Sometimes setting up a Sourcing event in Ariba is very straightforward, but oftentimes the requirements drive the need to stretch Ariba's capabilities to the max. Ariba's Sourcing solution has a great deal of flexibility and options for running complex sourcing events, and we will discuss some of these scenarios and recommended approaches in this session. You will hear from a customer who has used Ariba to run a complex event, and will also hear from an Ariba Best Practice Center consultant about topics such as how to approach very large events, set ups requiring formulas, and when to use functions like custom offline bidding.

1. Running Complex Sourcing Events –
A Best Practices Approach
David Nasser, Procurement Director, Sears Holdings
Christopher Bertram, Sourcing Manager, American Tire Distributors
March 19, 2014
#AribaLIVE
@ariba
© 2014 Ariba, Inc. All rights reserved.

2. Agenda:
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•
•
Welcome
Complex Sourcing Events – Ariba BPC Team
Customer Stories:
Sears Holdings – Non ‘Traditional’ Auctions
American Tire Distributors – Multi-Scenario, Multi-Location RFP
•
2
Closing Remarks and Takeaways
© 2014 Ariba, Inc. All rights reserved.

3. Best Practice Center:
Complex Sourcing Events
•
What makes a Sourcing Event complex?
Gathering more than just a simple price
Use of Auction formats that include transformation,
buyer-determined goals/ceilings
A large number of line items
Supplier-specific item bidding
Alternate pricing
Custom formulas…
3
© 2014 Ariba, Inc. All rights reserved.
…to name a few

4. Best Practice Center:
Complex Sourcing Events
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Sourcing Set-up Options for Complex Events
RFP or Auction Total Cost Templates
Price Breakdown RFP Templates
Matrix Pricing
Transformation Bidding
Custom Offline Response Sheet
Custom Event Templates
4
© 2014 Ariba, Inc. All rights reserved.

5. Sears Holdings: E-Sourcing Case Study
David Nasser, Procurement Director, Sears Holdings
March 2014
#AribaLIVE
@ariba
© 2014 Ariba – an SAP company. All rights reserved.

6. Agenda
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•
•
•
•
6
Sears Holdings Info
Ariba Sourcing Utilization
Decision on Negotiation Style – Auction?
Process Recommendations
Ariba Best Practice Center (BPC)
© 2014 Ariba – an SAP company. All rights reserved.

7. Sears Holdings
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Almost 2,500 full line and specialty retail stores
Shop Your Way
Social Shopping and Reward Points
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•
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Leading home appliance retailer in US
Brands
Nation’s largest service provider
14 million service and installation calls annually
7
© 2014 Ariba – an SAP company. All rights reserved.

8. Ariba Sourcing Utilization
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Embedded within procurement process at Sears Holdings
All RFx content flows through Ariba Sourcing
Legal docs, Scope of Work, Pricing, etc.
•
•
Final negotiation occurs – auction or other
Sourcing Library holds core information
Legal templates, PPI/commodity info, process maps, etc.
8
© 2014 Ariba – an SAP company. All rights reserved.

9. Auction Style – English
ENGLISH (OR STANDARD) REVERSE AUCTION
PRICE POINT
$10K
0 Supplier 1
Supplier 2
Supplier 3
$9K
$8K
$7K
1
2
3
4
5
Suppliers can see their rank, and lowest bid at buyer's discretion
All participants start at agreed-upon pricing (usually preliminary bids)
Suppliers systematically lower their bids to overtake Rank 1 position
Auction automatically extends as long as valid bids are being placed
Once no more bids have been placed, lowest valid bid wins
$6K
$5K
$4K
$3K
$2K
1 Generally used when preliminary bids are close to each other
2 Generally used when supplier pool is 3 or more
3 Used when buyer wishes visibility to price decrease history during event
$1K
20 minutes
(Variable)
DURATION
9
© 2014 Ariba – an SAP company. All rights reserved.
Ext. #1 Ext. #2 Ext. #3 Ext. #4 Ext. #5 Ext. #6 ETC…

10. Auction Style - Dutch
DUTCH AUCTION
PRICE POINT
1
2
3
4
$10,000
$9,000
Suppliers are blind to rank and lowest bid
Price starts 20-30% lower than current lowest preliminary bid
Price Increases in small increments over a series of time intervals
First supplier to place a bid within the current interval wins
$8,000
0 Supplier 1
Supplier 2
Supplier 3
$7,000
$6,000
$5,000
Supplier 2 enters first bid in 5th interval
Auction ends and Supplier 2 is awarded business
$4,000
$3,000
1 Can be used when preliminary bids are widely divergent
2 Can be used when supplier pool is less than 3
$2,000
$1,000
1
2
3
4
TIME INTERVALS
10
© 2014 Ariba – an SAP company. All rights reserved.
5
6
7
8
9
10

