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Ariba Collaborative Supply Chain

High Level Introduction

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Agenda

Solution extension to direct goods

Proposition value today

Next steps


Agenda



Next steps


Ariba Cloud solutions

Spend

AnalysisSourcing

Contract

mgmt

Operational

mgmt

Invoice

mgmtPaymentSupplier mgmt

ARIBA

SPEND

VISIBILITY

ARIBA

SOURCING

ARIBA

CONTRACT

ARIBA

SIPM

ARIBA

CATALOGSARIBA

PROCURE TO

ORDERPO & INVOICE AUTOMATION

ARIBA INVOICE

PRO

ARIBA PROCURE TO PAY

ARIBA

DISCOUNT

MANAGEMENT

Sourcing projects

RFI, RFP,

eAuction

Scoring

Negotiation

Libraries

Repository

Supplier profiles

Qualification

Performance

Catalogs

PR and PO

Approval

workflow

eInvoicing

Reconciliation

Invoice status

update

Dynamic

discounts

Payments

Remittance date

update

Consolidation

and data

cleansing

Spend analysis

Benchmarking

ARIBA SERVICE PROCUREMENT


Ariba is Extending Beyond Indirect Procurement into Direct

Materials Procurement/Supply Chain Collaboration

Indirect: goods or services that do not end up in the product delivered to the customer;

the spend is tracked under OPERATING EXPENSES.

Direct: procurement of goods or services that go into production and are at the core of the product

delivered to the customer and related spend is tracked under COST OF GOODS SOLD, including:

Merchandise vendors stocking retail shelves

Contract manufacturing of the final product

Manufacturers of subassemblies

Component suppliers

Raw material suppliers


Why Collaborative Supply Chain?

For Buyers

• Complete Visibility to Supply

• Reduce Inventory Levels

• Reduce Supply Chain Risks

• Single Business Network Collaboration Platform

with embeded Supplier Enablement Service and

Build-In Integration to SAP

For Suppliers

• Complete Visibility to Demand

• Superior Service to Customers

• Increase Order Fill Rates & Inventory Turns

• Single place to serve multiple Customers


Contractmanufacturers

Subassembly suppliers

Complex Manufacturing Supply Chains Inhibit Visibility into Supply

Large

enterprise

OEM

Component suppliers


More outsourcing

More trading partners

More to track

More geographies

More technologies


Lack of Visibility Inhibits Collaboration

of manufacturing is

outsourced in a typical

company

of buyers have poor

visibility into

source of supply

of suppliers lack visibility

into customer

order management

32%

65%

70%

Without visibility, complex supply chains

risk:

• High safety stock levels

• High inventory carrying costs

• Stock-outs and missed or delayed

shipments

“Supply chains…need visibility across multiple systems to

synchronize manufacturing and procurement.”


Agenda



Next steps


Direct Material Collaboration Process in Mfg IndustriesDesign > Plan > Source > Make > Deliver > Enable

PLM/PDM

Demand/

Supply

Planning

Market

End

Customer

ERP

Sales/MRP/Purchasing

Contractmanufacturers

Subassembly suppliers

Component suppliers


Supply Commit

RFQ/RFX

BOM/Eng

Net Demand Forecast Visibility/Subcon PO

Forecast/Purchase

Order/Release

Purchase Order

ASN

Purchase Order

ASN

Purchase Order

ASN

OwnMfr Plants

ASN/Invoice

Demand

Supply Plan

SourcingContract

Supply

Logistics Provider

Logistics Provider


Ariba Collaborative Supply ChainDirect Purchase Orders

13

Schedule Agreement

Direct Purchase Order

Contract Manufacturing

Consigned Inventory

BuyerSupplier / Contract

ManufacturerBenefits

• Ability to communicate granular

demand by multiple dates and

quantities

• Facilitates efficient order

fulfilment process by Direct

Material suppliers

PO’s with Delivery Schedules

PO Confirmation

Goods Receipt Notice (POD)

Advance Ship Notice

Self Billing/ERS Invoice

Payment

Invoice


Manage Complex Requirements with Purchase Order

Extensions

• 100 new direct material fields that

support direct material processing

• Additional product characteristics

such as promotional deal ID, size

quality, grade, color, etc.

• 38 fields for product packaging such

as container serial code, shipping

mark, length, weight, etc.

