10 11 webinar e procurement 1 3 buying made easy_final
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Bying made easy - a webinar series from OpusCapita - with the following topics: Risk mitigation Contract compliance Process metrics Payment programs Cash flow forecasting
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10 11 webinar e procurement 1 3 buying made easy_final
- 1. Buying made easy – A webinar series from OpusCapita 5 ways data analytics adds value to Procurement
- 2. Internal Agenda • Introductions • 5 Impacts of Analytics • Risk mitigation • Contract compliance • Process metrics • Payment programs • Cash flow forecasting • Closing remarks 11.11.2016 Presentation name2
- 3. Internal Rowan Lemley (host) Our panel of experts 11.11.2016 Presentation name3 Kati Myllyniemi Managing Consultant Martin Casserdahl Head of Consulting & Training
- 4. 5 ways data analytics adds value to Procurement
- 5. Internal Webinar Poll – Risk mitigation within the supply chain. – Early payment programs for discount capture. – Reduction or elimination of maverick spend. – Improving supplier contract compliance. – Understanding cashflow requirements and improving forecasting. Question: In 2017 our priorities for spend analysis will focus on: 11.11.2016 Presentation name5 Laura: can we allow the user to pick only 3?
- 7. Internal Manage risk • To ensure you identify and manage the different risks impacting your Company Why do this? • Spend Categories • Spend Analyses based on invoice data How to start? • Control of Supply risk • Control of Supplier risk • Opportunity for Supplier consolidation What is the value? 11.11.2016 Presentation name7
- 9. Internal Contract compliance • Companies lose nearly 3-5% of savings opportunities because of auto-renewing contracts Why do this? • See the following slide How to start? • Best-in-class organizations achieve up to 80% more savings than others through a clearly defined contract compliance process What is the value? 11.11.2016 Presentation name9
- 10. Internal Category plans Identified saving opportunities How to achieve contract compliance 11.11.2016 Presentation name10 Strategic Sourcing Contract negotiations Transition plan Savings follow-up Ensure new contract utilization Supplier Relationship Management Procurement Monitoring & KPI’s Catalog based purchasing Feedback to Category management Tangible proof of promised savings Legal and regulatory compliance issues Ethics and sustainability Suppliers integral part of business model Value add form partners Maverick buying Purchase made easy Process measurement & KPI’s Contract benefits Data Analytics
- 12. Internal Process metrics • Understand your processes better • Define a path for improvement • Define success Why do this? • Define and refine your key process metrics • Establish a method for tracking them • Look to benchmark where possible How to start? • Promote ongoing supplier compliance • Identify areas for improvement • Goals become clear What is the value? 11.11.2016 Presentation name12
- 14. Internal Payment programs • Reduce purchase prices • Better use of cash on- hand • Improve liquidity for suppliers Why do this? • Define and refine your key process metrics • Establish a method for tracking them • Look to benchmark where possible How to start? • Promote ongoing supplier compliance • Identify areas for improvement • Goals become clear What is the value? 11.11.2016 Presentation name14
- 16. Internal Cash forecasting • Utilize data to forecast cash needs • Prepare for what is coming Why do this? • Analyze data based on spend • Number of transactions • Payment terms How to start? • Utilize cash in an optimal way • Control your payment terms What is the value? 11.11.2016 Presentation name16
- 17. Closing Remarks
- 18. Internal Closing Remarks 11.11.2016 Presentation name18 Kati Myllyniemi Managing Consultant Martin Casserdahl Head of Consulting & Training
- 19. Thank You See you at the next ‘Buying made easy’ – webinar on eProcurement Topic: 5 ways BiC organizations optimize their purchasing processes (December 8) Rowan Lemley
Editor's Notes
- Why do this? How, what’s the value? Better analyze your suppliers to highlight risks and opportunities Different types of risk based o category Supply risk (earth quake, shortage of raw material etc.) Fukushima, A key element is a chemical for lithium-ion batteries, used in mobile phones, tablets and laptops, for which 70% of the production comes from a Japanese factory shut by the quake Supplier risk – CSR aspect – black listed supplier, not compliant with Company policy, financial unstable Opportunity – consolidate or distribute supplier base based on Category supply risk and criticality
- Why do this? - The reason is: To identify and understand the risks for you company. There are different kinds of risks, you need to identify them and mitigate/manage them How: Spend data Segment direct vs indirect Critical vs non critical goods High value vs low value Prioritize The value: Different types of risk based on category and supplier base Supply risk (earth quake, shortage of raw material etc.) Fukushima, A key element is a chemical for lithium-ion batteries, used in mobile phones, tablets and laptops, for which 70% of the production comes from a Japanese factory shut by the quake Supplier behavior risk – CSR aspect – black listed supplier, not compliant with Company policy, or an financial unstable supplier – impacts on supply. You do not want to transact with such suppliers and if you have them are they critical? Opportunity – consolidate or distribute supplier base based on Category supply risk and criticality the change that you are driving
- Use goods receipt and quality inspections to highlight contract compliance/non-compliance
- Contract management includes negotiating the terms and conditions in contracts and ensuring compliance with the terms and conditions, as well as documenting and agreeing on any changes that may arise during its implementation or execution.
