ariba scc building a rock solid business case & bringing ... · schaan, november 2016 ariba scc...

Schaan, November 2016

ARIBA SCC –BUILDING A ROCK SOLID BUSINESS CASE & BRINGING IT HOMESAP Infotag für den Einkauf

Baden-Baden, Oktober 2019

ARIBA SUPPLY CHAIN COLLABORATION PERFECTLY FILLS THE GAP IN HILTI`S DOWNSTREAM PROCESS ROADMAP

PurchasingInvoice

Management

PaymentStrategic

Sourcing

Contract

Management

Supplier

Management

Supplier

Risk

Supply

Chain

Commodity

Classification

Spend

Analysis &

Reporting

Opportunity &

Exceptions

Identification

Savings

Tracking

Addressable

Spend

Capture

Sourcing

Project

Management

RFx &

Auctions

Supplier

Discovery &

Qualification

Authoring &

Review

Approval &

eSignatures

Store,

Operationalize

& Manage

Compliance &

Reporting

Onboarding &

Qualification

Supplier

Collaboration

Performance

Mgmt. &

Development

Master

Data

Risk

Assessments

Risk

Mitigation

Risk

Monitoring

Supplier

Audit

Planning &

Forecasting

Visibility &

Tracking

Contract

Manu-

facturing

Inventory

Policies &

Approvals

Requisition &

Purchase

Order

Trading

Partner

Integration

Visibility &

Control

Invoice

Receipt &

Processing

Workflow

Management

Exception

Resolution

Contract &

Services

Invoicing

Payment

Terms & DPO

Discount

Realization

Payment

Execution &

Inquiries

Cash Mgt. /

Supply Chain

Financing

Spend

Analysis

2

© SAP Ariba

Hilti Ariba SCC | SAP Infotag für den Einkauf | Oktober 2019

ARIBA SCC IS A VERSATILE INSTRUMENT…

PLANNING

COLLABORATION

INVOICE &

PAYMENT

BUY & MAKE

COLLABORATION

PO Collaboration (all PO types)

Vendor Consignment

Subcontract/ Contract

Manufacturing w/ Multi-tier orders

Scheduling Agreement Release

Quality Notifications

Quality Inspections

Quality Reviews

Place, inquire and receive order

Report consumption of consigned stock

Provide rolling delivery schedule w/ different

firming levelsExecute against firmed orders (released)

Place order with components

Provide notification of components’ shipment

Provide component inventory & order visibility

Notify buyer of components’ receipt

Provide component consumption

Communicate & respond to quality notification

Request test results, COC, COA

Collaborate and share quality documents

Request & respond to quality notification

Submit test results, COC, COA


Confirm order and provide advance shipment notification

Self-Billing/ ERS InvoicingProvide self-bill/ ERS invoice based on GR

Provide payment notification

Vendor Invoice ProcessingProvide invoice processing status & payment notification Provide invoice based on PO/ ASN

Return Order Collaboration Place return order & provide return ship notice Provide credit memo

SUPPLIERHilti

Forecast Collaboration

Supplier Managed Inventory

Share forecast Forecast commit

Share demand, inventory and min/max levelsProvide & execute against shipment plan via scheduling agreement

External Manufacturing Visibility Provide Manufacturing and Inventory Status

Hilti Ariba SCC | SAP Infotag für den Einkauf | Oktober 2019 3

© SAP Ariba

… WITH A PLETHORA OF POTENTIAL BENEFITS

SUPPLIERHilti

PLANNING

COLLABORATION

INVOICE &

PAYMENT

BUY & MAKE

COLLABORATION


Supplier Managed Inventory

Share forecast Forecast commit

Share demand, inventory and min/max levelsProvide & execute against shipment plan via scheduling agreement

External Manufacturing Visibility Provide Manufacturing and Inventory Status

PO Collaboration (all PO types)

Vendor Consignment

Subcontract/ Contract

Manufacturing w/ Multi-tier orders

Scheduling Agreement Release

Quality Notifications

Quality Inspections

Quality Reviews

Place, inquire and receive order

Report consumption of consigned stock

Provide rolling delivery schedule w/ different

firming levels Execute against firmed orders (released)

