managing spend for continuous profitability with mysap srm 13 th feb. 2007
TRANSCRIPT
Managing Spend for Continuous Profitability with mySAP SRM
13th Feb. 2007
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Agenda
SAP SRM Vision and Solutions
Emerging Procurement Trend
Roadmap ahead ..
Summary
ONGC Scenario
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…andVALUE GENERATION
…for world-classSUPPLY MANAGEMENT
mySAP SRM is a PURCHASING PLATFORM
…that deliversSUSTAINABLE SAVINGS
SAP Vision for mySAP SRM
ERP PLM SRM GTS ERP CRM
SRMSRMmySAPSRM
mySAPSRM
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Automate and accelerate processes
mySAP SRM is a Purchasing Platform
Fully integrated system for all purchasing processes Enterprise platform for center-led purchasing Built-in performance and knowledge management Complete audit trails for regulatory compliance Support for multi-channel supplier enablement
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Sourcing events triggered by enterprise processes
Role-based dashboards for intuitive analytics
Contract distribution to multiple ERP systems
Automated purchasing and regulatory compliance
better insight and discipline
…that delivers Sustainable Savings
Close the loop between sourcing and procurement
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…and Value Generation
Create a foundation for long-term results
Get suppliers involved in the design stage Reward suppliers for innovation Shift focus from price to performance Assimilate all supply processes Drive efficiency beyond boundaries
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Supply management is more than just purchasing Requires strategic insight and category expertise Ability to compose and extend “next practices” is key A service-oriented architecture ensures flexibility
…to World-Class Supply Management
Enlarge the scope of supply management
ERP PLM SRM GTS ERP CRM
… to service-oriented applicationsFrom human-integrators …
PLM
SRM CRM
GTS
ERP
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Procurement Challenges mySAP SRM Solution
Managing growing no. of SKUs Catalog Management
Managing supplier performance
Managing growing no. of vendors
Supplier Evaluation & Performance Management (Scoring mechanism, Supplier scorecard, benchmark)
Statutory Regulation Contract Management and Monitoring, Integrated process from Sourcing to Purchasing
Inability to do global spend analysis by supplier resulting in potential unrealized volume discounts
Spend Analytics that reads across Purchase Order systems
Manage global spend by supplier and category
mySAP SRM addresses Procurement Challenges
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Procurement Challenges mySAP SRM Solution
Inefficient & inconsistent collaboration with suppliers
Supplier Collaboration (Web-based interaction with suppliers )
Significant maverick buyers leading to overpayment to suppliers
Self-Service Procurement
Manual & inefficient RFx, bidding, and reverse auctioning
Integrated Sourcing executions from RFx to Reverse Auctions to Contract Management
Poor compliance with contract pricing due to lack of access to contracts
Contract Management and Monitoring
mySAP SRM addresses Procurement Challenges
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Better supply strategiesthrough focused sourcing initiatives, supplier selection and contract management.
Expedited purchasing processesthrough process automation and compliance management for goods and services.
Higher supplier participationthrough supplier self-service, connectivity, collaboration and supply chain visibility.
Strategic Purchasing & Sourcing Supply strategy development Spend analysis Supplier selection (RFx, Auction) Contract management Catalog management
Operational Procurement Self service procurement Services procurement Plan driven procurement
Supplier Collaboration Supplier registration Design collaboration Order collaboration Collaborative replenishment Supplier connectivity
SC
EN
AR
IOS
mySAP™ SRM Comprises of Three Core Elements
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Implement Better Supply Strategies
STRATEGIC PURCHASING & SOURCINGEstablish focused sourcing initiatives
Typical characteristics High executive visibility Involves multiple stakeholders Approach varies by category Knowledge of markets is key Multiple, parallel initiatives Primary metric is cost savings
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mySAP SRM for Strategic Purchasing & Sourcing
Improve spend visibility and supply strategy
Supply Strategy Development Demand aggregation & planning Portfolio analysis Purchasing strategy planning Category management Program management Purchasing controlling
Spend Analysis Global spend Content consolidation
Manage contract compliance
Contract Management Contract development Document management Contract distribution Contract execution Contract monitoring
Catalog Management
Reduce errors and compress sourcing cycle times
Supplier Selection Supplier qualification Request for quotation Reverse auctions Sourcing event analysis
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3. Qualify Supplier identification Supplier registration Request for Information Supplier pre-selection
Closed-Loop Process for ‘Strategic Procurement & Sourcing’
5. Award Bid comparisons Weighting and scoring Winner award
6. Contract Contract development Contract distribution Execution and monitoring
2. Strategize Demand aggregation
& planning Portfolio analysis Purchasing strategy
planning
1. Analyze Supplier Performance Mgmt Global spend analysis Content consolidation
4. Negotiate Request for quotation Reverse auctioning Terms and conditions Engineering specifications Discussion & Collaboration
Sourcing activities are part of an overall process
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Expedite Purchasing Processes
OPERATIONAL PROCUREMENTPurchasing platform for ALL spend categories
Typical characteristics High administrative workload Complex approval rules Many unplanned expenditures Low contract compliance Large safety stocks Supplier disconnect
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Simplify process flows
Self Service Procurement Adaptive requisitioning Order management Confirmation Invoice processing
mySAP SRM: Solving Your Procurement Needs
Establish cost limits for service agreements
Services Procurement Service specification & requisitioning Order management Confirmation Invoice processing
Automate PO generation for mission-critical buying
Plan Driven Procurement Source of supply determination Plant maintenance integration Project system integration
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Self-Service Procurement
• Employee• Admin
• Manager
• Purchaser • Purchaser
• Employee• Central Receiver
• Employee• Accounting
Self-service procurement empowers company employees to create and manage their own requisitions, allowing purchasers to focus on strategic sourcing.
