Your supply chain is your company’s fountain of life. Without the right solutions to manage your sources of supply for direct materials, you’ll have trouble launching new products on time and at target cost. Margin expansion for existing products will suffer. Success requires effective supplier selection and qualification, plus insights into performance and risk. You must then execute your procurement processes for delivering the right direct materials to the right plant at the negotiated price

1. PUBLIC
March 22, 2017
Lincoln Yarbrough and Deborah Kaplan, SAP Ariba (SAP)
Shawn Breen, Merck
Sabrina Martin, CenturyLink
Changing Dynamics:
Driving Direct Material Sourcing and Supplier
Collaboration

2. 2PUBLIC© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ
Public
“Your supply chain is your company’s
fountain of life. Without the right
solutions to manage your sources of
supply for direct materials, you’ll have
trouble launching new products on time
and at target cost. Margin expansion for
existing products will suffer. Success
requires effective supplier selection and
qualification, plus insights into
performance and risk. You must then
execute your procurement processes for
delivering the right direct materials to
the right plant at the negotiated price.”

3. Introductions
Panel Discussion
Audience Q&A

4. 4PUBLIC© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ
Public
User experience + Cloud platform + INTEGRATION
SAP Ariba solutions: direct materials journey
Providing our customers with a single solution for all spend categories
Invoice and payProcureSource and contract
Purchase order/subcontract order
Schedule agreement release
Component inventory data
Goods receipt notice
Self-billing/ERS invoice
Component ship notice
Consignment inventory status
Payment
Forecast/demand
Component receipt notice
PO confirmation
Component consumption notice
Advance ship notice
Invoice
Forecast commit
Manufacturing visibilityContractSourceAnalysis ReceiveOrderPlan PayManageInvoice
Supplier lifecycle and risk management
DIRECT MATERIALS SUPPLY CHAIN
Buyers Suppliers
Quality notification Quality notification

5. 5PUBLIC© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ
Public
Self-fund the digital transformation
SAP Ariba solutions will strengthen every SAP S/4HANA business case

6. 6PUBLIC© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ
Public
• Material master and ERP integration
• Contract line item documents
• Increased event limits – 10,000 items
• Bonus-penalty scoring
SAP Ariba Strategic Sourcing portfolio
Innovations that address direct materials sourcing
Phase 1: Existing innovation
Phase 2: Recent innovation
Phase 3: Future innovations
• Product lifecycle sourcing
• Product costing
• Volume forecasting and price estimating
• Bill of material support and integration
• Supplier qualification and segmentation
• Simplified user experience for RFX support
• Service item support
• 360 material/part and category report
• Pricing conditions – volume
• Lookup table formulas
• What-if analysis and advanced optimization
enhancements
• Automated price negotiation
• Japanese auctions
• Service item hierarchy and service master
integration
• Complex price conditions – commodity index
based pricing
• Collaboration support for sharing engineering
drawings and large attachments
• Retail material and parametric types support
in sourcing
• SAP article master data integration
• Risk and savings opportunity integration
• Supplier performance automation

7. 7PUBLIC© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ
Public
SAP Ariba Supply Chain Collaboration
Innovations that address the network
Forecasts
Returns
Multi-tier
• Supply chain mobile
• Supplier-managed
inventory
• Third-party logistics
provider integration
scenarios
• Integration with SAP
Integrated Business
Planning – forecast
commit scenario
Q1 2016
Q2 2016
Q3 2016
Planned 2017
innovations
Q4 2016
Supply chain monitor
Quality collaboration
!

8. 8
Merck
Virtual Supply Chain
and Our SAP Ariba Supply
Chain Collaboration Story
March 2017
8
Shawn Breen

9. We are a global healthcare
company with a 125-year
history of working
to make a difference
in global health.
HEADQUARTERS
Kenilworth, NJ, U.S.A.
operating in more than
140 countries
Merck & Co., Inc.
is our legal name and is
listed on the New York
Stock Exchange under
the
symbol "MRK."
EMPLOYEES
approximately 68,000
worldwide (as of
10/25/16)
2015 REVENUES
$39.5 billion; 56% of
sales come from outside
the United States
2015 R&D EXPENSE
$6.7 billion; 19 drug
candidates in late-stage
development
BUSINESSES
Pharmaceuticals,
Vaccines, Biologics
and Animal Health

10. World Class Partnership
 At Merck Manufacturing, we work to ensure
that medicine reaches the patient – always
 In External Manufacturing, we strive for “World
Class Partnership” to meet that goal
 We work with trusted, industry leading partners
and strive to continuously improve how we
work together
In 2015 we recognized that systems and processes were not on track
to support this vision
For 125 years, our company has been guided by the conviction that great medicines change the world.

