Sap Supplier Risk Performance 2011

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Sap Supplier Risk Performance 2011

  1. 1. Performance & Riskprepared for Analyst BriefingHenner Schliebs, 2011
  2. 2. Agenda 1.  Performance Management: The SAP portfolio 2.  Managing Risk – The Virtuous Cycle a. Identifying & Analyzing Supplier Risk b. Measuring Impact To The Enterprise c. Assessing, Responding and Monitoring Risk 3.  Taking Risk Response Actions a. Collaboration b. Evaluating Suppliers c. Managing Supplier Performance 4. More Information ©  2011 SAP AG. All rights reserved. 2© SAP 2010 /2
  3. 3. Agenda 1.  Performance Management: The SAP portfolio 2.  Managing Risk – The Virtuous Cycle a. Identifying & Analyzing Supplier Risk b. Measuring Impact To The Enterprise c. Assessing, Responding and Monitoring Risk 3.  Taking Risk Response Actions a. Collaboration b. Evaluating Suppliers c. Managing Supplier Performance 4. Wrap-Up ©  2011 SAP AG. All rights reserved. 3© SAP 2010 /3
  4. 4. Barrier to Increased PerformanceLack of visibility through entire cycle Strategy Strategic Alignment Predictable Performance Confident Decisions Risks Opportunities Execution©  2011 SAP AG. All rights reserved. 4
  5. 5. Overview of SAP’s Portfolio To Support Risk &Performance across all LoB Data Sources/Warehouses Analytic Capabilities Access Services and Best Practices Industry & LOB Analytic Applications SAP Mobile Enterprise Performance Management Performance Management Other Application/ Browsers Data Sources Governance Risk and Risk Compliance and Compliance Social Media Management On Demand Content Business Intelligence Services Unstructured Business Intelligence Enterprise Content Dashboard/ Information Management MS Office Report OLAP Servers, Data Data Foundation Data Warehouse Management Warehouses & Marts Enterprise Portals©  2011 SAP AG. All rights reserved. 5
  6. 6. Included Solutions…. Ø SAP Sourcing Ø SAP BusinessObjects Data Sources/Warehouses Analytic Capabilities Access Ø SAP SRM Spend Performance Ø SAP Business Suite Management Ø SAP BusinessObjects Services and Best Practices Ø Supply Chain Performance Industry & LOB Management Analytic Applications SAP Ø SAPBusinessObjects Mobile Data Enrichment and Enterprise Classification Performance Management Performance Management Other Application/ Browsers Data Sources Governance Risk and Risk Compliance and Compliance Social Media Management On Demand Content Business Intelligence Services Ø SAP BusinessObjects Risk Management Unstructured Business Intelligence Enterprise Content Dashboard/ Information Management MS Office Report OLAP Servers, Data Data Foundation Data Warehouse Management Warehouses & Marts Enterprise Portals©  2011 SAP AG. All rights reserved. 6
  7. 7. Supplier Risks Trigger Risks & Performance Impact Across TheEnterprise As global supply lines stretch, companies are increasingly vulnerable to high-impact/low-probability events (e.g., port strikes, terrorism, geo- political imbalance, trade embargos, natural disasters, weather, etc). n  Lack of visibility beyond the four walls n  Rising energy costs and increased regulations n  Fear of poor customer service©  2011 SAP AG. All rights reserved. 7
  8. 8. Chief Procurement OfficerWhat Keeps Them Up at Night? Supplier Risk Strategic Sourcing Management How do I identify single How do I establish the How do I assess source supply risk? right sources of supplier risk and supply? analyze the mitigation options? Global Trade Cost & Supplier Compliance Performance How do I provide How do I evaluate embargo checks & supplier performance trade cost inputs into and ongoing source of supply development selection? ©  2011 SAP AG. All rights reserved. 8©SAP
  9. 9. Agenda 1.  Performance Management: The SAP portfolio 2.  Managing Risk – The Virtuous Cycle a. Identifying & Analyzing Supplier Risk b. Measuring Impact To The Enterprise c. Assessing, Responding and Monitoring Risk 3.  Taking Risk Response Actions a. Collaboration b. Evaluating Suppliers c. Managing Supplier Performance 4. Wrap-Up ©  2011 SAP AG. All rights reserved. 9© SAP 2010 /9
