e-procurement the administrative application that could anthony rotoli channel sales manager...
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E-ProcurementThe Administrative Application That Could
Anthony RotoliChannel Sales ManagerSciQuest, Inc.
Copyright Anthon Rotoli 2004. This work is the intellectual property of the author. Permission is granted for this material to be shared for non-commercial, educational purposes, provided that this copyright statement appears on the reproduced materials and notice is given that the copying is by permission of the author. To disseminate otherwise or to republish requires written permission from the author
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Agenda
About SciQuest
Tactical vs. Strategic Procurement
HigherMarkets Solution
Case Studies
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What is the innovation supply chain?About SciQuest
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About SciQuest
SciQuest's secure on-demand solutions integrate organizations with their suppliers to enable comprehensive spend management for the life sciences and higher education markets.
SciQuest's suite of modular applications helps to automate the source-to-settle process. When used with the SciQuest SupplierNetwork, these solutions reduce redundant tasks and maintain data integrity throughout the cycle of finding, acquiring andmanaging goods to increase efficiency, reduce cost and providetotal spend visibility.
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SciQuest Customers Life Science
GlaxoSmithKline Schering-Plough Amgen Biogen Memorial Sloan Kettering Corixa Theravance Aventis Pharmaceuticals Burnham Institute Boehringer Ingelheim Lexicon Pharmaceuticals Genentech Ciba Vision Inspire Pharmaceuticals Dendreon Corporation Ambit Biosciences The Salk Institute Epix Medical Roche Enanta Pharmaceuticals OSI Pharmaceuticals
Higher Education University of Chicago University of New Mexico Rensselaer Polytechnic Institute University of Edinburgh Emory University University of Michigan University of Notre Dame University of Arizona Indiana University University of Nottingham University of Nevada Reno Pace University Moody Bible College University of Pennsylvania University of Kentucky Arizona State University Penn State University
Industrial Research Air Products GE Corporate Research Johnson & Johnson
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Current State of Higher Education
Increased Demands on
Campus Services
DECREASE IN BUDGETSDramatic reductions in state and
federal funding
INCREASED COST PRESSURESPlunging endowments and restricted grants
INCREASE IN REGULATIONSPatriot Act regulations, increased EPA fines, threat of bad press
INCREASE IN STUDENTSServing more people
with less resources
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Traditional Approach
FIND BUY MANAGEManual searches
Limited selection of suppliers
No integrated visibility into inventory
FIND BUY MANAGE
Overall Increase in Indirect Spend
Increased cost of goods Increased Processing CostsIncreased
Risks & Inventory Costs
Manual requisitioning
High volume of orders to multiple suppliers
No tracking beyond receipt
Separate process from purchasing
Redundant purchases
Manual tracking, limited chemical information
Manual compliance reviews and reporting
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Integrated Solutions for Higher Education
Integrated Sourcing
FIND
BUYMANAGEIntegrated Processes
Inte
grat
ed In
vent
ory
Cost of GoodsProcessing CostsInventory Costs
The smartest purchase is the one that isn’t made.
Maximize productivity,minimize risk.
Change what they buy,not just how they buy.
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What is the innovation supply chain?Reaching Your StrategicProcurement Goals
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Tactical vs. Strategic Procurement
Focused on spend management
Set and achieve long term goals
Proactively working with departments and suppliers
Perceived as a value creator
STRATEGICTACTICAL
Focused on transactions
Set and achieve short term goals
React to departmental purchasing needs
Perceived as a cost center
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Procurement Continuum
See opportunities for improvement
Desire to make an impact
Unsure of the best approach
STRATEGICTACTICAL
Managing manual processes effectively
Disparate data
Using human resources to fullest capacity
MOST
ARE
HERE
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What is the innovation supply chain?Bridging the Gap
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What’s missing?
