eprocurement. eprocurement - benefits/revenue $12 billion spend in 2005 reduced material costs$239m...
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eProcurement
eProcurement - Benefits/Revenue$12 Billion Spend in 2005
Reduced Material Costs $239M
NPI / CPPD $178M
Supplier Negotiations $ 61M
Efficiency (Headcount) $ 21M
Warranty Reduction $ 20M
Receiving / Invoicing Related $ 12M
Premium Freight Savings $ 8M
Inventory Reduction $ 5M
Item Reuse / Duplicate Parts $ 7M
Exchange Revenue $ 26M
Total Through 2005 $338M
eProcurement - Benefits/Revenue$12 Billion Spend in 2005
Direct Material 74% - $8.8B
Reduced Material CostsNPI / CPPD $178M
VendorSite RelatedNegotiated $ 14MEfficiency $ 21MWarnty Reduc $ 20MGrief $ 12MFreight $ 8MInventory $ 5M
$258M
Indirect Material 26% - $3.2B
Reduced Material CostNegotiated $ 46.0M
Efficiency GainsPO Issue $ 2.3M
Search CostsTIC $ .6 MSPL $ .5 M
Grief ReductionPurchasing $ 4.5M
$ 53.9M
Exchange Revenue Opportunity $26 M
Corporate Purchases$12 Billion
Indirect MaterialFabricationsMachiningMisc. DirectMachine Tools & Capital
Business Units
Re-manufacturingContract PackagingServiced Parts
LogisticsCabsIndirect MaterialCastingsForgingsHydraulicsMachineHeavy FabricationsEngine Components
PTE
Finished MachiningGeneratorsTurbo ChargersPistonsEngine Components
GESMCentralized Indirect MaterialCastingsForgingsUnformed SteelTires & RimsPurchased Finish
M&PS
Concept to Check
Receipt ofGoods/Services
Supplier Communications
Product &Process
Development
RequisitionCreation
ApprovalCycle
P.O.Generation
Invoice
CaterpillareProcurement
INVOICE
Payment
INVOICE AdvanceShip Notice
Basic Installation Costs $10M
Future Investment: NPI/CPPD $25M - $40MConcurrent Collaborative Design Tool
NPI
• WEB Catalog of Supplier & Cat Data
• Graphics Display All Types Images
• Rastar Image Sharing• Drawing Mark-up Capability• Multiple Language Searches• Electronic Approval Routing• Supplier ILC Support• Supplier Managed Catalog Data• Duplicate Parts Reduction (SPL)• Interfaced Into Corporate
Systems
WECAP Legacy SYS
•EDI (Electronic Data Interchange)•ASN / Bar Code•Supplier Scheduling Collaboration•Supplier Expedite•Delivery Performance•Electronic Invoices / Payments•Supports “No Error on Demand”
VendorSite
SourcingERP- MRPPurch Sys
SupplierCommunication
LogisticsTraffic
ReceivingInvoicing
ElectronicPaymentsNPI
PaperlessRequisition
Policy Decision
A&FP
Design Collaboration
Sourcing
ERP- MRPPurch Sys
SupplierCommunication
LogisticsTraffic
ReceivingInvoicing
AccountsPayableNPI
Initial Investment: Enhancements and Interfaces $10M Future Investment: NPI/CPPD $25M - $40M
$178M
Design Collaboration
NPI
NPI / CPPD DesignDesign Collaboration…
• Solid Model files• Viewing files• RASTAR files• Simulation Results• Digital images• ECN’s• Specs, etc.
Caterpillar Confidential: Yellow
Possible Solution:
Visual Collaboration EnvironmentVisual Collaboration Environment
Purchasing
Mach’g
Supplier AMach’g
Supplier A
Foundry
Supplier E
Pattern
Shop C
Engineering
Mfg
Assem
RASTAR
File Transfer
CaterpillarCaterpillar
3DViewing
D/B (Future?
