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PROCUREMENT IN
THE NEW
JUNE 2017
DIGITAL
PROCUREMENT
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PROCUREMENT NEEDS TO REIMAGINE ITS FUTURE
“TIME IS NOW”
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“30 GUTENBERG MOMENTS HAPPENING IN PARALLEL” 1
LOST IN DIGITAL TRANSLATION
1 Salim Ismail - Singularity University
Ingredients for success
Where to start
Who owns it
Relevant Trends
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Market intelligence 2.0
Open innovation beyond the buzz
Amazonization of Procurement
Welcome to the kingdom of Apps
Blockchain
From Products to Service
12 GAME CHANGERS LIKELY DISRUPT PROCUREMENT
THE DIGITAL LONG LIST
Make user experience as simple as amazon
Increase your start up IQ
Review your make/ buy strategy for category management
Nominate a Chief Data Officer
Move to real-time and predictive spend analytics
Switch to real time sourcing organization
Own the ecosystem
Test & learn process automation
Leverage Augmented Intelligence
Develop procurement social network strategy
Full Transparency to supply chains
Back to local sourcing
Savings Bermuda triangle is over
Robotic Process Automation
Big data & analytics tsunami
Cognitive procurement
Supplier networks war is on !
Clear is the new clever
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NEW
APPLIED
NOW
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WE ARE ARCHITECTING THE NEW IN PROCUREMENT
PROCUREMENT CAPABILITY MAP
Digital Enablers
Strategy
Core Processes
Workforce Strategy Digital Strategy Change StrategyVisioning Functional Strategy
Corp/Funct.
Strategy
Strategic
Roadmap
Change
Strategy
Knowledge
Strategy
Value
Realization
Ecosystem
Strategy
Digital
Workforce
Digital
Scouting
Digital
Roadmap
Social
Media
Cognitive
Computing
Mobile Advanced
Analytics
IIoTCloud
Receipt to
Pay
Category
Strategy
Contract
Administration
Innovation
Management
Manage
Relationships
Requisition to
Order
Ecosystem
Management
Sourcing
Management
Demand
Management
Category
Management
Supplier
Management
Contract
Management
Requisition
to Pay
Negotiation
Sourcing
Strategy
Contract
Development
Financial Asset
Mgmt.
SPM
Supplier
Development
Compliance
Management
Zero Based
Spend Mgmt.
Supply Base
Mgmt.
Intel
Management
Market
Analytics
Financial
Analytics
Price
Risk
Supply
Risk
Information
Security
Regulatory
Compliance Risk
Circular
Economy
Risk and
Regulation
Supplier
Collaboration
Supplier Life
Cycle Mgmt.
Supplier
Risk
Contract Life
Cycle Mgmt.
Spot
Buying
Buying Channel
Strategy
Collaborative
Supplier Mgmt.
Innovation
Realization
Strategic Spend
Evaluation
Collaborative
Financing
Collaborative
Sourcing
Commodity
Price Risk Mgmt.
Sustainability
Compliance
Internal
Analytics
Sourcing
Execution
Value Chain
Partner Mgmt.
Tail Spend
Purchasing
Supplier
Strategy
Operational
Strategic
Transactional
Workforce
Strategy
Foundation
Control Framework
Policies &
Standards
Governance
Business Process
Management
Process
Quality
Spend
Taxonomy
People Management
Performance
Mgmt.
Talent Life
Cycle Mgmt
Change Management
CommunicationsChange
Tracking
Business Performance
Management
CPO
Dashboard
Business
Reviews
Information
Management
Content
Provider Mgmt.
Master Data
Management
Core Processes
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LET’S DEMYSTIFY ANALYTICS FIRST …
ANALYTICS CONSTRUCTION KIT
Degree of Intelligence
Competitive Advantage
Standard Reports: What happened ?
Ad Hoc Reports: How many, how often, where ?
Query Drilldown: Where exactly is the problem ?
Alerts: What actions needed ?
Statistical Analysis:
Why is this happening ?
Forecasting: What if
these trends continue ?
Predictive Modelling: What will happen next ?
Optimization: What’s the best that can happen ?
Information
Interpretation
Recommen-
dations
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IT IS TAILORED & BASED ON EXPERIENCE
PROCUREMENT ANALYTICS IN REAL LIFE
Standard Reports:
What happened ?
Ad Hoc Reports:
How many, how often, where ?
Query Drilldown:
Where exactly is the problem ?
Alerts:
What actions needed ?
Statistical Analysis:
Why is this happening ?
Forecasting:
What if these trends continue ?
Predictive Modelling:
What will happen next ?