• Suppliers can view and edit these

fields when processing purchase

orders, ship notices and invoices

Show screen shots from video of item

characteristics and packaging descriptions

Schedule Agreement



Consigned Inventory


Organize and Prioritize Direct Materials Shipments

with Ship Notice Due List

• Seller can create Ship Notice Due List

based on customer, ship-to location,

product, purchase order, and due date

• Automatic grouping of multiple

purchase orders by customer and

customer location to consolidate

orders into a single shipment

• Creates ship notices that span

multiple purchase orders, and

combines items from both purchase

orders and scheduling agreement

releases

Schedule Agreement



Consigned Inventory


Ariba Collaborative Supply ChainScheduling Agreement Release Collaboration Process

16

Schedule Agreement



Consigned Inventory

Benefits

• Improved visibility into

availability of supply

• Greater transparency for

suppliers into longer term and

near-term demands of their

customers

• Flexible invoicing options,

including self-billing and

supplier-generated invoicing

Buyer

Schedule Agrt Release (FRC/JIT)

Goods Receipt Notice (POD)

Supplier / Contract

Manufacturer

Advance Ship Notice


Payment

Invoice


Communicate On-Going Demand with Scheduling

Agreement Releases

Create rolling delivery schedules to

indicate the degree to which the lines of

schedule are binding:

• Firm zone (go-ahead for production).

This is firm and fully binding

• Trade-off zone (go-ahead for

procurement of input materials). If you

cancel, the vendor is only entitled to

charge for material costs

• Planning Zone (forecast)

Schedule Agreement



Consigned Inventory


Ariba Collaborative Supply ChainContract Manufacturing Collaboration Process

18

Schedule Agreement



Consigned Inventory

Benefits

• Allows buyer to leverage

purchasing power while

maintaining visibility and control

into contract manufacturing

process

• Improves visibility into

availability of supply, Inventory

and production status

• Drives greater efficiencies

between multiple supply chain

parties


Manufacturer

Subcontract Purchase Order

Issue Subcontract Components

Component Inventory Status

Goods Receipt Notice

Component Receipt Notice

PO Confirmation

Component Consumption Notice

Advance Ship Notice

Self Billing/ERS Invoice (Option A)

Component Ship Notice

Payment

Invoice (Option B)


Provide Manufacturing Partners with Components and

Gain Visibility into Component Consumption

Enables contract manufacturing processes

utilizing components shipped by buyer

• Enables contract manufacturing

partners to drill down into component

lines from an assembly PO

• Allows buyers to ship components to

contract manufacturers and gain

visibility into usage

• Enables contract manufacturers to

report receipt and consumption of

components with relevant batch

information, ensuring greater

predictability of supply

Schedule Agreement



Consigned Inventory


Ariba Collaborative Supply ChainConsignment Collaboration Process

20

Schedule Agreement



Consigned Inventory

Benefits

• Improves buyer cash flow and

inventory turns by deferring

transfer and payment of goods

until they are consumed.

• Provides suppliers with visibility

to movements related to

consigned inventory.

• Minimizes risk of material

stock-outs

• Reduces replenishment lead

times

Buyer

Consignment Purchase Order

Consumption: Consignment Transfer

Consignment Stock Receipt Notice

Supplier / Contract

Manufacturer

PO Confirmation

Advance Ship Notice


Payment

Invoice


Consignment Inventory Movement Visibility

Replenish and receive consignment

inventory and transfer it to your stock

as needed

• Obtain and share visibility into

material movements with suppliers

• Signal change of ownership of

inventory and settle payment to

suppliers

Schedule Agreement



Consigned Inventory


Improving Collaboration in the Direct Material Supply Chain

Summary of Key Innovations

Collaboration Benefits

Purchase Order

• Delivery Schedule Support

• Direct Material/Retail Extensions

• Streamlines PO’s by adding multiple delivery schedules per line item

• Supports critical extensions such as packaging information

Scheduling Agreement Release

• Forecast & JIT Releases

• Provides suppliers with transparency into longer term demands of their customers .