STRATEGICTACTICAL INCREASEDEFFICIENCY
BETTERINFORMATION
RIGHTTOOLS
BETTERDECISIONS
RIGHTRESULTS
IMPROVEDPRODUCTIVITY
E-Procurement
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E-Procurement Enables Best Practices
Improve Productivity
Better Decisions
Right Results
Automate Manual Tasks
Capture Comprehensive Data
Influence Buyer Behavior
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Automate Manual Tasks
Gain more resources to devote to strategic initiativesGain more resources to devote to strategic initiatives
SPEND DIRECTOR
REQUISITION
MANAGER
• Enable and Configure Catalog and non-catalog suppliers • Select and Compare Products• User friendly shopping experience
• Electronic Routing
• Approval Workflow
• Order Parsing & Distribution
• Process Orders
ORDER
MANAGER
SETTLEMENT
MANAGER• Receiving
• Electronic Invoicing
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Capture Comprehensive Data
Purchasing Data
Supplier Data
Transaction Data
Better data helps you make better decisionsBetter data helps you make better decisions
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Influence Behavior
How end users buy
What they buy
Who they purchase it from
Achieve your strategic goals by helping end usersAchieve your strategic goals by helping end users
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The Experts Agree…
• Aberdeen Research survey concluded the typical post-implementation benefits of e-procurement include:
• 5--10% reduction in indirect / non-production spend• 73% reduction of costs per purchase order ($114 to $31 per order)
• Andersen Consulting estimated that the typical organization will reduce its indirect
spend by 7% by using e-procurement
• Giga predicts e-procurement solutions will deliver 5-15 percent cost savings in the
first year.
• Gartner estimates that small and mid-tier life science companies can achieve
savings of 15-20% annually by using e-procurement solutions “that help
researchers make smarter buying decisions.”
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Increase contract compliance Promote preferred vendors in search results
Promote “Organizational best buys”
Provide detailed data for auditing user and supplier compliance
Identify new savings opportunities By Supplier and Commodity using detailed spend reports
Realize significant productivity savings Increase efficiency of end users and procurement Minimize IT commitments
E-Procurement Solutions Deliver Financial and Productivity Savings
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% of Spend to Preferred Suppliers / Month
55.5% 52.5% 55.2%
65.4% 67.3%62.0% 59.3%
54.3%
63.0%56.9%
61.0%64.5%
0.0%10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
54.4% 61.6% (7.1% increase)Began using preferred positioning for key suppliers
Preferred positioning of key suppliers increases on-contract spending and decreases materials purchase by 10-20 %
Spending Trend With Preferred Suppliers
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-
20
40
60
80
100
120
JAN
FEBM
ARAPR
MAY
JUN
JUL
AUGSEP
OCTNOV
DEC
48.0%50.0%52.0%54.0%56.0%58.0%60.0%62.0%64.0%
# Suppliers Receiving Orders Per Month
% of Orders to Preferred Suppliers
Began using preferred positioning for key suppliers
Preferred positioning also consolidates client’s supplier base by 20% resulting in less work for accounts payable
Order Distribution Trend with Preferred Suppliers
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Avg Cost* of a PO: = $114 (per NAPM/ISM)
Avg E-Procurement PO Cost: = $31 (per Aberdeen)
Savings with e-procurement: = $83 per PO* Primarily based upon total allocated labor costs from sourcing through payment
Example:2,000 orders per year
x $83 savings per order $166,000 productivity savings
(~ equivalent to recouping the productivity of two to three staff members)
By minimizing the unproductive time that users spend sourcing,
requisitioning and procuring products, they will have more time
for value-added activities such as research and negotiating savings.
By minimizing the unproductive time that users spend sourcing,
requisitioning and procuring products, they will have more time
for value-added activities such as research and negotiating savings.
Productivity Savings
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What is the innovation supply chain?Introduction to
HigherMarkets
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Connect with Existing Systems & Suppliers
ON-DEMAND TECHNOLOGY PLATFORM
SPEND DIRECTOR
REQUISITIONMANAGER
ORDERMANAGER
BUSINESS
INTELLIGENCE
SCIQUEST SUPPLIER NETWORK
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Flexible Supplier Enablement Options
YourPreferred Suppliers
Key Supplier
Punch-outs
Hosted Configurable Catalog
SUPPLIER
NETWORK
YourLocal
Inventory
ApprovedNetwork
Suppliers
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Partnership with SCT
Jointly develop and market “HigherMarkets for SCT Banner”
Fully-integrated, comprehensive procurement solution
Works with Banner Finance 6.0 and Luminis Data Integration Suite
SCT is the leading global provider of technology solutions for colleges and universities of all sizes and complexity. The Company supports more than 1,300 client institutions worldwide with administrative and academic solutions.
