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IBM Smarter Asset Management Procurement

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As corporations rely more and more on their supply chains to support product innovation and work efficiency and productivity, the role of procurement organizations has evolved from simply delivering cost savings to improving supplier performance, monitoring contracts, and proactively managing supply chain risk.

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IBM Smarter Asset Management Procurement

  1. 1. © 2015 IBM Corporation IBM Smarter Asset Management Procurement End-to-End Solution as a Service Paul Nash Domenico Merlino Elizabeth Koumpan
  2. 2. Agenda • Introductions and Purpose • Existing Challenges • IBM Value Proposition • Conceptual Architecture • Additional References 1
  3. 3. Existing Challenges
  4. 4. Key drivers of asset management Increase asset service levels at a lower cost Improve financial results Improve budget forecasting Transfer knowledge of an aging workforce Meet regulatory requirements 3 Source: Reliabilityweb.com Research Report on Asset Management Practices, Investments and Challenges 2014-2019. www.reliabilityweb.com Increase system reliability
  5. 5. Suppliers are vital to your organization’s success, regardless of industry On average, 50 percent of revenue is now spent with suppliers Constructionand engineering Telecommunications servicesproviders Automotive manufacturing Beverage Semiconductor manufacturing Chemical Consumerpackaged goods(CPG) Metalsandmining Transportation services Electronic manufacturing Pharmaceutical Industrial manufacturing Aerospaceand defense Healthcareservice providers Oilandgas Banking Utilities Financialservices Uncontrolled Controlled Percentageofrevenue 0% 70% SOURCE: CAPS Research, Cross-Industry Report of Standard Benchmarks, June 2012. 4 On average, 25 percent of revenue is spent on Asset Based spend
  6. 6. A Real World Example
  7. 7. Current Process Analysis/ Request (PR) Bid Package Contract Maximo Work Order / Purchasing Job Inspection Completion
  8. 8. Supplier Management Challenges • Limited information collected from the supplier • No approval workflow or means to collect assessment data • Inability to check outside information like D&B • Disruptions caused by unreliable suppliers • Poor visibility into supplier spend and performance • Costs incurred as a result of inaccurate or conflicting supplier information • Risk to company and brand because of supplier actions or policies 7 Grow qualified supplier base • Capture & evaluate qualification data to ensure suppliers meet statutory company & category requirements Obtain complete view of supplier performance across organizations and categories • Classify suppliers across multiple categories and company organizations • Capture survey and transaction data to evaluate performance • Have a standard process for onboarding and qualifying new suppliers • Define and manage supplier development programs Remediate suppliers that pose supply chain risk • Identify supplier risks across numerous company criteria • Define programs with goals and track progress
  9. 9. Bids and Solicitations Challenges • Managing virtually all categories—simple to complex— using the same process and system • Optimizing supplier bids to obtain the best value, not just the best price • Running large events, complex events or both • Providing an interface for suppliers to access the bids • Managing virtually all categories—simple to complex— using the same process and system • Optimizing supplier bids to obtain the best value, not just the best price • Running large events, complex events or both 8 Efficiency in the sourcing process with need for • Central repository and access • RFx Wizards and Templates • Complete configurability Accelerate the decision process with • Optimized analysis • Gain control without manual tasks Manage pipeline of sourcing events • Create & execute sourcing events for complex and basic categories • Monitor & manage event pipeline across categories
  10. 10. Contract Management Contract Management helps companies structure more profitable contracts, streamline the contracting process and improve compliance. Execute on negotiated time and materials against demand from requisitions or work. Track warranty details against assets for improved recovery. Provide Enhanced Process Automation, Document Controls Capability, Enhance Terms and Conditions Management, Enhanced External Communications, Expanded Process Transparency, Enhanced Overall Contracts Language Management, Storage and Retrieval. Challenges • Inability to produce an actual contract document to be signed by both parties • No control over the process or approval workflow • Limiting exposure to risk and understanding the impact of marketplace events • Missing savings opportunities and ensuring delivery of obligations • Enforcing compliance with standards and government regulations
  11. 11. Supplier Performance and Risk Challenges • Disruptions and cost overruns caused by unreliable suppliers • Poor visibility into supplier spend and performance • Costs incurred as a result of inaccurate or conflicting supplier information • Risk to company and brand because of supplier actions or policies 10 • Identify Risk Earlier • Analyze Risks in real time • Mitigate Risks via Advanced Decision support where KPI’s are integrated as an • early warning system • Facilitate suppliers’ compliance with relevant regulations and social norms • Evaluate supplier performance and support compliance with contractual terms • Identify and measure likelihood and impact of supplier risk • Manage supplier development programs to improve compliance and performance or to mitigate risk
