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Reining in Elusive Tail Spend with Spot Buy Purchasing

© 2016 SAP SE or an SAP affiliate company. All rights reserved. 2 Customer

Today’s Presenter’s:

James Tucker Vice President, Go-to-Market Strategy & Operations, Ariba Spot Buy

Scott LaGois Manager, Business Process & Operations, Global Procurement

SUPPLIERS 20% 40% 60% 80% 100%

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Vilfredo Federico Damaso Pareto


ProcureCon Survey Results


The Long-Tail Challenge There is nothing “one-off” about “one-off” purchases

TACTICAL • 20% of indirect spend • 80% of suppliers • 1-4 weeks

STRATEGIC • 80% indirect spend • 20% of suppliers • 4+ weeks

SUPPLIERS 20% 40% 60% 80% 100%

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1. Inefficient purchasing 2. Reduced transparency

3. Higher transaction costs 4. A long tail of one-off suppliers

15% of indirect goods are from one-off purchases resulting in

‘Shining a Light on ‘One-Off’ Purchases’ , Procurement Leaders, 2016

SPOT BUYS • 15% of indirect goods – both

Strategic and Tactical • Non-sourced / non-contracted • Not in company catalog • Need immediately


Common Spot Buy Categories Example spot buy purchases

Other Urgent and Unanticipated Items

Facilities and Maintenance

Office Furniture & Supplies

Electrical and Test Equipment

Technology and Accessories

MRO and Industrial Supplies


ProcureCon Survey Results


Ariba Spot Buy: Find and Buy Non-Sourced Goods The perfect balance of convenience and control

• Simple user experience • Configuration and workflow • Secure payment • Visibility into transaction details

* The use of Ariba Spot Buy is subject to regional availability and is currently available for U.S. domestic buying only.

SHIP

Spot Buy Ecosystem

APPROVE PAY

SEARCH

BUYERS

Ariba Procurement

ANALYZE FILTER

Marketplaces

Ariba Network Suppliers

• Filtered suppliers and content • Thousands of categories • Ecosystem of supply from Marketplaces and

Ariba Network Suppliers*

Company Catalog

Spot Buy Catalog

SUPPLIERS


Ariba Spot Buy Quickly and easily find items not available in your company catalog without leaving the Ariba Procurement tool

Simple search refinement filters:

• Price range • Location (zip code) • Condition (new, used) • Seller Name • Seller Type

A submitted Purchase Requisition is routed for approval

Select item you want

Add item to shopping cart

Find non-sourced goods in your approved P2P tool without risk of buying on the web

• Can’t find what you need from the Company Catalog tab?

• Find and buy non-sourced goods from the Spot Buy Catalog tab

(0)


Ariba Spot Buy Business Value

“Spot Buy is a game changer for non-sourced goods. We’ve seen 25% savings over non-catalog orders.”

- Biopharmaceutical Company

Eliminate non-catalog, invoice, etc. saves $400 per trans

Sources: CAPS Benchmarking

Improve Process for Finding and Buying Non-Sourced Goods

“Spot Buy has improved customer satisfaction ratings by simplifying one time purchases.”

- Enterprise Software Company

Increase Procurement’s strategic value

Accelerate User Adoption and Improve Customer Satisfaction

“We look at Spot Buy as a real opportunity to help focus on higher value procurement.”

- Nuclear Technology Company

Average P-Card rebate about 1.0%

Increase P-Card Rebate Savings

“We’ve cut 20% of our long-tail one-off vendors and replaced with Spot Buy.”

- Specialized Polymer Company

Savings estimate of about $100 per vendor

Source: 2015 Ariba survey

Reduce Vendor Management and Long-Tail Supplier Costs


Eliminate Long-Tail Issue using a single proxy vendor with Ariba Spot Buy

Suppliers

Spe

nd

1. Current long-tail suppliers

Annual spend with ad-hoc suppliers

Annual spend with Spot Buy suppliers

Suppliers

Spe

nd

2. Target ad-hoc suppliers to replace with Spot Buy

Suppliers

Spe

nd

3. Reduce ad-hoc suppliers

Suppliers

Spe

nd

4. Vendor management savings with Spot Buy

Savings estimate of about $100 per vendor

Source: 2015 Ariba survey


Long-Tail Rationalization from customer presentation at Ariba LIVE 2016

“Every purchase with Ariba Spot Buy

supports and sustains the

progress of this key objective.”