Place order with components

Provide notification of components’ shipment

Provide component inventory & order visibility

Notify buyer of components’ receipt

Provide component consumption

Communicate & respond to quality notification

Request test results, COC, COA


Request & respond to quality notification

Submit test results, COC, COA


Confirm order and provide advanced shipment notification

Self-Billing/ ERS InvoicingProvide self-bill/ ERS invoice based on GR

Provide payment notification

Vendor Invoice ProcessingProvide invoice processing status & payment notification Provide invoice based on PO/ ASN

Return Order Collaboration Place return order & provide return ship notice Provide credit memo

Process

Efficiency

Increase

Inventory

Reduction (Cash Flow,

Operating &

Carrying

Cost)

Write

Off

Red.

Logistic

Cost

Red.

Capacity

Utilization

Safety

Stocks

Spend

Reduct

ion

Capacity

Utilization

Revenue

Growth

Process Efficiency Logistic ExpeditesDock Que

Stock

Write Offs

(QM Related)Process

Efficiency

Dynamic DiscountsCash

FlowProcess Efficiency

Process

Efficiency


© SAP Ariba

IN A NUTSHELL, THE BUSINESS CASE IS ABOUT SMARTLY MANAGING PO-S AND JOINTLY REDUCING INVENTORIES


PO- & Invoice Management Optimization

Inventory CollaborationLogistical Optimization


HANDLING PO`S AND INVOICES MORE SMARTLY UNDERPINS THE ENTIRE BUSINESS CASE

PO Automation

Rate

Time spent per

invoice*

Time spent on

PO changes

Time spent

per shipping

notification

Time spent on

manual PO & Invoice

management

(-)

(-)

(-)

(+)

(+)

(+)


… AND THIS IS WHERE WE GOT THE DATA FROM: CELONIS

Description Data Source

# BU Material Managers (MMs) Org. chart

Time spent on PO management [min/day]* Derived from survey

Current manual workload [min/year] Assuming 220 working days

Current annual direct POs processed Hilti-data 2017 from Celonis

PO change in % Hilti-data 2017 from Celonis

# POs which trigger disruptions Hilti-data 2017 from Celonis

Current manual time per PO which trigger disruption Derived from Survey

Future time spent per disruptive PO [min] Benchmark SAP SCC

Future manual workload [min/year]

Estimated Efficiency Benefits [FTE]


THE RATIONALE BEHIND INVENTORY REDUCTION IS ACTUALLY PRETTY STRAIGHTFORWARD….

Visibility of

suppliers

production plans /

Forecast commit

Feasibility of

Hilti forecast

Reliability Hilti

planning – supply

side

Supplier planning

capability

Inventory

Levels

(+)

(-)

Data sharing to

suppliers –

forecasts,

inventories and

prod. plans

Visibility of

supplier

inventory

(+ +)

(+)

(+)

(+) Accuracy of

inventory

planning

(+)

(+)

Feasibility of

VMI

(+)

(+)

Supplier

responsiveness

(+)Lead Time(--)

(-)

Automation rate

Throughput

time POs

(-)

Safety Stock

due to inventory

intransparency

(+)

(-)


… BUT THE CALCULATION REQUIRED A LOT OF FRAUNHOFER (AND HILTI) BRAINS

Description Data Source

Current Days On Hand Hilti ERP data

Average current Inventory Value Hilti ERP data

One day of Inventory Value Hilti ERP data

Future Days on Hand SAP SCC Benchmark / Fraunhofer

Inventory Improvement Actual Stock Fraunhofer

Inventory Improvement Good Receipt Fraunhofer

Estimated Inventory Reduction

By improving our own forecast accuracy and by enabling VMI, the inventories can be reduced


AT FIRST, FRAUNHOFER SHOWED US AVAILABLE INVENTORY AND FORECAST COLLABORATION CONCEPTS


Forecast

Collaboration

Buyer

Managed

Inventory

(BMI)

Vendor

Managed

Inventory

or

Supplier

Managed

Inventory

(VMI/SMI)

Collaborative

Planning,

Forecasting &

Replenishment

(CPFR)

