managing spend for continuous profitability with mysap srm 13 th feb. 2007

Managing Spend for Continuous Profitability with mySAP SRM

13th Feb. 2007

SAP AG 2007, mySAP SRM for Essar / 2

Agenda

SAP SRM Vision and Solutions

Emerging Procurement Trend

Roadmap ahead ..

Summary

ONGC Scenario


…andVALUE GENERATION

…for world-classSUPPLY MANAGEMENT

mySAP SRM is a PURCHASING PLATFORM

…that deliversSUSTAINABLE SAVINGS

SAP Vision for mySAP SRM

ERP PLM SRM GTS ERP CRM

SRMSRMmySAPSRM

mySAPSRM


Automate and accelerate processes

mySAP SRM is a Purchasing Platform

Fully integrated system for all purchasing processes Enterprise platform for center-led purchasing Built-in performance and knowledge management Complete audit trails for regulatory compliance Support for multi-channel supplier enablement


Sourcing events triggered by enterprise processes

Role-based dashboards for intuitive analytics

Contract distribution to multiple ERP systems

Automated purchasing and regulatory compliance

better insight and discipline

…that delivers Sustainable Savings

Close the loop between sourcing and procurement


…and Value Generation

Create a foundation for long-term results

Get suppliers involved in the design stage Reward suppliers for innovation Shift focus from price to performance Assimilate all supply processes Drive efficiency beyond boundaries


Supply management is more than just purchasing Requires strategic insight and category expertise Ability to compose and extend “next practices” is key A service-oriented architecture ensures flexibility

…to World-Class Supply Management

Enlarge the scope of supply management

ERP PLM SRM GTS ERP CRM

… to service-oriented applicationsFrom human-integrators …

PLM

SRM CRM

GTS

ERP


Procurement Challenges mySAP SRM Solution

Managing growing no. of SKUs Catalog Management

Managing supplier performance

Managing growing no. of vendors

Supplier Evaluation & Performance Management (Scoring mechanism, Supplier scorecard, benchmark)

Statutory Regulation Contract Management and Monitoring, Integrated process from Sourcing to Purchasing

Inability to do global spend analysis by supplier resulting in potential unrealized volume discounts

Spend Analytics that reads across Purchase Order systems

Manage global spend by supplier and category

mySAP SRM addresses Procurement Challenges


Procurement Challenges mySAP SRM Solution

Inefficient & inconsistent collaboration with suppliers

Supplier Collaboration (Web-based interaction with suppliers )

Significant maverick buyers leading to overpayment to suppliers

Self-Service Procurement

Manual & inefficient RFx, bidding, and reverse auctioning

Integrated Sourcing executions from RFx to Reverse Auctions to Contract Management

Poor compliance with contract pricing due to lack of access to contracts

Contract Management and Monitoring

mySAP SRM addresses Procurement Challenges


Better supply strategiesthrough focused sourcing initiatives, supplier selection and contract management.

Expedited purchasing processesthrough process automation and compliance management for goods and services.

Higher supplier participationthrough supplier self-service, connectivity, collaboration and supply chain visibility.

Strategic Purchasing & Sourcing Supply strategy development Spend analysis Supplier selection (RFx, Auction) Contract management Catalog management

Operational Procurement Self service procurement Services procurement Plan driven procurement

Supplier Collaboration Supplier registration Design collaboration Order collaboration Collaborative replenishment Supplier connectivity

SC

EN

AR

IOS

mySAP™ SRM Comprises of Three Core Elements


Implement Better Supply Strategies

STRATEGIC PURCHASING & SOURCINGEstablish focused sourcing initiatives

Typical characteristics High executive visibility Involves multiple stakeholders Approach varies by category Knowledge of markets is key Multiple, parallel initiatives Primary metric is cost savings


mySAP SRM for Strategic Purchasing & Sourcing

Improve spend visibility and supply strategy

Supply Strategy Development Demand aggregation & planning Portfolio analysis Purchasing strategy planning Category management Program management Purchasing controlling

Spend Analysis Global spend Content consolidation

Manage contract compliance

Contract Management Contract development Document management Contract distribution Contract execution Contract monitoring

Catalog Management

Reduce errors and compress sourcing cycle times

Supplier Selection Supplier qualification Request for quotation Reverse auctions Sourcing event analysis


3. Qualify Supplier identification Supplier registration Request for Information Supplier pre-selection

Closed-Loop Process for ‘Strategic Procurement & Sourcing’