Spot Buy at Pfizer Scott LaGois – Global Procurement, BP&O


Pfizer Overview

PFE Numbers (2015)

$49B Revenue

63 Manufacturing Sites Worldwide

>175 Markets in which Pfizer sells products

>97,000 Colleagues around the world

7 Products with sales greater than $1 Billion


Pfizer’s Ariba Footprint


Spot Buy Opportunity Analysis

To estimate the potential usage and benefit of Spot Buy, an analysis on non-catalog orders was performed

Items were “sourced” through Spot Buy – to determine availability and compare pricing

Results:

32% PO line items were available in Ariba Spot Buy

Of the items available, prices were generally lower than paid by Pfizer (average savings 25%, weighted average savings 20%)

0%

25%

50%

75%

100%

-

5

10

15

20

25

30

35

40

Maintenance,Repair &

Operations (MRO)

Lab & MedEquipment And

Supplies

Packaging &Shipping Materials

IT Hardware,Supplies &Software

Facilities Environmental(ES&H) Waste

Disposal Services

Lab Chemicals,Biologicals AndRadioactives


Drivers for Implementation

Key decision factor for 9r2 upgrade Significant shift for procuring non-sourced goods Other benefits and business drivers:

Process Automation

• Reduction in transactions routing to Procurement • Consistency within standard controls and business rules

Vendor Maintenance

• Fewer (one-time) adds and reduction in overall vendor maintenance requirements

P-Card Activity • Spot Buy purchases help Increase P-Card rebate

Hard Savings • Cost savings of marketplace items versus ad hoc


Spot Buy at Pfizer

Pfizer Spot Buy Supply

Order Confirmation sent and validated

2 Buyer receives OC

Purchaser Order (PO ) PO validates inventory and price

purchase request (PR)

approval workflow

Advanced Ship Notice sent 3

and ASN

1

Company Catalog

Spot Buy Catalog

Ariba Procurement Content

Supplier ships goods upon payment receipt

ship

spot buy catalogs

Ariba Network Suppliers

Spot Buy Supply

Level 2/3 enriched data 4

pay

eBay Marketplace Sellers paid via PayPal funded with a ghosted Amex P-Card

CAR

AMEX routes data to Pfizer’s CAR Tool

SAP CAR uses enriched data to perform reconciliations and upload to SAP G/L


Current Status and Best Practices

Current Status

Live since Feb. 23rd

Phase I – Early Access to Spot Buy • ~45 colleagues invited, 29 trained • Selected based on spend profile

Phase II – Broad Spot Buy Adoption • ~4K colleagues invited • Higher anticipated volume

Best Practices

Change management

Policy

Training

Communication

Conclusion James Tucker


World-Class Organizations have 80% of Spend Under Management; however…

Source: The Hackett Group

Non-world-class organizations typically influence only 55% of overall spend compared to eighty percent for world-class

Ariba Spot Buy can help • Improve process for finding and

buying non-sourced goods • Accelerate user adoption and

satisfaction • Increase P-Card rebates • Reduce long-tail supplier problem


Q&A Take control of your spot buy spend today

SIGN UP for an Ariba Spot

Buy spend assessment

START using Ariba Spot Buy

today

WATCH Ariba Spot

Buy video on YouTube

https://youtu.be/LuGEJPIIzdE

A r i b a Sp o t B u y

Scott LaGois

Manager, Global Procurement BP&O +1 212-733-6415 [email protected]

James Tucker

Vice President, Ariba Spot Buy Go-to-Market +1 650 390 1702 [email protected]

jbtucker3

https://youtu.be/LuGEJPIIzdE

https://twitter.com/jbtucker3

James Tucker

Vice President, Ariba Spot Buy Go-to-Market +1 650 390 1702 [email protected]

jbtucker3

Thank you Contact Information:

https://twitter.com/jbtucker3

reining in elusive tail spend with spot buy purchasing · ariba spot buy . quickly and easily find...

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