• Provides efficient way of communicating plan-driven demand in repetitive mass

manufacturing environments

Contract Manufacturing • Provides end-to-end visibility into subcontracting process, including physical component

movement and component consumption

Consignment • Provides end-to-end support of consignment procurement through settlement process

• Allows suppliers to trigger replenishments and invoicing as needed

Ship Notice Due List • Delivers greater flexibility and more efficient view of shipments due

Confirmation Due List • Streamlines processing of high volumes of orders

• Ensures predictability of supply and better production planning


Open Integration Framework

Seamless integration with your existing IT environments


What Makes a Business Network Different from EDI?

Intelligence and Flexibility

EDI OR 1:1 INTEGRATIONS

• Processes customized per trading partner

• EDI formats and connectivity standards

• No business logic

• No aggregated data content or history

BUSINESS NETWORKS

• Standardized processes

• Multiple connectivity options

• Configurable rules and business logic

• Community intelligence


Agenda



Next steps


SAP Ariba Collaborative Supply Chain Solution Is in Year Two of a

Multi-Year Journey

A basis for direct

materials collaboration

on execution processes

Extends to support outsourced

manufacturing and consignment

inventory scenarios

Expanding into additional

process areas to support

forecast collaborations

related to Planning

Inventory and Quality

Collaborations

Multi-Tier Collaboration Scenarios

Mobile, Network Intelligence

CSC 1.0

CSC 2.0

CSC 3.0FUTURE

!

Better sharing of planning & execution information

More processes enabled

Increased access to intelligence

Value Levers at Each Stage Upcoming

Release


SAP Ariba Collaborative Supply ChainForecast Collaboration - Planned in Q1,2016

27


Manufacturer

Benefits

• Early visibility of net demand

for suppliers to support forecast

visbility scenarios

• Enables collaboration to

support ability to receive

current capacity/inventory

status and collobarate with

suppliers on supply plans to

meet end cusomers demands.

Forecast (Net Demand from MRP)

Forecast Commit

Inventory Level

Industry Relevance

• Predominant process across

Manufacturing/CPG Industries

Forecast (UnConstrained Supply

Plan)

Forecast Visibility Scenario

Forecast Commit Scenario

Forecast (Constrained Supply

Plan with supplier commits)

Mfg Planning Visibility


End to End Forecast Collaboration

Provides time series view of

forecast for suppliers.

Flexible UI supports

• Search Filtering

• Configurable Data

• Related Firm Orders

• Supplier Commit Updates

• Excel Download/Upload


Ship Notice Barcode Printing

Custom PDF Layout – Barcode Label sample (1/4)


Value to Customer/Supplier Solution

Challenges of lack of Inventory Visibility

include

• Using information strategically to improve

service levels, reduce obsolescence and

ensure compliance with QA.

• Reduction of Stock Outs

• Improved operational efficiency by

automating the exchange of information

between all partners and by providing

decision support capabilities and

consolidated visibility to the end-to-end

process.

Business Benefits of Forecast

Collaboration

• Lower inventory levels through increased

inventory visibility.

• Reduce obsolescence cost by better

utilization of available inventory in the

supply chain.

• Improve order fill rates through

comprehensive visibility into all available

sources of supply.

Industries

• All Industries

Part Inventory Monitor

Provide Inventory Visibility for Buyer and Supplier .The view should include different Stock Types (Unrestricted/Consignment), Stock Categories

(Unrestricted, Blocked, Quality) and ownership status of the inventory

SMI/VMI Monitor

VMI Monitor to allow suppliers to View Stock levels, Demand, Stock on Hand, In transits, Projected stock, Planned Receipt, Firmed Receipt,

Min/Max, Stock Alerts

Component Inventory Monitor

Component Inventory View with both supplier and buyer updates of on hand Inventory at Batch level to facilitate inventory reconciliation in Contract

Manufacturing scenario's.

WIP Monitor

WIP report Allow the Suppliers and Buyers to view WIP status at the PO item level including the consumption data, batch details.

Exception Monitor

Allow Supplier and Buyers view exceptions and alerts to mange the Business process .

Inventory Collaboration – Future Functionality


Value to Customer/Supplier Solution

Business Benefits

• Sharing of quality related data with supply chain partners to drive

issue visibility and quick resolution

Customer:

• Manage non-conformance of suppliers and contractors.

