Taking Catalog and Supplier Relationships to the Next level
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For most companies, significant challenges exist around the management of catalogs and supplier relationships. Over the last several years, Lexmark has successfully transformed and streamlined their indirect procurement and catalog processes to become best in class. In this session discover the “real world” lessons that have helped them to optimize processes, eliminate gaps and stabilize organizational structures to create growth, improved efficiencies and better business results for them and their suppliers.
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Taking Catalog and Supplier Relationships to the Next level
- 1. Taking Catalog and Supplier Relationships to the Next Level For most companies, significant challenges exist around the management of catalogs and supplier relationships. Over the last several years, Lexmark has successfully transformed and streamlined their indirect procurement and catalog processes to become best in class. In this session discover the “real world” lessons that have helped them to optimize processes, eliminate gaps and stabilize organizational structures to create growth, improved efficiencies and better business results for them and their suppliers. © 2013 Ariba, Inc. All rights reserved.
- 2. Taking Catalog and Supplier Relationships to the Next Level Matt Montgomery Lexmark International Global Manager, Procure to Pay Operations © 2013 Ariba, Inc. All rights reserved. 2
- 3. #AribaLIVE Ariba Collaborative Value Chain – Direct, Indirect, Services © 2012 Ariba, Inc. All rights reserved.3 Buyer’s Processes: Analyze to Pay Supplier’s Processes: Market to Cash The Ariba Network is the world’s largest Business Network, allowing Buyers and Sellers to become more efficient across their Buying, Selling, and Cash Management Processes
- 4. #AribaLIVE Ariba Collaborative Value Chain – Direct, Indirect, Services © 2012 Ariba, Inc. All rights reserved.4 •Spend Data Enrichment •Spend Analysis •Contract Collaboration •Authoring •Repository •Requisition Ownership •Catalog Compliance •Contract Compliance •Approval Workflow •PO Collaboration •PO Transmission •Goods & Services Receipt •Invoice Receipt •Invoice Compliance •Invoice Approval •Exception Workflow • Awareness Marketing •Lead Collaboration •Proposal Collaboration •Bidding Opportunity •Contract Collaboration • Contract Repository •Catalog Collaboration •Catalog Syndication •Requisition Collaboration •Specification Negotiation •Order Collaboration •Order Status •Invoice Delivery •Invoice Collaboration •Supplier Info; Performance Mgmt; Supplier Research •Company Profile Mgmt •Customer Account Management Buyer’s Processes: Analyze to Pay Supplier’s Processes: Market to Cash •Payment Collaboration •Discount Collaboration •Payment Collaboration •Payment Visibility •Working Capital Collaboration •Category / Project Mgmt •RFI / RFP / Auction Collaboration •Savings Tracking & Pipeline
- 5. #AribaLIVE Delivering Measurable Benefits Value to Companies of All Sizes, Industries, Regions Supplier ValueBuyer Value Sourcing Procurement Process AP Process Compliance WCM & Discount 3-9% Process Savings $3-20 Savings/ Document 1-8% Spend Savings Total Savings Faster Payment AR Process Processing Orders Sales & Marketing Increased Revenue 15-75% Time Savings 15-75% Process Savings 5-32% Revenue Increase Total Savings Source: Ariba customer surveys and interviews © 2013 Ariba, an SAP Company. All rights reserved.5
- 6. #AribaLIVE Matt Montgomery is a Global Manager with Lexmark, responsible for Procure to Pay (P2P) Global Operations, Systems, and Policy. Since joining Lexmark in 2006, he has led the global rollout of procurements systems, supplier corporate responsibility, and procurement operational excellence programs. Mr. Montgomery recently led the Vendor Master Data Management project which was awarded the 2011 Gartner Master Data Management Excellence Award for the Lexmark program (which included Vendor, Customer, Product, Material and Person Master Data Management). © 2013 Ariba, Inc. All rights reserved.6 Matt Montgomery Global Manager Procure to Pay Operations Lexmark International mmontgom@lexmark.com For the 10 years prior to joining Lexmark, Mr. Montgomery worked for Atos as a Business Application Management Consultant to Global 1000 companies. His specialization is in corporate operations, operational excellence, project management and custom solution development.