11. Auction Style - Japanese
JAPANESE AUCTION
PRICE POINT
$10,000
◄ All three suppliers bid in 1st round
0
◄ All three suppliers bid in 2nd round
0
$9,000
0 Supplier 1
Supplier 2
Supplier 3
◄ All three suppliers bid in 3rd round
0
$8,000
◄ Supplier 1 declines to bid in 4th round and is not invited to round 5
$7,000
◄ Both remaining suppliers bid in 5th round
$6,000
◄ Supplier 2 declines to bid in 6th round
◄ Round closes and Supplier 3 is awarded the business
$5,000
$4,000
$3,000
1
2
3
4
$2,000
Suppliers are blind to rank and lowest bid
Price starts slightly above highest preliminary bid
Price decreases in increments over a series of rounds
Supplier is awarded business when all other competitors
have declined to bid in the current round/interval
$1,000
1
2
TIME INTERVALS
11
3
4
5
6
7
8
9
10
1 Can be used when preliminary bids are widely divergent
2 Can be used when supplier pool is less than 3
3 This auction style keeps suppliers in the dark as to rank/position
but is not as sudden and cut-throat as a Dutch Auction

12. Process Recommendations
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Conduct all facets of your normal sourcing process
All suppliers invited to an auction
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•
12
Determine all factors of TCO
Transportation, transition, rebates, qualitative differences
Build all TCO factors into the ranking of the auction
To bid sheet or not?
© 2014 Ariba – an SAP company. All rights reserved.

13. Ariba Best Practice Center (BPC)
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Transition to Ariba Sourcing Auctions
Added functionality comes with increased complexity
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Auction build verified by BPC
BPC monitors key auctions in real time
Valued advisor to auction build issues-ideas
Japanese Style mock auction build
13
© 2014 Ariba – an SAP company. All rights reserved.

14. Sears Holdings: Q&A
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14
Questions for David?
© 2014 Ariba, Inc. All rights reserved.

15. American Tire Distributors: eSourcing Case Study
Christopher Bertram
Sourcing Manager
American Tire Distributors
15
© 2014 Ariba, Inc. All rights reserved.

16. American Tire Distributors: eSourcing Case Study
Agenda
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•
About ATD
Why Ariba
Adoption, Modules and ATD Evolution
LT Goals
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ATD eSourcing / Project Management Process
Process Map
Event Examples
•
Retrofit Lighting Case Study
Project Scope
eRFP Strategy & Project Set-up
 Custom Off-Line bidding
 Lotting Strategy
 Multiple markets, de-coupled supply base approach
 Utilization of UI and Baseline Pricing (CapEx Budget)
16

17. American Tire Distributors: eSourcing Case Study
About ATD (slide 1 of 2)
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18. American Tire Distributors: eSourcing Case Study
About ATD (slide 2 of 2)
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19. American Tire Distributors: eSourcing Case Study
Why Ariba?
Challenges
Limited indirect spend visibility and spend management control
Increased focus on sourcing and driving negotiated savings but need to
ensure spend compliance for savings retention
All invoicing done via paper or p-card
No formal mechanisms to enforce policies and procedures
impacting procurement
Limited insight into level of compliance
Limited visibility into what is being spent and with
which supplier
Lack of standardization across business units, field locations,
and geographies
19

20. American Tire Distributors: eSourcing Case Study
ATD eSourcing: The ATD Process (ex. 2 of 2)
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21. American Tire Distributors: eSourcing Case Study
ATD eSourcing: eSourcing Examples
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22. American Tire Distributors: eSourcing Case Study
Retrofit Lighting Case Study: Project Scope, General Approach and
Value Adds
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

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10 locations in our network with metal-halide lighting
CapEx budget approved for project
Evaluate National, Regional and Local (Manufacturers, Resellers and Installers)
Utilization of site survey results, SOW and BOM to level-set supplier
RFP submissions
 Estimated operational cost reduction of 40-65% per location
 Project ROI realized within 36 months
22

23. American Tire Distributors: eSourcing Case Study
Retrofit Lighting Case Study: RFP Strategy and Project Set-up
 10 location lots
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



23
 3 pricing lots (Turnkey, Materials Only and Installation Only)
 30 lots total
Custom Off-line bidding
UI Savings Calculations
 Cost Avoidance vs. Budget per location
 Cost Avoidance vs. Total Project Budget
Supplier lot selection relative to capabilities vs. invitation by lot
Ariba Discovery
Alternative bid responses (alternative specs (fixtures) and finance options

24. American Tire Distributors: eSourcing Case Study
Retrofit Lighting Case Study: Ariba Project Elements (Custom-offline
bidding, lotting, budget and TCO calculations). (ex. 1 of 2)
24

25. American Tire Distributors: eSourcing Case Study
Thank you!
QUESTIONS?
25

26. Closing Remarks & Takeaways
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26
Understand Ariba Sourcing capabilities and consider conducting your
next complex Sourcing event via the tool
Build/modify Templates using specific settings to meet various
complexity needs (Alternative Bidding, Custom Offline, etc.)
Take advantage of the Sourcing Library to build core information
Utilize available help and information (BPC, Webinars, Training)
© 2014 Ariba – an SAP company. All rights reserved.