  12. 12. Spend Data Analysis Challenges • Lack of visibility into spend across the enterprise • Spend data housed in different systems and differing formats • Lack of control over savings programs 11 Enrichment (aggregation and cleansing) of spend from different categories and systems Accurate spend classification, down to the line-item level with automated feedback Real-time dashboards and analysis
  13. 13. IBM Value Proposition
  14. 14. The Smarter Way… Analysis/ Request (PR) Bid Package Contract Maximo Work Order / Purchasing Job Inspection Completion
  15. 15. Delivering strategic supply and contract management solutions that enable your company to maximize financial performance and reduce commercial risk IBM Solution delivers value to the supply chain 14 Gain contract lifecycle visibility Define and manage risk Accelerate time to closure Ensure compliance
  16. 16. Plan & Analyze Improve Productivity Increase Savings Mitigate Risk • Standardization of procurement processes • Increase source to contract cycle times • Improve resource utilization by automating processes Contract Manage & Execute How does our solution deliver value? • Create multi-year savings programs • Identify more savings opportunities • Negotiate higher savings for events and contract negotiations • Track spend and SLAs against the contract • Increase use of preferred, top performing suppliers • Minimize activity with high risk suppliers Centralized Data Management 360 Dashboard Reporting and Visibility 15
  17. 17. Program & Request Management 16 Supplier Qualification Supplier Discovery Web based, logic driven supplier registration Detailed category assessments Automated approval workflow Value Maintain one portal for all suppliers Quickly identify and onboard new suppliers Enforce compliance with corporate standards Conduct market analysis to find the best suppliers Strategic Supply Management Supplier Qualification Source Classify Suppliers Contract Execute Orders Evaluate Supplier Risk & Perf. Analyze Spend Plan & Analyze Qualify Suppliers
  18. 18. Program & Request Management 17 Sourcing Capabilities Buyer Survey, RFI, RFQ, RFP, Auctions Best Practice Category Templates Automated scoring & ranking Easy to use online and offline bidding interface What-if bid comparison & savings analysis reporting Value Streamline RFx creation – run more events Analyze RFx results faster and more efficiently Track savings by category, business unit and RFx type across organization Strategic Supply Management Sourcing Source Classify Suppliers Qualify Suppliers Contract Execute Orders Evaluate Supplier Risk & Perf. Analyze Spend Contract
  19. 19. Strategic Supply Management Contract Management Program & Request Management 18 Contract Management Logic driven ―Interview Wizards‖ Standard Template library & Pre-Approved clauses MS Word Integration with real-time data sync Conditional and clause level workflows Proactive alerts and automatic task creation Value Reduce contract cycle times Identify and eliminate process bottlenecks Realize negotiated benefits to capture more savings Source Classify Suppliers Qualify Suppliers Contract Execute Orders Evaluate Supplier Risk & Perf. Analyze Spend Contract
  20. 20. Strategic Supply Management Supplier Evaluation & Risk Program & Request Management 19 Supplier Evaluation & Risk User defined scorecards and surveys with ability to link to contracts Risk modeling with sophisticated calculations Integrated KPIs, traffic light system graphics, and proactive alerting Value Supplier risk data is centralized and easily accessed Manage more suppliers with automated evaluation processes Proactive alerting to identify risks earlier Source Classify Suppliers Qualify Suppliers Contract Execute Orders Evaluate Supplier Risk & Perf. Analyze Spend Manage & Execute
  21. 21. Strategic Supply Management Spend Analysis Program & Request Management Source Classify Suppliers Contract Execute Orders Evaluate Supplier Risk & Perf. 20 Spend Analysis Superior data enrichment with guaranteed accuracy Cognos powered dashboard views and reporting Analytics to source and rationalize supply case Compliance Management to track contracted vs. actual Value Increase global spend visibility Drive more business to preferred suppliers Improve compliance & reduce leakage spend Identify more opportunities for savings and rationalization Plan & Analyze Analyze Spend Qualify Suppliers
  22. 22. 21 Virtual Supply Master - Centralized Data Management 360 Dashboard Reports & Analytics 360 view of cross suite supply chain activities from one interactive dashboard report Preassembled workspace content – drag and drop assembly Accessible online or on mobile tablets / iPad Value Increase visibility to savings and rationalization opportunities, demand aggregation, compliance issues and supplier risk Use supply chain intelligence to increase corporate competitiveness Strategic Supply Management 360 Dashboards Reporting & Analytics Program & Request Management Source Qualify Suppliers Contract Execute Orders Evaluate Supplier Risk & Perf. Analyze Spend Classify Suppliers 360 Dashboard Reporting & Analytics