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Plan-Driven Procurement
Integrates operational procurement with existing supply chain management, plant maintenance, and project solutions for compliance enforcement, process efficiency, and supplier selection efficiency.
Demandand requisition
Assign
Order
Contracts
Assign source of supply
Consolidate demands
Spend, Scorecard, and Supplier Info. Winning Bids
Materials management
systems
Purchasing systems
Maintenance and project
systems
Planning systems
SAP and non-SAP systems
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Service Procurement
Services processes are more complex and less standardized compared to products. Services procurement requires increased flexibility, greater collaboration, and judicious cost management.
InvoiceInvoice
ConfirmationConfirmation
OrderOrder
Request for ServiceRequest for Service
Supplier
Buyer
Invoice
Order
Monitor
Assign
Approve
Requisition
Confirm
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Enable Supplier Participation
SUPPLIER COLLABORATIONMulti-channel approach for supplier collaboration
Typical characteristics Low process transparency Long order cycle times Unsynchronized design cycles Last-minute changes Poor visibility on inventory Frequent supply shortfalls Limited insight into performance
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Supplier Collaboration with mySAP SRM
Supplier Registration Supplier self-registration Supplier qualification
Design Collaboration New product design Collaborative project
management
Order Collaboration Account information Bidding event notification Order management Invoice processing Dispute resolution
Supplier Connectivity Integration broker Supplier network
Collaborative Replenishment Stock requirement visibility Supplier managed inventory Advance shipping notification
Reduce administrative overhead for supplier communication
Extend process control to your suppliers…
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Supplier Enablement
EXPAND your value proposition by linking ANY kind of supplierswith THREE appropriate and cost-effective channels.
Web browser
Web browser
SAP NetWeaver™
SCMCollab. Replen.
PLMCollab. Design
ERPFulfillmentS
RM
Ord
er
Colla
b.
Lo
w-v
olu
me BUYER
SUPPLIERS SAPXI
Hig
h-v
olu
me
CRM systemCRM
systemSAP Supplier
Network
Supplierconnectivity
Supplierportal
Browser
XML
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Closing the Loop Between Value Discovery and Realization
VALUE DISCOVERY
VALUE REALIZATION
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Agenda
SAP SRM Vision and Solutions
Emerging Procurement Trend
Roadmap ahead ..
Summary
ONGC Scenario
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Emerging Trends in Purchasing ….
Expanding Scope of Supply ManagementIncreased amount of spend managed and influenced
Supplier Relationships will DeepenCapturing Innovation from supplier base, Performance base agreements
Technology will be Central to ChangeFully integrated networks of suppliers available to customers
Trends Driving Changes
The CPO will Become a Strategic Partner to the BoardPromoting creative, cross-functional and risk management skills
How important a role do procurement executives currently play in establishing your company’s overall strategic objectives?
6
TODAY IN 10 YEARS
28
38
40
Very importantVital role
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Critical Success Factors of Today’s Purchasing Organizations
Globalization and Growth
Increase Savings
Empower Strategy and Compliance
$£ ¥€
Simplified and Standardized Global Purchasing Processes Tightly Integrated Suppliers
Spend Analysis and Effective e-Negotiations Collaboration amongst Key Stakeholders
Measure Savings and Performance Ensure Contract and Regulatory Compliance
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How mySAP SRM supports Purchasing
Empower Strategy & Compliance
IncreaseSavings$£ ¥€
Globalization & Growth
Requisitioning Order Management
Supplier Enablement
Simplify procurementStandardize
global processes Automate supplier
transactions
Supplier NegotiationCategory ManagementData Improvement
Improve spend visibility
Effective negotiation
Regulatory CompliancePurchasing Controlling
Purchasing Planning
Instill method into strategy development
Measure savings and performance
Ensure regulatory compliance
Transforming Objectives into Executable Initiatives
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Agenda
SAP SRM Vision and Solutions
Emerging Procurement Trend
Roadmap ahead ..
