Danfoss IT procurement case study presentation given by Markit Head of Sales, Margus Vahemäe, at Procurement Leaders Data Intelligence & Technology Forum on 6-7 November 2019
Read more about the event at https://www.markit.eu/ww/en/b-wkbb/corporate-immune-systems-are-stifling-innovation-in-procurement
MARKIT TECH SHOWCASE
FOR PROCUREMENT LEADERS
DATA INTELLIGENCE & TECHNOLOGY FORUM 2019
DANFOSS EMEA SUPPLIER CASE:
CONSOLIDATION AND AUTOMATION
HEAD OF SALES
TOTAL ANNUAL REVENUE
ESTONIAN TOP 500 COMPANIES
ESTIMATED SPEND ON IT DEVICES
FORBES GLOBAL 2000 COMPANIES
TECH COMPANIES FROM ESTONIA
TACKLING BIG GLOBAL CHALLENGES
CHALLENGES FACING GLOBAL COMPANIES IN
IT HARDWARE COMMODITIES PROCUREMENT
Amount of products increasing 10 x, but unit prices going down.
Change of traditional 80/20 rule and common procurement methods
not ensuring optimal results anymore.
For global companies: problem is small at “entity” level, but big when consolidated.
Ideal sourcing and delivery should be local – to – local with local invoicing process.
Side-effects: low visibility of spend and purchasing guidelines are not always followed -
leading to maverick spend with no savings in sight.
EFFICIENT PROCESS BECOMES PARAMOUNT
THREE KEY TRENDS SHAPING IT PROCUREMENT
Dramatic decrease of
Explosion of product variety
IT personnel cost growth
EMEA SUPPLIER CONSOLIDATION
Global Technology company creating
innovative solutions to bring savings in
field of energy, food, heating and
HQ in Denmark with 6,1 bn EUR
revenue, 28 000 employees in
130 SUPPLIERS IN EMEA FOR IT ACCESSORIES
TOTAL YEARLY SPEND OF 2 MIL EUR
22 COUNTRIES OPERATIONAL IN EMEA
DANFOSS KEY NEEDS
1. Direct costs savings of purchased products and internal process cost decrease
2. Increased insights due to information availability
3. Visualization and cost awareness
4. Transparency and simplicity
5. Automation & workflow
RESULTS WITH MARKIT
1. ONE SUPPLIER CONTRACT for 24 countries vs 130 different suppliers to manage
2. AUTOMATIC REAL-TIME e-TENDERING for each item the 400 IT buyers are ordering
(30 000 items in 2018 with a transparent pricing model).
3. DIRECT SAVINGS OF 110 000 EUR from 750 K EUR spend on the first year.
Average 13.5 % extra savings on an annual basis with order revenue increasing 50% Y-
RESULTS WITH MARKIT
4. DELIVERY TIME DOWN from 28 days to 2.4 days globally. This has remained stable for
since implementation 3 years.
5. 500+ HOURS SAVED ANNUALLY from purchasing activities and now a clear overview
of spending by countries and product categories. Additional product categories are
added each year to leverage co-operation.
ONE CONTRACT FOR DANFOSS IN 33 COUNTRIES
One supplier frame-contract for up to 33 countries
Markit local entities ensure local – to – local invoices with local VAT
REAL TIME MARKETPLACE FOR FAIR AND TRANSPARENT
Markit is a real time marketplace for IT products
with local-to-local deliveries in 33 countries.
We integrate approximately 300 leading IT
distributors world-wide: real time and
transparent catalogue representing 80% of
market-share in every country.
One login to access in 33 countries.
BEST SOLUTION FOR IT PROCUREMENT
SPECIALISTS AND BUYERS
Efficient e-tendering of every purchase
order with local invoicing
Multiple offers from all the leading
distributors for more than 1 million
View the winning offer versus the rest
and place a fast local-to-local
order with quick lead times
(1-3 business days)
DANFOSS ERP AND INTERNAL
PURCHASING SYSTEM ARIBA
FULLY AUTOMATED PROCESS
DETAILED ACTIVITY AND PROGRESS REPORTS
Markit provides detailed information to
analyse and decide next steps for further
improvements in purchasing.
TAKE THE CHASING
OUT OF IT PURCHASING
HEAD OF SALES