spend analysis: it's what you do with it that matters

Spend Analysis: It’s What You Do With it That MattersSeptember, 2015

2© 2015 Ariba - an SAP company. All rights reserved.

Speakers

Eric O’BrienSolutions Consultant Ariba, an SAP Company

Keertan Rai Director, Solutions MarketingAriba, an SAP Company

Benjamin LandisStrategic Sourcing Manager, Oldcastle Materials, Inc.

Jon Ball Director of Global Data Insights & Analytics, Dun & Bradstreet


Agenda• Need for Spend Analysis • Ariba Spend Visibility - How it Works • The Supplier Enrichment Value in Spend Analysis – D&B• Case Study: CRH • Ariba Spend Visibility Demo


86% of companies say spend visibility is very important …

But only 40% of companies have

good visibility into their spending


Aggregation and Reporting is Only the Tip of the IcebergTurning data into actionable intelligence requires more

Data aggregation

Dashboards and reporting

Commodity classifications

Supplier data enrichment

Market insights and benchmarks


Ariba® Spend Visibility powered by SAP HANAA clear view of all your spend and suppliers in one place

Ariba Spend Visibility unified with D&B Business Insights and powered by HANA provides you the ability to make trusted and confident spending decisions by delivering comprehensive visibility on your spend data.

How much are we spending? What are we buying? Who are we buying from?

Improve sourcing pipeline Increase purchasing clout with suppliers Rationalize supplier & product portfolio Reduce inventory costs Increase spend under management Mitigate supplier risk Diversity and sustainability adherence

Insights Decisions


Ariba Spend Visibility powered by SAP HANA Your on-ramp to effective spend management

Extraction

Classification

Supplier Data Enrichment

Market Benchmarks

Reporting

Key Enablers

• Unified D&B based enrichment

• In-depth commodity classifications

• Integrated Benchmarks

• SAP HANA based reporting

• Project management and • Best Practice Center(BPC)

Services

1

2

34

5


Not a One-Hit WonderSpend Visibility Drives Sustainable Value in the Long Term

Sourcing Savings Opportunities

Supplier Negotiation Leverage

Maverick Spending Trends

Time to Value

Effort toDiscover

Contract Compliance Adherence

Quick Wins

High

High

Low

Low


Not a One-Hit WonderSpend Visibility Drives Sustainable Value in the Long Term

Sourcing Savings Opportunities

Supplier Negotiation Leverage

Maverick Spending Trends

Time to Value

Effort toDiscover

Working Capital Leverage

Supplier Diversity Reporting

Green & SustainabilityInitiatives

Supplier Risk Analysis

Category Sourcing Insights

Spend Under Management Improvement

Contract Compliance Adherence

Quick Wins Mid/ Long Term Opportunities

High

High

Low

Low


We Have Observed the Benefits from a Vantage Point Examples of real life use cases in spend visibility

Sourcing Savings USD 27.3 million savings in 2.5 year period and 18% average savings across all spend categories

Supplier Optimization 97% of the annual spend classified and enriched over 98% of the supplier base thus resulting 20% supplier reduction

Working Capital $2.5 Million in savings due to optimized Days Payable Outstanding ( DPO ) terms with suppliers

Procurement Efficiency Over 400,000+ goods and services categorized based on industry taxonomies at 99% accuracy resulting savings of over USD 3 million annually


Polling Question

Which of the following do you see as the potential outcomes of leveraging Spend Analytics in your organization? (Select all that apply)

• Improving sourcing savings and pipeline

• Driving supplier sustainability and diversity initiatives

• Improving supplier negotiation clout

• Reducing contract compliance leakages

• Reducing supplier management costs

The Enterprise Need for Spend Visibility

*Aberdeen Group : Spend Analysis – Transforming Data Into Value , By Christopher .J. Dwyer

Factors Driving Enterprises to Focus on Spend Analysis *

Getting Insight Starts with Asking the Right Questions

• How can I get more detailed information on suppliers?

• How much am I spending with suppliers at a corporate family level?

• How diverse is my supply base? And how can I locate more diverse suppliers?

• Where are the greatest risks in my supply chain?

Inconsistent Data Quality

Disparate Data Sources

Manual Effort Intensive Processes

Limited Access to Market Information

Poor Visibility on Suppliers

Why is Gaining Visibility on Your Spending a Challenge ?

How often have you made decisions based on limited or missing information?

Spend Visibility, with D&B inside, provides clarity about your suppliers.

Supplier Data Enrichment Through Dun & Bradstreet


In-depth Insights on Your Suppliers with the World’s Largest Supplier Database

• Gain supply chain visibility with a consolidated, standardized view of suppliers

• Identify hidden paths for costs savings and risk exposure management

• Find sourcing opportunities within existing relationships globally

• Strategically leverage full negotiation advantage

• Benchmark supply base diversity and sustainability levels and how they meet organizational goals

How much are we Spending with them?

Is my supplier base diverse?

Are my suppliers at risk ?

Is my supply chain Green?

Who are ourSuppliers ?

Industry Codes

Parentage Information

Financials

Green Certifications*

Diversity Certifications*

Risk Ratings*

* Provided as an optional service

World’s largestcommercial database

More than 240 million company records

30,000 data sources

5 million updates per day

The largest, most accurate contact databases (Dun & Bradstreet NetProspex)

The patented DUNSRight™

data verfification process

Trusted by nearly 90% of the Fortune 500 to turn massivestreams of data into high-quality information and insight


Jon BallDirector of Global Data Insights & Analytics at Dun & [email protected]

CRH – Ariba Spend Visibility Case Study

Three product groups

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o Oldcastle Materials is one of three Oldcastle product groups:

• Building Products — No. 1 in building envelope solutions; No. 1 provider of precast concrete engineered solutions in North America; No. 1 in masonry and hardscapes

• Distribution — Leading building products distributor to specialty contractors in residential and commercial construction

• Materials

Oldcastle Materials

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• Oldcastle Materials is the leading vertically integrated supplier of aggregates, ready-mixed concrete and paving services in the United States.o No. 1 in asphalt productiono No. 1 in asphalt pavingo No. 2 in ready-mixed concrete productiono No. 3 in aggregates productiono Major provider of heavy highway construction services

Landscape - Stats• Over $19B in annual

spend, $5B in OMG

• 7.5MM invoices group wide

• Over 130K unique Supplier Global Parents

• 650 unique L3 categories

Procurement Landscape & Challenges

SOURCE: Oldcastle Materials | 24

Challenges• Various disparate ERP

systems across the globe

• Multiple currencies

• Internal resource allocation

• Increased coordination across groups, difficulty gathering spend and identifying opp.

Implementation Approach

• Using the tool must be easier than working around it

• Dedicated procurement resource per group

• Global core team coordinating

• Training early and often

Approach to Implementation & Lessons Learned

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Lessons Learned

• More frequent data refreshes

• Top-quality data for opportunity analysis

• Continuous Refinement & data enhancement

• Consistent customized training

• Creating an understanding & demand for the information

• Alignment with IT resources

Spend Visibility Example

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• Supplier Parentage hierarchy

• Unit Price info for direct materials

• Uncovering new opportunities

• Project Pipeline development

Materials

• Cement & Aggregates• Asphalt & Paving• Readymix Concrete

CRH plc

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Products Distribution

Products for Construction Solutions

General MerchantsRoofingSiding


Thank You Contact Information:

Keertan Rai [email protected]

Eric O’[email protected]

mailto:[email protected]

mailto:[email protected]