Summary
ONGC Scenario
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Major Investments to Capture Market Growth
300% Research and Development Growth
Frictionless Acquisition addresses:
“On Demand” Market and Delivers immediate Savings to Customers
Demonstrates SAP’s Commitment to Growth in the SRM Market
SAP and Partners delivered Proof-of-Value Trials:
42 M € Savings on 156 M € Spend
Actively recruiting ISV’s to enhance SRM Solution Capabilities
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SRM 5.0
FOCUS FOR SRM 5.0:
Improve Strategic Sourcing
Enhanced Sourcing Execution Category Management Introduce Sourcing On Demand Offering (Frictionless acquisition)
Global contract compliance monitoring Enhanced contract execution
Cross System Invoice management Supplier Enablement Services with SAP Supplier Network
Support of ESA Services
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SRM 6.0 is Focused on Business Optimisation . . . .
Flexible Sourcing Strategy
Intelligent Category and Spend Management
Contract Types and Authoring
Streamlined Operational Procurement
Fact Based Supplier Evaluation & Management
Scaleable Purchasing Platform with Analytics for the Business User
Contract Management
OperationalProcurement
Supplier Management
Category-Based Strategic Sourcing
Scaleable Platform with Business
User Interface & Analytics
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The New Face of mySAP SRM
Streamlined User Interaction
Navigation Personalization Work Center Concept
Single-Click to Launch Actions
E.g. Process an order, change a query
Ability to Define Regularly Used Queries and Reports
Define attributes Store query Personalize
More Intuitive, Personalizable, and Efficient More Intuitive, Personalizable, and Efficient
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Category Management Objective and Value Drivers
How does Category Management create value for the company?
Sharing knowledge and best practices
Enabling collaboration amongst stakeholders
Monitoring performance, Identifying opportunities and shifting priorities as
required Proactively responding to market trends
Driving process standardization
Reducing cycle-time
$£ ¥
€
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OBJECTIVES
STRATEGY
SOURCING
Category Management in mySAP SRM
Mission Statement:transforming corporate objectives into actionable initiatives
SAVINGSSUPPLIER
PERFORMANCEL.C.C.S. OUTSOURCING
………..
ANALYZE & PLAN
OBJECTIVES
STRATEGY
PROGRAMS
INITIATIVES
EXECUTE MONITOR
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Agenda
SAP SRM Vision and Solutions
Emerging Procurement Trend
Roadmap ahead ..
Summary
ONGC Scenario
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Conclusion: mySAP SRM is Better Supply Management
REDUCED OPERATING COSTS Better spend controls Improved contract compliance Lower connectivity costs
COMPRESSED CYCLE TIMES Immediate online approvals Purchasing process automation Quicker supplier responses
LOWER UNIT PRICES Improved quality of goods Lower inventory-carrying costs More competitive pricing
IMPROVED SUPPLY STRATEGY Supply base rationalization Global spend analysis Reduced risk of supply
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Operational Procurement
Contract Management
Strategic Sourcing
Supplier Management
Process Automation
Process Simplification
Business Optimization
Innovation Empowerment
Benefits At Each Stage
“By strengthening supplier relationships, we negotiated deals that delivered greater value and drove down contract prices.”
Sea Containers
Sea Containers: 3- month reduction in procurement cycle
time
Sea Containers: 25% average cost savings against
existing contracts
Ericsson: 75% reduced
handling costs
Mahindra: 3-day reduction in inventory cycle time
Colgate-Palmolive: Improved contract compliance from
75% to 95%
Ericsson: 80% reduction in
purchasing cycle time
Mahindra: manufacturing cycle compressed form 4 weeks to 1 week
Pemex Gas: 72% reduction in
decision process for order placement
Steelcase: $5 million savings
in 1st year of online bidding
Pemex Gas: 6% drop in average 1-
year contract prices
Steelcase: 2-month
reduction in sourcing cycle
Pemex Gas: 70% reduction in
suppliers‘ sales cycle
BHP Billiton: Manage more than 70% of all
external spend
“… we improved the quality and speed of information flow, collaboration and our basis for decision making..”
Ericsson
“We (now) have far better visibility and control over our purchasing process.”
Colgate-Palmolive
“Quite simply, mySAP SRM offers us a better way of collaborating with our suppliers.”
Mahindra
“Executing our new strategies could only happen through SAP . . . it’s an enabler of integrated processes
Pemex Gas
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Customers Quotes on SRM
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700+ Organizations Run SRM
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Over 80+ Live Customers in Asia includesC
ust
om
ers
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Agenda
SAP SRM Vision and Solutions
Emerging Procurement Trend
Roadmap ahead ..
Summary
ONGC Scenario
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ONGC Scenario
Create Bid Invitation
Publish Bid Invitation
Bid Invitation Display
Domestic Bid
Submission
Foreign Vendor Bid
Bid Return
Bid Re- submission
Technical Bid
Rejection
Adjust Price Bid
Price Bid Opening
Bid Comparison
Report
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Thank You!