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Still have procurement outside shared services? Ever ask yourself why?
The document outlines Deutsche Post DHL's financial indicators from 2011, highlighting their extensive global operations and employee statistics. It discusses the establishment of a global business services division to enhance efficiency in procurement processes and achieve cost reductions. The text emphasizes the importance of standardized procedures, technology integration, and performance tracking through KPIs for successful shared services purchasing organization.
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Jerker Gunnarsson introduces himself and the presentation date, setting context for the discussion.
Key facts about Deutsche Post DHL including revenue, EBIT, global operations, and workforce statistics.
Critical questions for establishing an effective Shared Services Purchasing Organization to optimize costs and performance.
Overview of DP DHL's Global Business Services launched in 2006, detailing employee distribution and service lines.
Discusses standardizing procurement requirements and processes to enhance efficiency and communication.
Details the two major parts of procurement: strategic sourcing and operational purchasing, and their interrelationship.
Plan to centralize operational procurement functions, showcasing benefits like cost reduction and streamlined vendor transactions.
Data on purchasing orders, staff costs, and significant efficiency improvements across operational costs over the years.
Emphasis on developing KPIs that align with stakeholder expectations for procurement performance.
Introduction of an automated dashboard for real-time progress reporting in procurement operations.
Overview of technologies used in shared services for procurement, emphasizing automation and efficiency tools.
Key conclusions on implementing shared services for efficiency, standardization, and effective use of technology.
Details on moving to a touchless Procure-to-Pay (P2P) process utilizing backend systems and automation.
Concluding remarks by Jerker Gunnarsson, inviting questions from the audience.
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Still have procurement outside shared services? Ever ask yourself why?
- 1. Jerker Gunnarsson May 24th, 2012
- 2. Deutsche Post DHLfacts & figures DP DHL financial key indicators (2011): Revenue: 53 bn € EBIT: 2.4 bn € Corporate Center (CC) MAIL EXPRESS GLOBAL SUPPLY • 82 high-tech mail sorting • Operations in 220 FORWARDING CHAIN centres countries and territories FREIGHT • Facilities in over 3,000 • 80,000 mail delivery staff • More than 124,000 • ~ 11,000 employees locations with more than • 34,600 vehicles for mail Express employees • More than 40m tons 148,000 employees delivery • 36 express hubs transported per year • Around 1,400 logistics • ~ 3,300 delivery bases worldwide • More than 160 Freight centres, terminals and • ~ 54,700 delivery districts • More than 4,700 terminals in Europe warehouses worldwide • Nearly 40 million households express facilities • 35,000,000 sqm worldwide warehouse storage • 108,000 letter boxes • 420 aircraft operating on capacities worldwide • 69 million mail items every day behalf of DHL Express • More than 30 countries • 930,000 P.O. boxes • Around 72,000 express covered • More than 12,500 retail outlets vehicles Global Business Services (GBS) P2P leaders Chicago 2012 – Jerker Gunnarsson Page 2
- 3. Questions to determinethe path to a successful Shared Services Purchasing Organization 1 2 How do we organize What processes do ourselves to be cost ORGANIZATIONAL BUSINESS we implement to efficient while STRUCTURE PROCESSES optimize performance improving business of the organization? value? Success TECHNOLOGY depends on us covering ALL THREE of these areas! What tools do we deploy to facilitate the business 3 processes and improve efficiency? P2P leaders Chicago 2012 – Jerker Gunnarsson Page 3
- 4. Breaking out Procurementgroup from the business into one global organization DP DHL bundled in 2006 all major internal support functions in a new division “Global Business Services” to streamline and strengthen service and efficiency. Global Coverage 10 Service Lines • ~10,000 FTE Europe (incl. • IT Services Germany) • Finance Operations • ~2,000 FTE Americas • Real Estate • ~1,000 FTE Asia Pacific In total 13,000 GBS employees GBS – a • • Procurement HR Operations worldwide • Legal worldwide • Risk & Insurance • Fleet organization • Business Consulting • Global Customer Solutions Basic Volume • 3 Global Data Centers • 5 Regional Accounting Centers • 350 milo square feet properties • >90,000 Fleet managed P2P leaders Chicago 2012 – Jerker Gunnarsson Page 4