  23. 23. Strategic Supply Management Smarter Asset Purchaser e Integrated Sourcing Application Integrated Contract Management Supplier classification defining supplier strategies Supplier evaluation managing supplier performance Integrated Spend Analysis Supplier onboarding and discovery processes Integrated supplier data sources and self service Supplier risk online tracking and monitoring Supplier qualification to assess and approve suppliers Supplier master data management and synchronization Collaboration and knowledge sharing between purchasers 22
  24. 24. Mobile enablement Mobile Capabilities Drive Adoption
  25. 25. Conceptual Architecture
  26. 26. Logical Architecture 25
  27. 27. Cloud based Solution as a Service Purchase Order Goods Receipt Invoice Receipt Payment Requisition Budget and GL Postings Contract Management Spend Analysis Sourcing and Negotiations Transactional: Improve Usability, Workflow, Flexibility, Employee and Supplier self service Strategic: Cost Savings, Risk Mitigation, Productivity Improvements E-invoicing Program Management: Develop Portfolio Strategy - Category Analysis (Internal-External) - Implementation - Performance Monitoring Supplier Lifecycle Management – Qualification/Classification/Evaluation/Risk/Development Master Data Supplier Network Catalogues Purchase Requisition Goods Receipt or Time Entry Invoice Receipt Requisition Approvals Approvals 26
  28. 28. Interaction with other systems 27 Smarter Asset Management Procurement Solution Vendors ERP Systems Email System Active Directory/LDAP Project Control Systems Enterprise Service Bus Commercial Reporting Tools Financial Systems Tax Services Existing Applications ECM Systems 3-d Party Data Banking Systems Engineering Systems Suppliers Vendor Management System HR Systems Internal Users Buyer Users System Administrators Contract Users Sub Contractors Integration support, messaging Engineering Design and Scheduling Accounts Payable Contract, Bid, Procurement, Supply, Project, Risk Management Bidding, contracts, purchase orders Projects with child project/work orders/ with tasks that all have scheduled times Scoring models; best bid compasrison Update VSM Master Suppliers with data from the third party provider Contracts, Orders, Invoices, Configuration Tools for creating and changing database objects and attributes to perform other customizations Supplier registration, vetting and approval, supplier management ( Purchase order, invoices), bidding,risk and compliance Provide alerts and notifications, such as alert users to purchased items becoming due for shipment or those that are overdue shipment or delivery. Correspondence and email communication Support Financial, including Project accounting services User authentication and authorization Update purchase order shipment weight, volume, and item details Data Exchange with existing applications Exchange Vendor Data Search and retrieve documents stored in external ECM repositories. Exchange purchasing and financial data View reports generated by external tools within the application Suppler Validation; Get Tax Identification Number Retrieve 'Master' data for all information related to HR
  29. 29. Products that Enable this Solution 28 • IBM Emptoris - is used for strategic supply, category spend, and contract management. It helps procurement organizations improve performance, capture sustainable cost savings, and mitigate risks. • IBM Maximo supports processes for inventory management, invoice and work order generation, inspection assignments, and accounts payable. It enables multiple assets to be managed on a single software platform, with automated interval-based, meter-based, or event-driven purchasing that helps you order the right parts and services at exactly the right time. • The IBM FileNet P8 is an enterprise content management platform for capturing, classifying, managing, and storing business- related digital assets with centralized, secured access and control. It provides the ability to link procurement-related documents (such as invoices, vendor data, and purchase orders, inspection instructions, contract attachments, and so on) to corresponding business processes. • IBM Sterling is a portfolio of commerce solutions and includes IBM Sterling B2B Integrator, a transaction engine and toolkit that allows you to define, create, implement, and manage business processes involving trading partners, including suppliers. It automates the complete buy-sell-ship-pay process, supporting communication with anyone, in any way, and regardless of protocols, data formats, and preferred communication methods. • IBM Cognos Business Intelligence is used to deliver business intelligence capabilities, such as reporting, dashboards, and scorecards. You can analyze shipping and freight payment data, perform program monitoring using dashboards, and prepare contract status reports to track key milestone activities. • IBM Watson Explorer is a platform for developing and deploying enterprise information navigation and search applications. Data Explorer’s 360-degree view pushes data, in-context, to the user based on their role in the organization, providing a unified view of data from any customer or business entity. Data Explorer virtually integrate the data so insights can be made that would otherwise not be possible looking at data from a single data silo. For example, Watson Explore supports custom (federated) searches that return data regarding supplier activities, news, credit information, blog data, and chat insights that can be useful in supplier negotiations. Data from multiple reports can be fused into single view to show relationship between the different data points, such as viewing performance data alongside cost savings data.