• Provide transparency into rework or return of non-compliant product

• Ability to communicate and transact return of excess or obsolete

inventory

Supplier:

• Ability to expose quality issue to customer for components provided to

ensure timely replenishment

• Enabled to quickly respond to reported product quality issues

Industries

• All Industries

Planned Solution

- Quality Notification, Return Delivery and Return PO

• Ability to receive quality notification (rework order) in Ariba Network from

customer’s backend system (finished product) with reference to existing

document

• Ability to receive a return delivery in Ariba Network from customer’s backend

system with reference to a document

• Ability to receive a return purchase order in Ariba Network from customer’s

backend system

• Ability to create quality notification or a Deviation Request in Ariba Network by

supplier / contract manufacturer (component) with reference to existing

document

- Invoicing

• Ability to send invoice to the vendor via Ariba Network for rework of non-

compliant product

- Reporting/ Certificates

• Ability to feed quality related data into vendor evaluation

• Ability for buyer to communicate report of quality issues to vendor (8D report)

• Ability for vendor to send Certificate of Analysis prior or along with shipment

• Ability to communicate testing results

- Batch Management

• Ability to cross reference customer and supplier / contract manufacturer

batches

- Alerts/Notifications

• Inform vendor about pending rework at cost and acceptance thereof

• Inform users of quality notification having been raised

Quality Collaboration - Future Functionality


Ariba Network - Platform Enhancements - Near FutureUsability Improvements


Ariba Network - Platform Enhancements - Near FutureMobile Access for suppliers


SAP Ariba Collaborative Supply Chain Buy Side Integration Status as of Dec 11, 2015

Process Related Documents

Relevant for Count towards number of Doc Types in Connection Services Setup

SAP Add-on Cloud

Integration


Collaboration (CSC1.0)

Purchase Order,

PO Change, PO Cancel, Confirmation, ASN, Goods Receipt, Invoice or CC Invoice,

Payment Advice

SP08 – Aug 2015 CI-6 – Sep 2015

Scheduling Agreement

Release Collaboration

(CSC1.0)

Scheduling Agreement Release, ASN, Goods Receipt, Invoice or CC Invoice,

Payment Advice

SP08 – Aug 2015 CI-3

Sub Contract PO

Collaboration (CSC2.0)

Sub Con Purchase Order^,

PO Change, PO Cancel, Confirmation, Component Ship Notice*, Component Reciept*,

Component Inventory, Component Consumption, ASN, Goods Receipt, Invoice or CC

Invoice, Payment Advice

SP09 – Dec 2015 Planned for CI-8 –

July 2016

Consignment Movement

Collaboration(CSC2.0)

Consignment Purchase Order^,

PO Change, PO Cancel, Confirmation, ASN, Goods Receipt, Consignment

Movement Visibility, Invoice or CC Invoice, Payment Advice

SP09 – Dec 2015 Planned for CI-8 –

July 2016

Green – $ Chargeable Document towards Annual Document Usage

Bold – Most Common, Italic - Optional depending on customer requirements

*Only Technical Implementation, Requires Project Work.

^ Does not count towards number of Doc types for Connection Services Setup


SAP Ariba Collaborative Supply Chain Buy Side Integration Status as of Dec 11, 2015


One Network to Simplify Supply Chain CollaborationProcure-to-Pay Collaboration in Real-Time

Faster

response to

manage

inventory

levels and fill

rates

Easy

onboarding

with minimal

IT costs

Improved

compliance with

standards-based

and open

electronic

communications

Simplifies

interactions

and

transactions –

connect once,

collaborate

with many

Network

intelligence,

reporting and

analytics on

supply chain

metrics


Ariba Collaborative Supply Chain: Early Adoption in Key IndustriesNote: These Accounts Are in Early Deployment Phases

Gartner ranked SAP the overall leader in worldwide supply chain management and supply chain planning*

*source: “Market Snapshot: Supply Chain Management Software, Worldwide, 2013” report.

ULTA Beauty

80% of merchandise vendors are live

Exchanging all EDI transactions – PO,

PO Confirm, ASN, Invoice

Significant efficiency in AP department

Manitowoc Crane

Ariba Design Partner

€200M scaling to €1B in direct materials

spend collaboration

Supporting Business transformation effort

to lean manufacturing

© 2015 SAP SE or an SAP affiliate company. All rights reserved.

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Download The Economist White Paper:

“The Future of Business: Supply Chains”