  10. 10. Managing Supplier RisksProcess automation for the virtuous cycle Establish Collaborate and risk appetite aggregate supplier and thresholds for risks acrossfuture embedded risk enterprise management Actionable, role-based Derive short term dashboards mitigation plan, act and alerts include accordingly and set upoperational procurement response action on risk factors corporate level©  2011 SAP AG. All rights reserved. 10
  11. 11. 1. Avoid SurprisesIncrease visibility and prioritization of key risks Identify and Manage Risk Status in Your Business Context n  Automated risk assessment and surveys n  Build, complete and consolidate risk assessment results Quantitative and Qualitative Risk Prioritization Using Risk Heat Map Analysis Options n  Point and scenario analyses n  Prioritization for response investment n  Survey functionality and guided activities n  Identifying shifting in risk profile n  Workflow reminders for updates©  2011 SAP AG. All rights reserved. 11
  12. 12. Identify & Analyze Supplier RiskSolution: SAP BusinessObjects Spend Performance Management SAP Solution 1. Identify n  n  Know your at risk suppliers Identify supplier concentration Root Cause Analysis and sole sourced risk factors 2. Appraise n  Assess impact to your spend n  Find and act on qualified alternate Impact Analysis supplier sources 3. Act Devise Mitigation Strategy SAP Differentiators Internal Supplier Data: Incorporate internal supplier performance indicators to analyze risk trends for early risk detection (e.g. SAP Sourcing, SAP Supplier Risk Management, SAP Business Suite) External And Market Data: Combine external and market data on suppliers to determine supplier viability (e.g. Lexis Nexis, Bureau VanDijk, Directory of Corporate Affiliations, Kompass International, US Government Central Contracts - Diversity, US Treasury Department - OFAC, US Census Bureau- Congressional, World Bank - Debarred entities, UK Post, Numerous state agencies) Assess Impact of Supplier Failure: Quantify impact on your business, spend volume and locations to help prioritize and establish alternate suppliers©  2011 SAP AG. All rights reserved. 12
  13. 13. Out Of The Box Supplier Risk Hierarchy* * Can be customized or extended©  2011 SAP AG. All rights reserved. 13
  14. 14. ExampleScreenshots from Supplier Risk Demo
  15. 15. identify riskTrack and monitor thesuppliers risk andperformanceŸ  overview over the supplier risk informationŸ  Analysis of different risk indicatorsŸ  Top high risk supplier analysis Figure out the high risk suppliers from this overview dashboard©  2011 SAP AG. All rights reserved. 15
  16. 16. analyze riskWhat impact has supplierwith high risk on thecompanyŸ  Detail with third party data shows e.g. on time delivery decliningŸ  Maybe looking for a short term Search risk attributes alternative and…Ÿ  Establish a mitigation plan longer planŸ  Can now negotiate better pricing with alternate vendor due to higher volume ..find alternate supplier for that item©  2011 SAP AG. All rights reserved. 16
  17. 17. take actionlonger term mitigationŸ  Strategic sourcing project with SAP Sourcing directly out of SPMŸ  Include all relevant data to negotiate prices Take immediate action and start sourcing initiative©  2011 SAP AG. All rights reserved. 17
  18. 18. Agenda 1.  Performance Management: The SAP portfolio 2.  Managing Risk – The Virtuous Cycle a. Identifying & Analyzing Supplier Risk b. Measuring Impact To The Enterprise c. Assessing, Responding and Monitoring Risk 3.  Taking Risk Response Actions a. Collaboration b. Evaluating Suppliers c. Managing Supplier Performance 4. Wrap-Up ©  2011 SAP AG. All rights reserved. 18© SAP 2010 /18
  19. 19. Assessing Impact To Enterprise In A ManufacturingCompany: Supplier Risk Scorecard©  2011 SAP AG. All rights reserved. 19
  20. 20. ‘cost of risk’ and the impact to overall Performance©  2011 SAP AG. All rights reserved. 20
  21. 21. Why SAP for Supplier Risk Identification & Analysis?Compare supplier risk attributes to quickly asses the risk impact and takeaction to minimize risk exposure for fulfillment of a critical item:1.  IDENTIFY potential at RISK suppliers2.  ANALYZE the RISK and the potential effects on your business including potential alternate supplier analysis3.  TAKE immediate ACTION on short term and derive a mitigation plan for longer term. HOLISTIC VIEW OF YOUR SUPPLIERS including your companys spend pattern ©  2011 SAP AG. All rights reserved. 21