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SciQuestHigher Markets
HigherMarkets for SCT Banner
HigherMarketsAdapter
LuminisMessageBroker
SCTBanner
LuminisMessageGateway
Luminis Data Integration
for eProcurement
Higher Markets for
SCT Banner
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Integration with Luminis Data Integration
LDI for e-Procurement is a built on LDI’s Publish and Subscribe architecture LDI for e-Procurement is standards based (JMS, HTTPS, XML, IMS Enterprise Specification, OpenEAI, etc.) HigherMarkets for SCT Banner and LDI for e-Procurement allows these systems to behave as if they were one application Leverages the current investment into Banner Eases burden on IT staff and resources An open, interoperable, and extensible solution
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HigherMarkets Benefits All Stakeholders
• One-stop shopping experience
• Freedom of choice: wide range of suppliers and products from which to choose
• Fast, easy requisitioning
End Users
• Control and visibility of spending
• Contract compliance
• Paperless process
• Error-free requisitions
Procurement
• Reduced materials costs
• Increased purchasing and user productivity
• Better budgeting information
Senior Management
• Low maintenance software
• Secure, reliable access
• Straight-forward integration
Information Technology
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What is the innovation supply chain?HigherMarkets Product
Introduction
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Search Hosted Catalogs or Punch-Out to Suppliers
Punch-out to suppliers’ e-commerce Web sites
Use parametric criteria to search hosted catalog content
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Quick Order
Enter catalog number or SKU and immediately add to cart
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Favorites
Manage personal favorites
Administer organizational “Best Buys”, approved items and supplier specials
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Search by Keyword
Search using parameters
Refine searches by limiting searches to specific subcategories
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Product ReSources
Antibody ReSource
ColumnReSource
Chemical ReSource with structure searching
Oligo ReSource also available
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View Search Results
Refine search by supplier or category
Basic product information with your contract pricing. Access to complete product descriptions
Search results from preferred suppliers appear first
Select multiple products to compare
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Side-by-side Product Comparisons
Compare detailed product information
Add to cart from product compare screen
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Accurate Requisitions
Pre-populated ship to/bill to information
Pre-populated item information from shopping cart
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Customized Approval Workflow
Customize approval workflow based on any requisition field
End users can preview approvals
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Track Order Status
Access all order online
Track order status
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What is the innovation supply chain?Case Studies
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University of Pennsylvania
Location:Philadelphia, PA
Enrollment:18,913
Client Since:2003
ERP:Oracle
Challenges:
Supplier enablement
User adoption
Solution:
Spend Director
Supplier Promotion Module
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University of Pennsylvania Results
Campus-wide implementation to 1,600 users
Enabled 75 preferred suppliers, representing 3 million SKUs and cover 68% of all transactions within 120 days
Realized $2.1 million in documented cost savings from 16 renegotiated contracts
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Rensselaer Polytechnic Case Study
Location:Troy, NY
Undergrad Enrollment:
5100
Client Since:2001
ERP:SCT Banner
Challenges:
Inefficient purchasing processes
Inability to control “maverick spending”
Solution:
Spend Director
Requisition Manager
Order Manager
SciQuest Supplier Network
Business Intelligence
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Rensselaer Return on Investment
$1,615,000$370,000$1,245,000TOTAL
$680,000$155,000$525,0004
$480,000$110,000$370,0003
$285,000$65,000$220,0002
$170,000$40,000$130,0001
TOTAL SAVINGS
PROCESS SAVINGS
CONTRACT SAVINGS
YEAR
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Conclusion
E-Procurement should be a critical component of an e-business strategy
Benefits are real Cost Savings Process Efficiency Renegotiated Contracts
Integration with ERP can extend value
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Questions
Q & A
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"What people need to realize is that purchasing can have a direct impact on the bottom line. The economy is very bad, the state institutions are not getting funded, and there are cutbacks. But there’s a multiplier effect through smart purchasing: Every dollar we save though smart purchasing translates to 10 or 15 dollars that’s not needed in revenue.
…You really can’t afford not to pursue an e-procurement initiative.”
Tim GibneyAssistant Vice President for Procurement Services
University of Notre Dame
“Taking the Pain Out of Purchasing,” University Business. April 2003