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Keynote - Successfully Transforming AusNet's Procurement with Ariba
The document outlines AusNet Services' procurement transformation, detailing the integration of SAP and Ariba tools to centralize procurement activities, enhance process efficiencies, and improve visibility. It highlights the significance of procurement metrics and the challenges associated with asset maintenance and contract management, particularly in the context of engineering works. Key insights reveal that a substantial portion of spend is influenced by procurement, with an emphasis on automating processes and effective stakeholder management.
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Keynote - Successfully Transforming AusNet's Procurement with Ariba
- 1. Successfully Transforming AusNet’s Procurementwith Ariba Cor van der Scheer, AusNet Services October 2015 Public
- 2. © 2015 Ariba– an SAP company. All rights reserved. 2Public Agenda About AusNet Services AusNet’s Procurement Environment & Metrics Part 1 – SAP – Ariba tools application at AusNet Part 2 – SAP – Ariba tools for “Pole to Pit” activity Part 3 – Ariba and Adobe e-Sign (EchoSign) Conclusion Questions
- 3. © 2015 Ariba– an SAP company. All rights reserved. 3Public AusNet Services operates in regulated transmission and distribution sectors Australian Energy Market Structure Competitive Generation / Production Transmission Distribution Retail Regulated Natural Monopoly Regulated Natural Monopolies CompetitiveCompetitive Competitive Regulated Natural MonopoliesRegulated/ Contracted Electricity Market Gas Market
- 4. © 2015 Ariba– an SAP company. All rights reserved. 4Public Suite of high quality assets 100% own, operate and control critical energy delivery infrastructure in Victoria * All figures are approximate as at 31 March 2015 Electricity Transmission 6,573km of transmission lines 13,000 towers Electricity Distribution 50,987km of electricity distribution network 679,213 customers Gas Distribution 10,630km of gas distribution network 647,536 customers
- 5. © 2015 Ariba– an SAP company. All rights reserved. 5Public Procurement Environment & Metrics
- 6. © 2015 Ariba– an SAP company. All rights reserved. 6Public Prior to 2011 Lotus Notes Environment for contracts and Oracle 2011 Introduce Ariba On Premise Upstream 2012 Centralise Procurement 2013 Reviewed P2P Processes Start on SAP project 2014 Moved to Ariba On Demand Upstream & creation of Spot Buying 2015 Live with SAP & Ariba Procurement Content AusNet’s Procurement Transformation Journey Centralising key procurement activities and a move to best practice P2P tools have led to process efficiencies, improved visibility and better overall control of procurement outcomes
- 7. © 2015 Ariba– an SAP company. All rights reserved. 7Public Insights Procurement Reach Spend under contract where procurement can influence is high through the use of Contracts (89% of Spend under Management), locking in “unitised rates” We are an Asset Owner and Operator Build – high value construction contracts Maintain – high value service contracts Hence – Ariba Sourcing tool is important Note to “Not managed by Procurement” – this mostly relates to statutory charges Spend with suppliers for 2014/15 by Procurement Involvement Observations Not managed by Procurement Total - Supplier Invoice Spend Supplier spend managed by Procurement Uncontracted Supplier Spend Non contracted spend with Contracted supplier On Contract 75% 84% 100% 3% 6% 16%
- 8. © 2015 Ariba– an SAP company. All rights reserved. 8Public Insights Transaction Types – Where is our challenge? Focus on efficiency, contract management, compliance, control Operationally only two categories: › Pole to Pit related engineering works › “The rest” Conventional P2P tools employed to manage “the rest” Of key interest – how to deal with Pole to Pit › Spend of 43% is only one dimension › By count of assets and count of notifications and WOs it represents ~90% Comparative Spend for FY2015 Insights Goods 15% Other Services 20% Works Engineering 65% Engineering Installation Logistics Pole to Pit 43% of Overall Spend 14%
- 9. © 2015 Ariba– an SAP company. All rights reserved. 9Public Part 1 SAP – Ariba tools application at AusNet
- 10. © 2015 SAPAG. All rights reserved. 10 AusNet Managed
- 11. © 2015 SAPAG. All rights reserved. 11 Ariba On Demand Ariba Contracts • Manage all our Procurement Contracts and associated documentation here • Includes Bank Guarantees, Contract variations, important communications Ariba Sourcing • Moved from On Premise to On Demand • Optimised our Sourcing Event templates • Refined Meta Data requirements
- 12. © 2015 SAPAG. All rights reserved. 12 AusNet Managed • Mirror SAP Outline Agreements as CIF catalogs • Set up Punch-out catalog links with selected suppliers • Manage views of who sees what catalogs Ariba Catalogues Manage prices, Facilitate “shopping”
- 13. © 2015 SAPAG. All rights reserved. 13 SAP Our finance, procurement, project management system • Manage Outline Agreements • Link OA to Ariba Contract Terms • Enable linking of Task Lists to OA items
- 14. © 2015 SAPAG. All rights reserved. 14 Ariba Network The glue that connects supplier content and transactions with AusNet Services’ transactions • Picking correct Supply Partners • On-boarding and training program not trivial • Be sure to know the WIIFM for both parties
- 15. © 2015 SAPAG. All rights reserved. 15 AusNet Managed
- 16. © 2015 Ariba– an SAP company. All rights reserved. 16Public Part 2 SAP – Ariba tools for “Pole to Pit”
