oracle sourcing1. customer buys oracle sourcing license – either perpetual or term - and gets...
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Oracle Sourcing
Spotlight on FinancialsDec 10th 2003
Andrew Douglas
In the last 10 weeks….
British Energy saved £800k
BNFL saved £1m
Whitbread saved £1.3m
NTL saved £1.5m
Marsh saved £4.5m
By using Oracle Sourcing!
What functionality does Oracle Sourcing give customers?
- Buyers Auctions
- Electronic Tenders ( RFX )
Customers use Auctions / RFX’s as a key element of -
Renewing existing contractsOffering new consolidated spend opportunitiesNegotiating significant spot purchasesReceiving pricing for a frequently tendered commodity / service
What commodities & services do Organisations auction?
……… here are 3 examples
Major UK Retailer
Most significant auction to date was for Air Freight services to Manchester from Hong Kong, Bangladesh, Malaysia and China.I year contract, 7 suppliers participatedAuction lasted 51 hours to accommodate time zonesAuction value £2mSavings exceeded £500k
Major European Rail Company
Auction for Desktop,Laptop and Server PC’s3 year contract Followed full OJEC processStrong collaboration between Buyer and IT Services Manager 3 major suppliers participatedAuction Value £1.17mOver 20% saving achieved against previous prices
Major UK Travel Company
First auction held to purchase the creative element of their in flight magazine ie. design, journalistic content etc. (not printing)5 creative agencies participatedAuction value £506,000 (based on previous tender 3 years ago for over £1m worth of work)Auction result £431k
There are 2 ways Customers can deploy their Oracle Sourcing licenses-
- Integrated within their EBS /i-Procurement application
- Virtual license model
Sourcing
Contracts
Procurement Process Automation
RFxAuction
Offers
QuotesBidsCounters
Contract
PurchaseOrder
Receipt
Payment /Reconciliation
Integrated EBS Sourcing model –streamlines the acquisition process
Demands
The ‘Virtual’ model – Key Customer steps
1. Customer buys Oracle Sourcing license – either perpetual or term - and gets delivered CD’s which they ‘file away’
2. Customer selects an Oracle Marketplace to act as a ‘virtual’host ( BT, LTSB, UK Procure ) and pays them annual hosting fee
3. Oracle protects marketplace annual transaction value 4. Customer can buy optional training & support from
marketplace5. Customer runs their auctions / RFX’s on their selected
marketplace
How do you get started?
First event support
If a Customer buys the Oracle license without a huge pre sales effort we will use our experienced pre sales team to run their first event for them
This covers initial opportunity evaluation, buyer & supplier training, milestone planning, full project management and auction day support
The Costs and ROI
The Costs and ROICOSTSTypical 3 year Virtual model total cost is circa £110kThis covers –
– Perpetual Oracle license– 3 years exchange hosting– Software maintenance & support
ROIAll of our customers to date have recovered their full 3 year cost within the first 2 hours of their first auction
Who uses it?
Some Oracle Sourcing Customers in the UKDirect
WhitbreadThomson Travel ( TUI )Legal & GeneralNTLLittlewoodsJarvisSITADairy CrestAchillesNetwork Rail
Exchange CustomersXeroxLTSBVeluxAquila‘3’ZurichEnvironment AgencyImperial CollegeBritish EnergyWelsh Health SuppliesCSC
Finally a FAQ –
Is it going to mess up my Buyer / Supplier relationship?
I ADAPT
Independent Assessment into the Development of Auctions as a Purchasing Tool
Purpose –– To assess how auctions have affected the buyer / supplier relationship– To understand the benefits of auctions to both buyers and suppliers– To identify the key success enablers / inhibitors– To identify the range of goods and services being auctioned
Research Team – CIPS, UWE, Oracle, BT
Changes in Supplier Performance recorded after using an auction as
Changes in Supplier performance after using an auction as part of the tender process
In Summary
Used correctly Auctions can be a very low risk / high return approach to selected commodity & service purchasesYou need sound purchasing processes to maximise your successYou need an internal championYou will typically return your complete investment within 12 weeks
Questions
Do you have a best in class Procure to Pay Process ?
Here is our 13 ‘discovery’ questions and some typical answers
Are you ‘best in class’? Do you -
Have visibility / control of all influentiable spend before it take place– Limited control with many areas not visible until after
invoice receipt.
Have accurate management information in real time, at the desktop & customised by user type.– Semi accurate information produced after a number of
days / weeks of effort that is based on historical data
Are you ‘best in class’? Do you -
Have a Purchasing organisation that uses all available skills and significantly contributes to the organisation– Purchasing Organisation does not fully support the
management of all commodities / geographic areas
Have a clear Procurement based strategic plan– There is no strategic plan
Are you ‘best in class’? Do you -
Provide all internal customers with a purchasing service that meets their business needs– Many internal customers by-pass the system
Provide all users with a quick and easy to use requisitioning process that enhances the use of preferred suppliers / agreements– Users by pass the system to achieve this
Have the ability to measure supplier performance –both quantitative and qualititative – You have a reactive process at present
Are you ‘best in class’? Do you -
Have a fully auditable, flexible and efficient approval process– Paper driven where used
Have clear savings targets– No formal target setting
Have a full set of KPI’s used to evaluate performance to plan– No KPI’s established
Are you ‘best in class’? Do you -
Operate a single purchasing system– Multiple systems in operation
Receive all Invoices with a quoted PO so they can be be matched with minimal effort– Approx. 50% of invoices have no PO on receipt. Untimely
matching process
Take prompt payment discounts where appropriate– Very limited take up at present
If you recognise some of our typical responses then please come and talk to us –
We think we can help!
Questions