- 5. Standardized the setup,but ensure to deliver to each specific need BUSINESS PROCUREMENT • Establish demand requirements • Conduct standardized Purchasing process • Define initial specifications • Perform spend analytics/benchmarking • Transfer technical understanding • Utilize advanced ePurchasing platforms • Communicate customer needs • Leverage volumes and best practices Foundation on standardized toolset supplier bid management supported end-end solution templates documented audit trail contract management standardized process risk database spend analytics P2P leaders Chicago 2012 – Jerker Gunnarsson Page 5
- 6. Identifying the processsteps in scope for shared services Purchasing Transactional Get Tool (Operational procurement) Marketplace 1 2 3 4 5 6 7 Contract & Catalogue Demand Management Requisitions Approval Purchase Delivery Invoice Reconci Payment 5 (Demand Identification) Order liations* Analyze Purchasing Monitoring 4 Sourcing (Strategic procurement) 1 The procurement process consists of two 3 major parts. These are sourcing (strategic procurement) and purchasing (operational 2 procurement). An efficient procurement operation can separate the processes and optimize the individual services P2P leaders Chicago 2012 – Jerker Gunnarsson Page 6
- 7. Steps to centralizeOperational Procurement – US & CA Centralization of Operational Super users with authority to staff to one location transact with preferred vendors under “sandbox” concept Catalog solutions for all high transaction items P-card with spending limits and blocked merchants for all low value ad hoc transactions Results: Reduction in Operational Purchasing cost by >50% P2P leaders Chicago 2012 – Jerker Gunnarsson Page 7
- 8. Results show dramaticgains in operational transaction cost Staff Year # POs # FTEs Cost/Purchasing Staff POs/FTE Cost/PO** 2008 80,506 13 $1,019,000 6,193 $12.66 2009* 37,672 5 $384,000 7,534 $10.19 2010 41,313 3 $254,000 13,771 $6.15 16,000 POs/FTE Cost/PO $14.00 14,000 $12.42 13,771 $12.00 $10.90 12,000 $10.00 10,000 POs/FTE Cost/PO $8.00 8,000 $6.15 $6.00 7,534 6,000 6,193 $4.00 4,000 2,000 $2.00 0 $0.00 2008 2009* 2010 *Reduction in volumes from business downsizing 2008-2009 P2P leaders Chicago 2012 – Jerker Gunnarsson Page 8
- 9. Ensure balanced performancetracking with all stakeholders considered Development of KPIs need to consider the balance of the expected performance of the Procurement organization P2P leaders Chicago 2012 – Jerker Gunnarsson Page 9
- 10. Dashboard keeps businessinformed of progress in procurement operations The Procurement Dashboard is an automated report pushed from a data warehouse to Business Partners directly P2P leaders Chicago 2012 – Jerker Gunnarsson Page 10
- 11. Technologies used inour Procurement shared services operation GeT eProcurement Information System Management e-Marketplace Document Hosted Catalogs SharePoint / Punch-out Contract Catalogs Repository/Mana Catalog & non- gement catalog via Supplier same Management requisition Global Procurement Sourcing Data Warehouse Application Reporting Strategic capabilities for Sourcing the whole Reverse e- “Procure to Pay Auction Process” Supplier Spend Cube Database P2P leaders Chicago 2012 – Jerker Gunnarsson Page 11
- 12. Conclusion • Implement shared • Standardize product services structure to offering/processes drive cost efficiencies • Consolidate and and synergies. ORGANIZATIONAL automate operational • Maintain business BUSINESS procurement STRUCTURE partner intimacy and PROCESSES • Implement KPIs and clarify roles and scorecards to drive responsibilities behavior TECHNOLOGY • Make sure the technology support each step of the process • The right technology will help drive down the processing cost P2P leaders Chicago 2012 – Jerker Gunnarsson Page 12
- 13. Backup Moving towards atouch less P2P process Procurement Content • Item search/Punchout • eCatalog Management Backend ERPs • Content Enrichment https/OCI or cXML PO & Inv Automation • Transaction Routing https/cXML • Vendor Self-Service Portal Email P2P leaders Chicago 2012 – Jerker Gunnarsson Page 13
- 14. Questions THANK YOU P2P leaders Chicago 2012 – Jerker Gunnarsson Page 14