)
PDM
Pro/ED/B’s
Other
RFQ Collaboration
Pilot (basic)IMT
PatternShop A
CAT
Blackhawk
Fdry A
GredeCorpVersa
Fdry B Fdry C
PatternShop B
PatternShop C
PDM- iMAN, Metaphase, etc.
eVis Enterprise
/ .Com
SPLTLG
Catalog
AN/C
FT / SIFT
UGCAM
i2 TradeMatrix
Lognet
RFQ
Pro/EProduct Devel
Rastar
PRWB
CPPDRelasing
WorkFlow
EDS
ECN
NPITracking
1ESpecs
QRWB
CDIM
WECAPWeb Engineering, Cataloging And Procuring
WECAP
Sourcing
ERP- MRPPurch Sys
SupplierCommunication
LogisticsTraffic
ReceivingInvoicing
AccountsPayableNPI
WECAP
•WEB Catalog •Graphics Display•Duplicate Parts Reduction (SPL)•Multiple Language Capability •Approval Routing•Supplier ILC Support•Supplier Catalog Synergy•Interfaced Into Corporate Systems
The Good Old Days
Today / Tomorrow
WECAPWeb Engineering Cataloging And Procurement
EngineeringCommunity
PurchasingCommunity
• Hardware Items • Office Equip/Supplies• Tooling• MRO• Packaging
• Similar Parts List• Tooling Standards• Graphics• NPI/CPPD
WECAPWeb Enabled Cataloging And Procurement
• Web Based, Secure, Easy To Use Tool ForCatalogingSearching
Viewing Graphical ImagesOrdering
Indirect PurchasingTool DesignSimilar Parts Listing - Direct Material
• Applications
Corporate InventoryCorporate AccountingAccounts Payable
• Interfaced to Corporate SystemsEngineering ImagesEmployee DataCorporate Purchasing
• Presentation of Supplier Catalogs
• Controlled Shopping Through Corporate Negotiated Pricing
• Paperless Ordering
• Automated Electronic Approval Routing
• Multiple Language Translations
• Display of Supplier Pictures
• Reduction of Duplicate Parts through Similar Parts Search
• Display of Engineering Drawings
WECAP Highlights
Cost Savings Scorecard TTT Division
Crib Purchases Not on Automatic Re-order (10% of Total WX PO’s)S&I Cost Saving (15 min) $ 2,790 / MonthGrief Cost Savings (30 min) $ 1,674 / Month
Misc Indirect Purchases (LOGNET) Search and Input Cost Savings (15 min) $ 1,656 / MonthGrief Cost Savings (30 min) $ 523
Total Monthly Savings $ 25,826
Crib Requests By Internal CustomersReq.'s per month 5,195Input Time saved using WECAP (1.1min) 5,715 MinInput Cost Savings @ $15.00 / hr $ 2,007 / MonthSearches per month needed 4,156Search Time Savings using WECAP(11min) 45,716 MinSearch Cost Savings $11,429 / MonthCurrent Grief Level (30%) UofIL 1,558Grief Time Savings (10 min) 15,585 MinGrief Cost Savings $ 5,747 / Month
Cost Savings Scorecard TTT DivisionTotal Positive Efficiency Cost Effects / Month $ 25,826Annualized WECAP Only Gains $ 321,912
Annual Cost Savings for VendorSite $ 310,000
Estimated 2001 Support Charges for WECAP / VendorSite / Portal$ 128,445
Net Savings Potential 2001 For TTTD $ 503,467
The Above Number DOES NOT include any Direct / Indirect Material cost reductions for leverage buying NOR does it include anything for Design Collaboration.
FYIPro-Card Activity for TTTD 1608 buys / mo $ 253,640LOGNET Buys Not Using U9 255 / month
Using U9 93 / month
Immediate Short Term Benefit Available
The Mainframe Item Catalog (TIC) 2314 Charges(Does Not Include Any Efficiency Gains)
Month TTTB Hits TTTB $/hit Corp Hits Corp $/hitJuly 24,785 $ .25 136,624 $ .25August 31,903 $ .28 163,144 $ .26September 26,798 $ .28 143,925 $ .24
Averages 27,829 $ .27 147,898 $ .25
Cost/Month $ 7,514 $ 39,932Thru End of 2000 $ 22,542 $ 119,796
VendorSite
•EDI (Electronic Data Interchange)•ASN / Bar Code•Supplier Collaboration•Supplier Expedite•Delivery Performance•Electronic Invoices / Payments•Supports “No Error on Demand”
Sourcing
ERP- MRPPurch Sys
SupplierCommunication
LogisticsTraffic
ReceivingInvoicing
AccountsPayable
VendorSite
NPI
VendorSite
Supply Chain and EDI In The “Ideal World”...