Consignment

Inventory

(CI)

Co-Managed

Inventory

(CMI)

Continuous

Replenish-

ment

(CR)

Forecast &

Capacity

Collaboration

(FC/CC)

Inventory Collaboration Forecast &

Replenishment

Collaboration

Status Quo

@ Hilti

De

gre

e o

f C

olla

bo

ratio

nlo

whig

h

Forecast & inventory collaboration and a combination of both have been evaluated © Fraunhofer Institute for Material Flow & Logistics (IML)

… AND PUT THOSE IN A PORTFOLIO MATRIX TO IDENTIFY THE RELEVANT LEVERS AND SIMULATE THE CASE


FC CPFR

BMI VMI/SMI

Fo

rec

as

t C

oll

ab

ora

tio

n

Hig

hL

ow

HighLow

# of PO

DoH

PA

BI

# of PO

DoH

PA

BI

# of PO

DoH

PA

BI

Forecast Collaboration (FC):

More reliable, aligned planning:

• Trustful & stable FC process

• Joint commitment

Inventory Collaboration:

Joint decision:

• min/max level &

• Inventory shift to suppliers

Requirements:

• Mutual trust

• Suppliers’ willingness

• Partnership to negotiate on

impact

Higher expected impact

Lower expected impact Inventory Collaboration

© Fraunhofer Institute for Material Flow & Logistics (IML)

… USING THE FOLLOWING EVALUATION CRITERIA TO JUDGE WHETHER WE SHOULD COUNT IN A SUPPLIER


Inventory/Days on Hand (days) Market knowledge

BI Risk (Business Interruption Risk)

Mutual trust and openness

# of POs Use of information systems

(EDI connected Supplier)

Inventory value

Product Availability/OTIF (%)

Spend = integrated in the rational for the potential calculation

Suppliers already on Ariba

Selected quantitative criteria Selected qualitative criteria

= applied as filter criterion for supplier selection

© Fraunhofer Institute for Material Flow & Logistics (IML)

TO CONCLUDE THE PRESENTATION, A SHORTCUT IF YOU`D LIKE TO GET STARTED WITH JUST THE SCC BASE MODULE

SAP Ariba Network

Add-on

Forecast

Collaboration

Add-on

Inventory

Collaboration

Add-On

Quality

Collaboration

Base Module

Order Collaboration

• Standard Purchase Orders

• E-Invoices

• Consignment POs

• Multi-Tier Orders**

• Order Confirmations

• Return Purchase Orders**

For as start, we decided to focus on the base module “Order Collaboration”, not the add-ons*

• Advance Shipping Notices

• Supply Chain Monitor

15Hilti Ariba SCC | SAP Infotag für den Einkauf | Oktober 2019

AND THIS IS HOW WE BROUGHT THE CASE HOME

16

Even within merely basic PO processes, with SCC one can reap huge benefits quickly

• Checking & refusing invoices before processing

What are we addressing? How does SCC help us?

• Processing invoices more quickly

• Order confirmation by suppliers

• > X FTEs freed up

by a reduction of 90%

• X MCHF additional early payment

discount realized per year (50%

improvement)

• X MCHF less expediting cost (X%

improvement)

• X MCHF reduction of yearly financing

cost** (X days DoH ~X%)

What is our benefit?

Blocked

invoices#

Not realized

settlement

discounts yearly

Not transferred

orders yearly

(X% of orders)

• Automatically sending out PO changes• > X FTEs freed up

by a reduction of 100%

Manually

sent POsXX

XX

MCHF

#

* Based on 201X ERP data analyzed with Celonis

** EDI: Electronic Data Interchange, i.e. direct exchange of order and status data between our S/4HANA and a supplier`s ERP system

*** Based on 201X Fax-interface errors

Hilti Ariba SCC | SAP Infotag für den Einkauf | Oktober 2019

THANK YOUContact data Fraunhofer IML:

Matthias Parlings

Dept. Supply Chain Development & Strategy

T: +49 231 9743 414 / www.iml.fraunhofer.de

ariba scc building a rock solid business case & bringing ... · schaan, november 2016 ariba scc...

Documents