- Get deeper insight into the processes through measurement: Procurement cycle time The average time it takes between requisition submission and purchase order placement is one measure of procurement cycle time. Also when supporting the whole purchase to pay the importance of the purchase requisition approval is also meaningful and tracking the bottlenecs in that process can prevent mavering buying – which happens if the normal process is not working Percentage of the suppliers accounting for the 80% of the spend This KPI measures the current state of supplier consolidation and activity within supply base Managed spend as percentage of total spend Managed spend is the amount of spend that the purchasing department influences throuth the strategic sourcing process. Total spend is the amount of money organization spend on products and services each year. This does not include labor cost. Spend under management (SOM) is as high as 85% in companies with best in class strategic sourcing organizations. Contract compliance - as a separate topic Summary: Capturing baseline KPI information within the supply base promotes ongoing supplier compliance and identifies areas of opportunity Actively measuring these top 10 KPI’s is the key to continuous improvement across an organization’s supply base. Benchmarking KPI’s against other best in class procurement organizations creates procurement goals and targets.
- Why do this? Get deeper insight into the processes through measurement: How to start? Define or streamline your procurement Key Performance Indicator metrics Follow them on a frequent (monthly basis) Example: Procurement cycle time The average time it takes between requisition submission and purchase order placement is one measure of procurement cycle time. Also when supporting the whole purchase to pay the importance of the purchase requisition approval is also meaningful and tracking the bottlenecs in that process can prevent mavering buying – which happens if the normal process is not working Contact OpusCapita Consulting: we’ll define the KPI’s together in the Best Practice Workshops in presales phase or when implementation is agreed What is the value? Capturing baseline KPI information within the supply base promotes ongoing supplier compliance and identifies areas of Procurement improvement opportunities Benchmarking KPI’s against other best in class procurement organizations creates procurement goals and targets What to avoid? Keep it simple, start with few concrete enough KPI’s and follow the change
- Why do this? Get deeper insight into the processes through measurement: How to start? Define or streamline your procurement Key Performance Indicator metrics Follow them on a frequent (monthly basis) Example: Procurement cycle time The average time it takes between requisition submission and purchase order placement is one measure of procurement cycle time. Also when supporting the whole purchase to pay the importance of the purchase requisition approval is also meaningful and tracking the bottlenecs in that process can prevent mavering buying – which happens if the normal process is not working Contact OpusCapita Consulting: we’ll define the KPI’s together in the Best Practice Workshops in presales phase or when implementation is agreed What is the value? Capturing baseline KPI information within the supply base promotes ongoing supplier compliance and identifies areas of Procurement improvement opportunities Benchmarking KPI’s against other best in class procurement organizations creates procurement goals and targets What to avoid? Keep it simple, start with few concrete enough KPI’s and follow the change
- But also a spend analysis based on Invoices will show seasonal fluctuations in the spend and thereby in the cash needed. Typically the spend is concentrated to H1 and also Nov/Dec are intense months Also With PO’s on the majority of the spend the forecasting is made easier. Short term the liquidity needed can be forcasted, since the PO aslo have their approved Payment terms, making it possible to forecast
- Why? To understand the Liquidity needs over time and the drivers Be able to do liquidity forecasting and hedge for difficult times How? - Focus on long term vs. short term Long term - Segment Direct vs Indirect categories - Payment terms - Identify patterns Short term - Check current PO’s But also a spend analysis based on Invoices will show seasonal fluctuations in the spend and thereby in the cash needed. Typically the spend is concentrated to H1 and also Nov/Dec are intense months Also With PO’s on the majority of the spend the forecasting is made easier. Short term the liquidity needed can be forcasted, since the PO aslo have their approved Payment terms, making it possible to forecast .