SuppliersManufacturer
Others
Planning Schedule, Matl Release
Advanced Shipment Notice
Receiving Advice
Remittance Advice
Application Advice
Shipping Schedule
The Harsh Reality -- “Tip of the Iceberg”
NotEDI capable
80% VendorSite
VendorSite
Integrated 5%
Rip & read(2 or more Trading Partners)
Rip & read(only 1 Trading Partner)
EDI Capable20%
Supplier Resistance to EDI: The Problem
CostSoftwareNetworkTrainingOn-going support
ComplexityASC X12 StandardsImplementation conventionsElectronic mailboxesAnnual updates
• No Return On Investment– Limited benefit - (except responsive
to customer request)
Plus
Plus
Vendor SiteApplication
EDI
Non-EDI CapableSuppliers (80%)
Web-browser
Internet
VendorSite Electronic Commerce
VendorSite - Completes the EDI System
EDI
Value AddedNetwork
EDI
EDI CapableSuppliers (20%)
Manufacturer
MRP Other Rcvg
A/P A/R
Traditional EDI
Benefits to Manufacturer
More e-linked suppliers provide more timely, accurate, and complete supply chain picture.Same data presentation for Manufacturer and Supplier reduces confusion and makes comparison easier.
Fewer Accounts Payables match problems due to discrepancies and missing documents (ASN, Invoice, Bar Code label all generated from same data).
Automatic e-mail alerts buyer of potential late deliveries and other problems.
Better supplier performance information enables proactive supply chain management.
Benefits to Suppliers
Simpler and less expensive than traditional EDI,PLUS
Supplier tool for managing manufacturer schedules (viewing, sorting, data analysis, automated response).
Same data presentation for Manufacturer and Supplier reduces confusion and makes comparison easier.
Automated payment reconciliation improves cash visibility.Bar charts and other visual tools provide insight for improved
production planning.Net benefit: easier schedule management, reduced
administrative costs, and improved cash flow.
Supplier Communications
Public Information
VendorSite
WECAP
--Delivery Performance
COMMERCIALSERVICES (WECAP)-- Sales to Suppliers-- ILC Mat'l -Quote -Order-- Indirect Materials-- Cat Service Tech
Group Tools
BUSINESSBUSINESSUNITSUNITS-- Products-- Contacts -Buyers -Logistics -NPI -CPPD -Quality-- Facility Maps-- Delivery Locations
REMITTANCEREMITTANCE/PAYMENT/PAYMENT-- Supplier Payment-- Invoices
-- Invoice Instr-- Status of Payment-- Contacts w/ Accts Pay
CONCURRENTCONCURRENTPRODUCT ANDPRODUCT ANDPROCESSPROCESSDEVELOPMENTDEVELOPMENT-- New Product Introduction-- RASTAR Drawings-- Engineering Changes-- Critical Processes
SUPPLIERTRAINING
-- Cat Training Catalog-- New Job Startup Procedures-- Lessons Learned-- CAT Training -Quality -SPC -Lean Mfg
PURCHASINGPURCHASING-- Strategic Sourcing-- Global Bidding-- Quotation Process-- Certification Process-- Supplier Setup-- 1E Spec-- Supplier Info-- Preferred Carriers
ENTERPRISE SUPPLIER WEBSITESecure Caterpillar Supplier Network Opportunities
SCHEDULESCHEDULEMANAGEMENTMANAGEMENT(VendorSite)
-- Schedules-- Shipments-- Advance Ship Notice-- Receipts-- Commitments-- eMail -Notification -Qty Chgs -Late Shipmts-- Collaboration on Schedules-- Lead Time
-- Collaboration on Capacity
SUPPLIERDEVELOPMENTAND REPORTING--Quality--Cost Trends
--Warranty--New Job Startup--QCLDM
LOGISTICSLOGISTICS-- Container
Management-- Shipping Instr-- Packaging
Instructions-- Corporate
Traffic-- Corporate
Brand Identity
QUALITYQUALITY-- Material Rejections-- Qlty Inspection Reports-- Product Improvement -- Annual Qlty Improvement-- CPK-- FMEA
PUBLICPUBLICINFORMATIONINFORMATION-- Code of Conduct-- New Suplr Ques-- Suplr Comm Guidl-- Purchasing Contacts-- Small Business Partnership
Questions?
WECAPWeb Engineering Cataloging And Procurement
Demo