  22. 22. Agenda 1.  Performance Management: The SAP portfolio 2.  Managing Risk – The Virtuous Cycle a. Identifying & Analyzing Supplier Risk b. Measuring Impact To The Enterprise c. Assessing, Responding and Monitoring Risk 3.  Taking Risk Response Actions a. Collaboration b. Evaluating Suppliers c. Managing Supplier Performance 4. Wrap-Up ©  2011 SAP AG. All rights reserved. 22© SAP 2010 /22
  23. 23. 2. Respond IntelligentlyMake more informed, risk-intelligent decisions View Aggregate Risks by Process and Category Finance Supply Sales .... IT Mitigate Risks Across Multiple Track Mitigation Response Status Processes and Risk Categories Top Industry Risks Mismatch of Demand with Supply Employee health and safety Non-compliance with emissions Production disruptions Supplier disruptions n  Response status monitoring Non-compliance with RoHS/WEEE n  Response cost tracking Non-compliance to regulatory requirements n  Analysis done before and after responses©  2011 SAP AG. All rights reserved. 23
  24. 24. 3. Stay InformedIncrease transparency by automated monitoring Align Risks with Corporate Strategy n  Ensure risk management methodology is aligned with organizational goals n  Execute strategy with increased visibility and understanding of risk n  Increase effectiveness of strategies and initiatives by clearly understanding the risk exposure Automatically Capture Incidents Monitor Risks and Losses n  Embedded into key business processes n  Create risk knowledgebase to learn n  Controls monitoring based from previous upon the level or risk experiences associated with each business process n  Incorporate and document workflow n  Workflow delivers capabilities into response assessments to experts playbook User receives email alert – data updated in SAP BusinessObjects Risk Management©  2011 SAP AG. All rights reserved. 24
  25. 25. 4. Plan For FutureDevelop and execute a proactive risk strategy Model and Align Risks to Organization Structure n  Data models aligning organizational units, process activities, risk categories and indicators n  Consolidated view of risk information supporting information needs Create Risk and Activity Catalogs Document Risk Appetite n  What types of risks do we want to track? n  Proposed risks based on business n  Align risks to corporate goals process n  Customizable, pre-delivered n  Define appropriate content risk categories and thresholds Risk Catalog Organization Unit©  2011 SAP AG. All rights reserved. 25
  26. 26. Manage Supplier RiskSolution: SAP BusinessObjects Risk Management SAP Solution 1. Assess n  n  Know your enterprise risk Increase visibility into the impact Root Cause Analysis of risk against performance 2. Reponse n  Reduce risk and cost across strategic initiatives Impact Analysis n  Increase Strategic Effectiveness through Automated Monitoring of 3. Monitor Risks Risk and Strategy SAP Differentiators Framework: §  provides a best-practice framework so we can identify, analyze, respond to, and monitor obstacles to reaching out firm’s growth objectives. Efficiency: §  Automate key risk management processes and controls §  Repeatable framework for risk-based analysis §  Minimized audit time and audit-related costs Assess Impact of Failure: §  Continuous monitoring of compliance and risks §  More reliable and trustworthy risk and compliance data §  Optimized management of risk initiatives©  2011 SAP AG. All rights reserved. 26
  27. 27. Enterprise Risk ManagementOperational Supplier Risk is pushed to Enterprise Risk Management©  2011 SAP AG. All rights reserved. 27
  28. 28. assess riskAssess RiskŸ  Heat map shows effect and probabilityŸ  Overview of cost related to the risk –  Inherent and –  Residual total loss Supplier risk might roll up into Logistics disruption, valued at $55m loss©  2011 SAP AG. All rights reserved. 28
  29. 29. create risk responseŸ  Take risk into enterprise consideration Ÿ  Assign control proposalŸ  Create risk response Ÿ  Assign regulation policyŸ  Estimate total loss reduction Ÿ  Assign to Risk Management process New controls established to monitor new supplier… Possible responses to supplier risk on enterprise level include increase of lead time or sourcing initiative …by including non-preferred vendors©  2011 SAP AG. All rights reserved. 29