5. Award Bid comparisons Weighting and scoring Winner award

6. Contract Contract development Contract distribution Execution and monitoring

2. Strategize Demand aggregation

& planning Portfolio analysis Purchasing strategy

planning

1. Analyze Supplier Performance Mgmt Global spend analysis Content consolidation

4. Negotiate Request for quotation Reverse auctioning Terms and conditions Engineering specifications Discussion & Collaboration

Sourcing activities are part of an overall process


Expedite Purchasing Processes

OPERATIONAL PROCUREMENTPurchasing platform for ALL spend categories

Typical characteristics High administrative workload Complex approval rules Many unplanned expenditures Low contract compliance Large safety stocks Supplier disconnect


Simplify process flows

Self Service Procurement Adaptive requisitioning Order management Confirmation Invoice processing

mySAP SRM: Solving Your Procurement Needs

Establish cost limits for service agreements

Services Procurement Service specification & requisitioning Order management Confirmation Invoice processing

Automate PO generation for mission-critical buying

Plan Driven Procurement Source of supply determination Plant maintenance integration Project system integration


Self-Service Procurement

• Employee• Admin

• Manager

• Purchaser • Purchaser

• Employee• Central Receiver

• Employee• Accounting

Self-service procurement empowers company employees to create and manage their own requisitions, allowing purchasers to focus on strategic sourcing.


Plan-Driven Procurement

Integrates operational procurement with existing supply chain management, plant maintenance, and project solutions for compliance enforcement, process efficiency, and supplier selection efficiency.

Demandand requisition

Assign

Order

Contracts

Assign source of supply

Consolidate demands

Spend, Scorecard, and Supplier Info. Winning Bids

Materials management

systems

Purchasing systems

Maintenance and project

systems

Planning systems

SAP and non-SAP systems


Service Procurement

Services processes are more complex and less standardized compared to products. Services procurement requires increased flexibility, greater collaboration, and judicious cost management.

InvoiceInvoice

ConfirmationConfirmation

OrderOrder

Request for ServiceRequest for Service

Supplier

Buyer

Invoice

Order

Monitor

Assign

Approve

Requisition

Confirm


Enable Supplier Participation

SUPPLIER COLLABORATIONMulti-channel approach for supplier collaboration

Typical characteristics Low process transparency Long order cycle times Unsynchronized design cycles Last-minute changes Poor visibility on inventory Frequent supply shortfalls Limited insight into performance


Supplier Collaboration with mySAP SRM

Supplier Registration Supplier self-registration Supplier qualification

Design Collaboration New product design Collaborative project

management

Order Collaboration Account information Bidding event notification Order management Invoice processing Dispute resolution

Supplier Connectivity Integration broker Supplier network

Collaborative Replenishment Stock requirement visibility Supplier managed inventory Advance shipping notification

Reduce administrative overhead for supplier communication

Extend process control to your suppliers…


Supplier Enablement

EXPAND your value proposition by linking ANY kind of supplierswith THREE appropriate and cost-effective channels.

Web browser

Web browser

SAP NetWeaver™

SCMCollab. Replen.

PLMCollab. Design

ERPFulfillmentS

RM

Ord

er

Colla

b.

Lo

w-v

olu

me BUYER

SUPPLIERS SAPXI

Hig

h-v

olu

me

CRM systemCRM

systemSAP Supplier

Network

Supplierconnectivity

Supplierportal

Browser

XML


Closing the Loop Between Value Discovery and Realization

VALUE DISCOVERY

VALUE REALIZATION


Agenda



Roadmap ahead ..

Summary

ONGC Scenario


Emerging Trends in Purchasing ….

Expanding Scope of Supply ManagementIncreased amount of spend managed and influenced

Supplier Relationships will DeepenCapturing Innovation from supplier base, Performance base agreements

Technology will be Central to ChangeFully integrated networks of suppliers available to customers

Trends Driving Changes

The CPO will Become a Strategic Partner to the BoardPromoting creative, cross-functional and risk management skills

How important a role do procurement executives currently play in establishing your company’s overall strategic objectives?

6

TODAY IN 10 YEARS

28

38

40

Very importantVital role


Critical Success Factors of Today’s Purchasing Organizations

Globalization and Growth

Increase Savings

Empower Strategy and Compliance

$£ ¥€

Simplified and Standardized Global Purchasing Processes Tightly Integrated Suppliers

Spend Analysis and Effective e-Negotiations Collaboration amongst Key Stakeholders

Measure Savings and Performance Ensure Contract and Regulatory Compliance


How mySAP SRM supports Purchasing

Empower Strategy & Compliance

IncreaseSavings$£ ¥€

Globalization & Growth

Requisitioning Order Management

Supplier Enablement

Simplify procurementStandardize

global processes Automate supplier

transactions

Supplier NegotiationCategory ManagementData Improvement

Improve spend visibility

Effective negotiation

Regulatory CompliancePurchasing Controlling

Purchasing Planning

Instill method into strategy development

Measure savings and performance

Ensure regulatory compliance

Transforming Objectives into Executable Initiatives


Agenda



Roadmap ahead ..