- 7. #AribaLIVE Agenda • Lexmark Overview: Who we are… • Our Journey: 2004-2013 • Supplier Relationships: Catalogs, Analytics, and Communication • Strategy: Projects, Metrics, and the Path Forward • Catalogs & Supplier Relationships: Summary of Lessons Learned • Questions & Answers © 2013 Ariba, Inc. All rights reserved.7
- 8. #AribaLIVE Lexmark Overview: Who we are… © 2013 Ariba, Inc. All rights reserved.8
- 9. #AribaLIVE Lexmark Overview: Who we are… © 2013 Ariba, Inc. All rights reserved.9 Managed Services Innovative Solutions and Software Cutting Edge Technology Infrastructure Optimization Proactive Management Business Optimization
- 10. #AribaLIVE Our Journey: Consolidate (2004-2008) © 2013 Ariba, Inc. All rights reserved.10 Geographical Structure Challenges 1.Multiple ERPs – North America/Manufacturing, EMEA, and APG 2.Multiple Purchasing Systems/Processes – No consistent purchasing system 3.Heavy use of Corporate Credit Cards – Department & Project Spend out of control Tactical Objectives: •Consistent Procurement Process that would drive savings through process control •Spend visibility •Reduction in Process Leakage Solution: •Establish more formal corporate procurement guidelines •Create & Rollout one purchasing system globally •Significantly reduce the number of procurement cards Organizational Structure Challenges •Procure VERSUS Pay •Regions acting very independently with country level processes and policies •Strong Executive Support, but in organizational siloes Approach: •Meeting with Region, Country, Business Leaders to understand goal, strategy and objectives •Customize the solution to fit their business •Standardize workflow where reasonable. •Maximize (basic) reporting •Maximize catalogs (low hanging fruit) Purchasing IT Finance ERP Final System Design System Design •Single Instance of Purchasing System •Single Instance of Cloud Solutions •Multiple ERPs Ariba Supplier Network Ariba Buyer NA & Mfg EMEA APG Contract & eRFx
- 11. #AribaLIVE Our Journey: Transform (2008-2011) • System Optimization ♦ Move to single ERP ♦ Start of Acquisition Integration ♦ Consolidation of Purchasing Tools • Process Optimization • Organizational Alignment • Data Consolidation and Master Data Management No change to the Cloud Solutions
- 12. #AribaLIVE Our Journey: Optimize (2011-2013) © 2013 Ariba, Inc. All rights reserved.12 Actions •Movement from regional purchasing support departments to a consolidated Shared Service Centers for Purchasing Support, Finance and Procure to Pay Operations. •One site covers NA, EMEA and APG. A second site covers Latin America •The primary stakeholders are based in the Corporate Headquarters. •Perceptive Software and Acquisition Companies are managed through the corporate processes Geographical Structure Organizational Structure RFx & Contract Overview •Transactional procurement and A/P are managed separately, but they are both located in the same facility. •Corporate Workflow Approvers manage transactions above a defined material clip level. •Globally, procurement is managed through the single instance of SAP with separate processes for Direct & Indirect purchasing. A/P Team in Shared Service Center Purchasing Team in Shared Service Center Final Process Design Overview •The Procure to Pay Steering Committee—the SAP IT Director, a Finance VP, the Global VP of Purchasing, and Treasurer meet monthly to set group priorities and strategies. •The Global P2P Operations Manager (reports up to Supply Chain) is considered the P2P process owner, but A/P still reports up to the CFO. •The Global P2P Operations manager runs a bi-weekly meeting with regional purchasing, the SAP center of excellence, and regional finance to coordinate operational activities. Global P2P Operations Supply Chain Purchasing CFO Finance ERPA/P IT
- 13. #AribaLIVE Spend Analytics • Gathering the Data: ♦ Internal Data vs. Supply Chain (Outsourced Model) ♦ Best Possible Outcome with the Uneducated User • Data Enrichment • Reporting & Analytics • Keeping Ahead of the Business © 2013 Ariba, Inc. All rights reserved.13
- 14. #AribaLIVE Spend Analytics © 2013 Ariba, Inc. All rights reserved.14 UNSPSC SIC Benchmarks UNSPSC SIC Benchmarks DataAccuracy Business Value
- 15. #AribaLIVE Spend Analytics © 2013 Ariba, Inc. All rights reserved.15
- 16. #AribaLIVE Catalogs • IT Software • IT Hardware • Laptops • Scientific Equipment • Office Supplies • Business Cards © 2013 Ariba, Inc. All rights reserved.16 • Professional Services • IT Developers • Furniture • Marketing/Promotional • Manufacturing Support Our Major Catalog Categories
- 17. #AribaLIVE Catalogs © 2013 Ariba, Inc. All rights reserved.17
- 18. #AribaLIVE Catalogs Metrics •# of Suppliers by Category & Country / Region •# of Transactions by Supplier •$ Spend per Supplier / Category & Country / Region •$ Catalog Spend as % of Total Spend •# Catalog Transactions as % of Total Transactions © 2013 Ariba, Inc. All rights reserved.18
- 19. #AribaLIVE Supplier Communication © 2013 Ariba, Inc. All rights reserved.19
- 20. #AribaLIVE Supplier Communication • Clear Visibility to Communication • Error Handling / Process Management • Reduction in Total Cost © 2013 Ariba, Inc. All rights reserved.20
- 21. #AribaLIVE Supplier Communication • Spend Analytics - Prioritization • Three Categories of Suppliers ♦ Current Suppliers on the Network – Actively Seeking ♦ Current Suppliers on the Network – Passively Seeking ♦ Suppliers that would need to be enabled • Corporate Metrics ♦ % of Transactions Enabled by Region/Country ♦ % of Suppliers Enabled by Region/Country © 2013 Ariba, Inc. All rights reserved.21
- 22. #AribaLIVE Strategy: Projects, Metrics and the Path Forward • Optimization of Integrated Internal Processes • Continued Network Expansion • Spend Analytics Expansion • Metrics: ♦ Spend under review ♦ Suppliers/Transactions under Catalog ♦ % of Spend with Key & Strategic Suppliers ♦ # of New Supplies by Category © 2013 Ariba, Inc. All rights reserved.22
- 23. #AribaLIVE Summary and Lessons Learned • Continued work to expose Value Stream and eliminate waste • Expansion of Global/Regional Catalogs • Improved Data Management to support Spend Analytics Objectives • Expand Electronic Communication © 2013 Ariba, Inc. All rights reserved.23
- 24. Questions? Matt Montgomery Global Manager Procure to Pay Operations Lexmark International mmontgom@lexmark.com © 2013 Ariba, Inc. All rights reserved. 24
Editor's Notes
- Ariba’s On Demand applications and the Network generate measurable value to organizations Buyer’s experience significant savings that fall right to the bottom line Some savings are obvious (see above) but others less so. For example, a large Oil company was able to significantly cut inventory of replacement parts in its refineries due to the visibility into order status the network provided. This visibility not only enabled the managers to focus on the operations instead of whether a critical shipment was going to come, but also enabled them to reduce the excess inventory they needed as safety stock to ensure the refinery didn’t go down Suppliers experience savings through the automation of non-value added activities (like AR clerks having to call their customers each month to see when payments will be made) Suppliers also see top line growth from participation on the network – including net new business and increased wallet share with existing customers