11. The Vision Looks Like This
Ops, Quality, PlanningOps, Quality, Planning
SAP ERPSystem(s)
of Record
Occurs at EACH
PARTNERVSC Operational Vision
Data entry
Information Flow
Physical material flow
Receive
Merck input
make, test, release Ship to
next node
receive at
next node
next make
operation
Program Components Most Significant Benefits
Partner Merck
Process and System improvement – SAP blueprint revised
for current/ future needs
Process Standardization – As each CMO on-boarded-
standard planning cadence, processes, data expectations
established and enforced
Ariba Network
integration
SAP Ariba
transaction
portal
Standard
reporting
Advanced
Planning
1
Leverage Ariba Network– via SAP Ariba Supply Chain
Collaboration to automate order, inventory, quality transactions,
improve timeliness and quality of information
2
3
1
2
3
ENHANCE
VISIBILITY
IMPROVE
EFFICIENCY
INCREASE
CONTROL

12. Sabrina Martin
Principal Architect
Senior Consultant for SAP Ariba Solutions

13. About Me…
 20+ Years in Project Deployment
• Past 15 Years in digital space inclusive of the cloud deployments
• Started with Century Link in 2017 as part of an acquisition of Seal Consulting Inc.
 Have been working with SAP Ariba solutions since 2009
• Food Distribution
• Food Processing
• Education
• Semiconductor Industry
 SAP Ariba Solution Implementations
• Spend Analysis
• Supplier Information and Performance Management
• Sourcing
• Contracts
• Procure-to-Pay with SAP ERP Integration
• PO Automation
• Invoice Automation
13

14. Fun Fact!
14
I have worked in every US state and
every province in Canada!

15. Panel Discussion
Audience Q&A

16. 16PUBLIC© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ
Public
SMART Modular’s Collaboration with Direct Materials Suppliers
for Supply Chain Visibility (SID 42911)
OR
Ariba Network: Driving Direct Material Sourcing and Supplier
Collaboration, Merck blue ribbon session (SID 42884)
SAP Ariba Supply Chain Collaboration (SID 43836)
OR
Direct Materials Sourcing Innovations: Road Map and Deep Dive
(SID 44035)
Which session to join next?
Don’t miss these sessions on direct materials and supply chain!
11:30 a.m. BASF: Transforming Strategic Supplier Management
(SID 43096)
OR
Extending Ariba Network for Digital Manufacturing Collaboration (
Industrial 3D Printing and Ariba Network (SID 42921)
TIME TUESDAY MARCH 21 WEDNESDAY MARCH 22
12:00 noon Source All Materials/Services in a Multilevel BOM (SID
43816)
Digitize Your Supply Chain (SID 43939)
Ariba Network: Supply Chain Today, Vision 2017 and Beyond
(SID 42926)
Ariba Network: Innovation Deep Dive (SID 42927)
1:00 p.m.
2:00 p.m.
3:15 p.m. Merck’s Supply Chain Collaboration with Contract
Manufacturers and Direct Suppliers (SID 42908)
4:30 p.m.
5:00 p.m. Manage Your Supply Chain by Exception (SID 43817)
Sourcing Multiple Spend Categories on One Platform:
Devon Energy and Grupo Herdez (SID 42912)
Supply chain use case
Supply chain road map
Supply chain use case
Oil and gas
Consumer goods industriesDirect sourcing road map
Tuesday Wednesday

17. 17PUBLIC© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ
Public
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18. Thank you.
Lincoln Yarbrough
Senior Solution Consultant
lincoln.yarbrough@sap.com
+1 615-947-5887
Deborah Kaplan
Supply Chain Network Executive
deborah.kaplan@sap.com
+1 708-205-2350
Contact information:

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