Optimization:
What’s the best that can happen ?Tender
optimization
Spend
Analytics
Spend
Analysis
Fraud
Analytics
Compliance
Analytics
Procurement Dashboards
Parts Ratio-
nalization
Supply Base
Optimization
Supplier
Profiling
Price Quality
Correlation
Negotiation
Dashboard
Price De-
velopments
Social Media
Monitoring
Contract
Analytics
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IT IS TAILORED & BASED ON EXPERIENCE
3RD
PARTY DIGITAL SOLUTIONS
Standard Reports:
What happened ?
Ad Hoc Reports:
How many, how often, where ?
Query Drilldown:
Where exactly is the problem ?
Alerts:
What actions needed ?
Statistical Analysis:
Why is this happening ?
Forecasting:
What if these trends continue ?
Predictive Modelling:
What will happen next ?
Optimization:
What’s the best that can happen ?Tender
optimization
Spend
Analytics
Spend
Analysis
Fraud
Analytics
Compliance
Analytics
Procurement Dashboards
Parts Ratio-
nalization
Supply Base
Optimization
Supplier
Profiling
Price Quality
Correlation
Negotiation
Dashboard
Price De-
velopments
Social Media
Monitoring
Contract
Analytics
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HOPEFULLY BY NOW WE HAVE DEMYSTIFIED ANALYTICS
ANALYTICS – CHEAT SHEET
Technology is NOT a limiting factor – All required components
are mature and available in multiple cost effective options1
Quality Data is important, we however don’t need 100 %
– the use cases build only on a subset of data – Technology helps to cleanse3
The start is a Question not a Dashboard – The ambition is to
generate new insights that drive value / improved decisions2
Ensure Skills don’t turn into a bottleneck - You won’t be the
only function looking for data scientist talent – be quick !!!6
Don’t reinvent the Wheel – Utilize what 3rd party solution providers
have built for you AND you can learn from your Ecosystem5
Journey to Value will be quick – 6 to 8 weeks is a typical time
horizon for a 5 use case Analytics initiative4
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COGNITIVE CAPABILITIES CAN
COGNITIVE COMPUTING
Sense
recognize text,
speech, images, videos
Comprehend
interpret and
understand
Act
draw conclusions,
take actions
Learn
learn from experience,
increase knowledge
Capabilities
Process Complexitytransactional judgement-driven
Digital Options
Integrated
Desktop
Robotics Process
Automation (RPA)
Virtual
Assistance
Artificial
Intelligence
Kill repetition of
100% identical
processes
Advanced MACROS
perform process
replays in ONE
system
Take the robot
out of human
activities
TEACHABLE
solutions take over
E2E processes
across MULTIPLE
platforms
Drive full
coverage through
quality services
SELF LEARNING
solutions mimic
human interaction
across MULTIPLE
channels
Invent activities
beyond human
capabilities
AUTONOMIC
solutions analyse
information, take
decision & increase
their knowledge
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BEYOND THE
DIGITAL
STRATEGY
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DIGITAL DEFINES QUARTILE ZERO IN ZBS INITIATIVES
SHOULD COST MODELING FRAMEWORK
13
COGS
(62%)
SG&A
(26%)
Profit
(12%)
Raw materials (x%)
Direct Labor (x%)
Packaging (x%)
Maintenance (x%)
Logistics (x%)
Events (x%)
S&M (x%)
Travel (x%)
Facilities (5%)
…
Initiatives to close the
gap to Q0
1. Replace manned
security with
technology solutions
(ex. Intelligent Security
Systems)
Initiatives to close the
gap to Q1
1. Rationalize areas that
require security
2. Rationalize
specifications
3. Centralized change
management programs
Utilities (x%)
…
Security - $100m (illustrative)
Cleaning & Gardening
Office Supply
Recycling
…
Q4 Q3 Q2 Q1 Q0
$120m $80m $60m
Client’s position today
Initiatives to close the
gap to Q2
1. Optimize supplier base
2. Standardize rates &
burdens in alignment
with market
benchmarks
Raw materials (x%)
Direct Labor (x%)
Packaging (x%)
Maintenance (x%)
Logistics (x%)
Events (x%)
S&M (x%)
Travel (x%)
Facilities (2.5%)
…
Utilities (x%)
…
COGS
(x%)
SG&A
(x%)
Profit
(x%)
• Executive Diagnostic (financial benchmarks)
• Company vs peer group
• ZBS / ZBSC cost categories by industry
• Operational data collection (spend analysis)
• List of initiatives by category
• List of KPI by category & Operational Benchmarks
• Book 3 & Digital use cases
• Combinatorial technologies
• Should Cost Model by priority category & industry to
define initial targets
• Client innovation on ongoing basis
• Financial impact calculated based on economic
model
GAP
$30m$80m $50m $30m
-x% on
SG&A
-x% on
COGS
ZBS Initiatives Digital