- 17. © 2015 Ariba– an SAP company. All rights reserved. 17Public Comments The challenge of Asset maintenance Hundreds of Thousands of Notifications – Bundled into WOs Detailed cost management per Asset (e.g. 440,000 poles alone) 2.1M pieces of equipment grouped by class Manage notifications, inspections and subsequent new repair/fix notifications, leading to new WOs Enables us to allocate costs to each asset Equipment count in SAP (thousands) by Eq_class Insights 117K GASMAINS 127K CONDUC- TOR 256K 166K TOTAL MISC 2.139K SURGE DIVERTER 58K DIST TRANS- FORMER 65K FUSE DISCON- NECTOR 98K INSULATOR CROSSARM 401K CABLE 412K POLE 439K 76% of equipment count in 5 main categories
- 18. © 2015 Ariba– an SAP company. All rights reserved. 18Public EAM Core Solution – PM link to MM & Scheduling Notification • Work Requests • Also used to record history of work performed against an asset. • Captures problem/cause/remedy codes. • Connects with Mobility to enable field workers to receive work. • Connects with GIS to spatially group work. Mobility Work Order GIS (LatLonGo) Project • Captures costs associated with work. • Notifications are attached to work orders. • Have operations that can be scheduled • Settle/assigns costs to Fixed Asset, WBS, Profit Centre or Cost Centre. • Connects with Mobility to enable field workers to receive work. • Connects with GIS to spatially group work. Fixed Asset Register Procurement / Inventory MRS • View of the work order operations • Assign the work to the work teams • Manipulate dates easily • Sets work to dispatched so mobility can pick it up • Brings in HR resource info • Show the view spatially HR Resource Info • Access and complete work assigned. • View my work spatially • View my work spatially • Open selected work back in MRS or PM PM
- 19. © 2015 Ariba– an SAP company. All rights reserved. 19Public How Tech Object Drives CU Technical Object Hierarchy (SAP) CU Library (SAP)
- 20. © 2015 Ariba– an SAP company. All rights reserved. 20Public Parts of a Work Order Work Orders are created for Maintenance activities, replacement Activities, new service installation for Gas Electricity Distribution & Transmission Activities. They contain materials and services along with rules that govern behaviour for settlement and Asset Creation 440,000 poles (Assets), hundreds of thousands notifications Service Master/Item Outline Agreement Purchase Req Plant Maintenance (Work) Materials & Services Pick Lists Inventory Demands Material Purchases Service Items
- 21. © 2015 Ariba– an SAP company. All rights reserved. 21Public Work Order Example Contract # Buyer
- 22. © 2015 Ariba– an SAP company. All rights reserved. 22Public Auto PO creation is critical, as is fixed pricing Linking Work Orders to assets for cost assignment, and to Outline Agreements with fixed unit pricing, as well as scheduling work in bulk and automatically creating the purchase orders Purchase Order Purchase Requisition Work Order ARIBA Network Then SAP automatically generates a Purchase Requisition Subsequently a modified ME59N is triggered when the OA referenced is a ZDP type to convert the PRs into POs Finally, the PO is routed through Ariba Network to the supplier (based on the PO transmission setting on the vendor record) When the work order calls out CUs with task lists, and the “control key” is set to PM03 and the Purchase Req field is set to “immediate”, and WO status is Released
- 23. © 2015 Ariba– an SAP company. All rights reserved. 23Public End to End – Scheduling work to Invoice: 3rd party processing via ARIBA Service Entry Sheet Purchase Order Requisition for 3rd Party Service Work Order ARIBA Service Provider PO / WO list SES csv file RCTI or Invoice 1 2 3 5 4 6 7 7 3PI 23
- 24. © 2015 Ariba– an SAP company. All rights reserved. 24Public Ariba Network Overview
- 25. © 2015 Ariba– an SAP company. All rights reserved. 25Public Part 3 Ariba and Adobe e-Sign (EchoSign)
- 26. © 2015 Ariba– an SAP company. All rights reserved. 26Public Calling Adobe e-Sign from Ariba Contract Management 1. Sourcing Event 4. Add Signers 5. Adobe eSign launched 6. Signatures obtained 3. Signature Task 2. Contract Workspace 7. Signed Contract Auto loaded in Ariba Docs copied from Sourcing Event From dropdown or added manually Adobe task automatically launched by Ariba when clicking “submit” in signature task Steps 5 and 6 are Adobe eSign processes, intuitive, requires no training
- 27. © 2015 Ariba– an SAP company. All rights reserved. 27Public Project Learnings & Issues • Despite starting over 9 months before Go – Live we still ran out of time • Stakeholder identification – who is going to be affected most, in what way, to what extent? Who can make what decisions within each supplier’s organisation? • Full impact on suppliers not communicated in a timely and comprehensive manner – e.g. what is required on the suppliers’ system and process side? • Impact of Ariba fees in the discussion – what benefits are available to be realised? Stakeholder Management between Asset Management and Procurement/Logistics stream, and with key supply partners and Ariba
- 28. © 2015 Ariba– an SAP company. All rights reserved. 28Public In Summary • Clearly define business problems, don’t follow fads • Ensure E2E solution are understood across all work-streams so integration and impacts are fully covered and tested • Don’t expect perfection or have all issues resolved. Instead be sure that the 95% of transactions are fully in place and accept workarounds for the minor issues • Stakeholder management – identify correct contacts at the right management levels Know what is important to the organisation – so you can focus on where you can have a real impact
- 29. © 2015 Ariba– an SAP company. All rights reserved. 29Public Questions Distribution Transmission
- 30. Cor van derScheer Procurement Processes & Systems Manager 0413 150 545