Management Management Event Documentation SUM Targets/Actual Realized Savings Tracking Regional Procurement Teams 3rd Party Sourcing Support Offshore 3rd Party Procurement Processes Support
  11. 11. Sample Global Spend Distribution Global: $10B Direct: $4B Other: $0.5B Indirect: $2B Intercompany: $3B TBC: $0.5B
  12. 12. Continuous Improvement Opportunities Finalize center-led category management implementation Increase category management scope and standard processes Increase user adoption, starting with spend analytics Incorporate 3rd party data (i.e. bill payment/audit providers) Introduce 3rd taxonomy (i.e. supplier spend segregation) Improve dashboard reporting capabilities Possibly extend footprint to other integrated solutions Facilitate supplier/customer compliance management process
  13. 13. Any Final Questions / Comments?

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