  30. 30. setup risk monitoringŸ  Set up Monitoring Ÿ  View result in Enterprise scorecardŸ  Assign to controls Ÿ  Supplier risk has been rolled up toŸ  Set up rules enterprise risksŸ  Assign monitoring frequencies Controls are assigned to purchases …and will be included in the alerting from non-preferred vendors… scorecard©  2011 SAP AG. All rights reserved. 30
  31. 31. Why SAP Risk ManagementTake supplier risk into enterprise consideration to quickly asses the riskimpact and create risk responses to minimize potential losses and violateregulations:1.  ASSESS potential RISK for the enterprise2.  CREATE the RISK REPONSE and take risk into controlled environment3.  MONITOR your RISK and include it into enterprise risk monitoringHOLISTIC VIEW OF YOUR ENTERPRISE RISK including operational supplier risk©  2011 SAP AG. All rights reserved. 31
  32. 32. Agenda 1.  Performance Management: The SAP portfolio 2.  Managing Risk – The Virtuous Cycle a. Identifying & Analyzing Supplier Risk b. Measuring Impact To The Enterprise c. Assessing, Responding and Monitoring Risk 3.  Taking Risk Response Actions a. Collaboration b. Evaluating Suppliers c. Managing Supplier Performance 4. Wrap-Up ©  2011 SAP AG. All rights reserved. 32© SAP 2010 /32
  33. 33. Supplier Risk Assessment Project©  2011 SAP AG. All rights reserved. 33
  34. 34. Supplier Risk Assessment Project©  2011 SAP AG. All rights reserved. 34
  35. 35. Supplier Risk Assessment Project - Link to StreamWorkfor Collaboration©  2011 SAP AG. All rights reserved. 35
  36. 36. StreamWork Collaboration Activity©  2011 SAP AG. All rights reserved. 36
  37. 37. StreamWork Activity©  2011 SAP AG. All rights reserved. 37
  38. 38. Supplier Scorecard Report©  2011 SAP AG. All rights reserved. 38
  39. 39. Supplier Score Trend Report©  2011 SAP AG. All rights reserved. 39
  40. 40. Supplier Scorecard Dashboard – Single Supplier©  2011 SAP AG. All rights reserved. 40
  41. 41. Supplier Scorecard Dashboard – Comparison of TwoSuppliers©  2011 SAP AG. All rights reserved. 41
  42. 42. Supplier Development Action Items©  2011 SAP AG. All rights reserved. 42
  43. 43. Agenda 1.  Performance Management: The SAP portfolio 2.  Managing Risk – The Virtuous Cycle a. Identifying & Analyzing Supplier Risk b. Measuring Impact To The Enterprise c. Assessing, Responding and Monitoring Risk 3.  Taking Risk Response Actions a. Collaboration b. Evaluating Suppliers c. Managing Supplier Performance 4. Wrap-Up ©  2011 SAP AG. All rights reserved. 43© SAP 2010 /43
  44. 44. Wrap Up: Delays In Supplier Drop ShipmentsRespond to Missed Customer Commits Business Process Key Performance Indicators Supply Lead Time Inbound Shipments & Receipt Confirmation Order Fulfillment Cycle Time Drivers Key Risk Indicators Risk Event Business Impact Supplier drop shipments Delayed Lead Time Delayed Production Improper or Inaccurate Missed % of blocked imports Customer dissatisfaction Shipping Documentation customer commitments Inspection failures High Defect Rates Financial - Lost sales revenue Preventive Recovery responses reduce responses reduce probability of event impact of event Responses Reduce Avoid Support Replace Controls n  Quality checks n  Cancel Shipment n  Provide alternate n  Change to new n  Establish or tighten contract and Re-Source shipping source supplier SLAsPlanned functionality – subject to change©  2011 SAP AG. All rights reserved. 44
  45. 45. SAP’s DifferentiatorRisk-adjusted enterprise performance management Directors & Executives n  Risk in context of corporate strategy and performance n  Understand true exposure of risk to performance n  Achieve proactive transparency n  Embedded in existing n  Automatic risk processes monitoring n  Reapply best practice n  End-to-end risk mitigations processes across the value chain n  Enable performance (and risk) innovation n  Become a driver of Lines of Risk business change Business Managers©  2011 SAP AG. All rights reserved. 45
  46. 46. Thank You!Contact information:Henner Schliebshenner.schliebs@sap.com#hschliebs
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