  30. 30. Why IBM • Industry analysts such as Forrester Research and Gartner, Inc., have recognized IBM as a leader in enterprise asset management, supplier management, sourcing and vendor management, business intelligence and analytics, and enterprise content management. Further, the SaaS-based Smarter Asset Management solution fits perfectly into IBM’s clearly defined cloud, social, and big data strategy, in which critical technology and business processes are increasingly delivered to clients as digital services rather than physical assets. • The Forrester Wave™: VMS, Q1 2014 (2014) http://w3-03.ibm.com/software/analyst/articles/forrester/forvms.html • Magic Quadrant for Energy and Utilities Enterprise Asset Management Software (2014) http://www.gartner.com/technology/reprints.do?id=1- 22DOTKA&ct=140929&st=sb 29
  31. 31. Contract Management Xcel Energy standardizes procurement across enterprise and realizes significant savings Business Challenge: Xcel Energy, an investor-owned utility based in Minneapolis that provides energy-related products and services, wanted to move to a sustainable savings model to drive down costs and understand supplier economics through spend analytics and repeatable sourcing and contracts processes. The company also wanted to reduce contract risk, increase competitive bidding, manage key supplier relationships, lessen the impact of turnover, improve controls and reduce maverick spending. The Smarter Commerce Solution: Xcel Energy centralized its sourcing function by implementing common methods, best practices and tools. This expanded the company’s sourcing bandwidth and reduced the impact of turnover. As a result, the company’s supply chain costs remained flat for three years, it increased sourcing savings by increasing the number of events competitively bid and it implemented a supplier relationship management program with 32 tier I supplier/category relationships. 100% of contracts were managed in new process 100% of spend was classified via spend analytics 6,000+ suppliers were registered and managed successfully 100% of $3 billion spend was managed by sourcing and procurement
  32. 32. Sourcing Telecommunications leader creates global procurement platform; achieves greater transparency and substantial savings Business Challenge: A leading telecommunications company that serves customers in more than 50 countries experienced a dramatic decrease in profits because of operational inefficiencies that included limited visibility and manual processes. The Smarter Commerce Solution: replaced multiple legacy sourcing systems with one end-to-end solution that provides global category management and transparency, resulting in company-wide cooperation and best-practice sharing. Now the telecommunications company manages supplier performance against contracted service levels and targets. A greater percentage of its spend is under control, leading to economies of scale. $5 billion+ competitively awarded each year 4,000+ sourcing projects per year
  33. 33. IBM Red Guide 32 http://www.redbooks.ibm.com/abstracts/tips1245.html
  34. 34. Thank You Your Feedback is Important! Access the InterConnect 2015 Conference CONNECT Attendee Portal to complete your session surveys from your smartphone, laptop or conference kiosk.
  35. 35. Notices and Disclaimers Copyright © 2015 by International Business Machines Corporation (IBM). No part of this document may be reproduced or transmitted in any form without written permission from IBM. U.S. Government Users Restricted Rights - Use, duplication or disclosure restricted by GSA ADP Schedule Contract with IBM. Information in these presentations (including information relating to products that have not yet been announced by IBM) has been reviewed for accuracy as of the date of initial publication and could include unintentional technical or typographical errors. IBM shall have no responsibility to update this information. THIS DOCUMENT IS DISTRIBUTED "AS IS" WITHOUT ANY WARRANTY, EITHER EXPRESS OR IMPLIED. IN NO EVENT SHALL IBM BE LIABLE FOR ANY DAMAGE ARISING FROM THE USE OF THIS INFORMATION, INCLUDING BUT NOT LIMITED TO, LOSS OF DATA, BUSINESS INTERRUPTION, LOSS OF PROFIT OR LOSS OF OPPORTUNITY. IBM products and services are warranted according to the terms and conditions of the agreements under which they are provided. Any statements regarding IBM's future direction, intent or product plans are subject to change or withdrawal without notice. Performance data contained herein was generally obtained in a controlled, isolated environments. Customer examples are presented as illustrations of how those customers have used IBM products and the results they may have achieved. Actual performance, cost, savings or other results in other operating environments may vary. References in this document to IBM products, programs, or services does not imply that IBM intends to make such products, programs or services available in all countries in which IBM operates or does business. Workshops, sessions and associated materials may have been prepared by independent session speakers, and do not necessarily reflect the views of IBM. All materials and discussions are provided for informational purposes only, and are neither intended to, nor shall constitute legal or other guidance or advice to any individual participant or their specific situation. It is the customer’s responsibility to insure its own compliance with legal requirements and to obtain advice of competent legal counsel as to the identification and interpretation of any relevant laws and regulatory requirements that may affect the customer’s business and any actions the customer may need to take to comply with such laws. IBM does not provide legal advice or represent or warrant that its services or products will ensure that the customer is in compliance with any law. 34
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