Summary

ONGC Scenario


Major Investments to Capture Market Growth

300% Research and Development Growth

Frictionless Acquisition addresses:

“On Demand” Market and Delivers immediate Savings to Customers

Demonstrates SAP’s Commitment to Growth in the SRM Market

SAP and Partners delivered Proof-of-Value Trials:

42 M € Savings on 156 M € Spend

Actively recruiting ISV’s to enhance SRM Solution Capabilities


SRM 5.0

FOCUS FOR SRM 5.0:

Improve Strategic Sourcing

Enhanced Sourcing Execution Category Management Introduce Sourcing On Demand Offering (Frictionless acquisition)

Global contract compliance monitoring Enhanced contract execution

Cross System Invoice management Supplier Enablement Services with SAP Supplier Network

Support of ESA Services


SRM 6.0 is Focused on Business Optimisation . . . .

Flexible Sourcing Strategy

Intelligent Category and Spend Management

Contract Types and Authoring

Streamlined Operational Procurement

Fact Based Supplier Evaluation & Management

Scaleable Purchasing Platform with Analytics for the Business User

Contract Management

OperationalProcurement

Supplier Management

Category-Based Strategic Sourcing

Scaleable Platform with Business

User Interface & Analytics


The New Face of mySAP SRM

Streamlined User Interaction

Navigation Personalization Work Center Concept

Single-Click to Launch Actions

E.g. Process an order, change a query

Ability to Define Regularly Used Queries and Reports

Define attributes Store query Personalize

More Intuitive, Personalizable, and Efficient More Intuitive, Personalizable, and Efficient


Category Management Objective and Value Drivers

How does Category Management create value for the company?

Sharing knowledge and best practices

Enabling collaboration amongst stakeholders

Monitoring performance, Identifying opportunities and shifting priorities as

required Proactively responding to market trends

Driving process standardization

Reducing cycle-time

$£ ¥

€


OBJECTIVES

STRATEGY

SOURCING

Category Management in mySAP SRM

Mission Statement:transforming corporate objectives into actionable initiatives

SAVINGSSUPPLIER

PERFORMANCEL.C.C.S. OUTSOURCING

………..

ANALYZE & PLAN

OBJECTIVES

STRATEGY

PROGRAMS

INITIATIVES

EXECUTE MONITOR


Agenda



Roadmap ahead ..

Summary

ONGC Scenario


Conclusion: mySAP SRM is Better Supply Management

REDUCED OPERATING COSTS Better spend controls Improved contract compliance Lower connectivity costs

COMPRESSED CYCLE TIMES Immediate online approvals Purchasing process automation Quicker supplier responses

LOWER UNIT PRICES Improved quality of goods Lower inventory-carrying costs More competitive pricing

IMPROVED SUPPLY STRATEGY Supply base rationalization Global spend analysis Reduced risk of supply


Operational Procurement

Contract Management

Strategic Sourcing

Supplier Management

Process Automation

Process Simplification

Business Optimization

Innovation Empowerment

Benefits At Each Stage

“By strengthening supplier relationships, we negotiated deals that delivered greater value and drove down contract prices.”

Sea Containers

Sea Containers: 3- month reduction in procurement cycle

time

Sea Containers: 25% average cost savings against

existing contracts

Ericsson: 75% reduced

handling costs

Mahindra: 3-day reduction in inventory cycle time

Colgate-Palmolive: Improved contract compliance from

75% to 95%

Ericsson: 80% reduction in

purchasing cycle time

Mahindra: manufacturing cycle compressed form 4 weeks to 1 week

Pemex Gas: 72% reduction in

decision process for order placement

Steelcase: $5 million savings

in 1st year of online bidding

Pemex Gas: 6% drop in average 1-

year contract prices

Steelcase: 2-month

reduction in sourcing cycle

Pemex Gas: 70% reduction in

suppliers‘ sales cycle

BHP Billiton: Manage more than 70% of all

external spend

“… we improved the quality and speed of information flow, collaboration and our basis for decision making..”

Ericsson

“We (now) have far better visibility and control over our purchasing process.”

Colgate-Palmolive

“Quite simply, mySAP SRM offers us a better way of collaborating with our suppliers.”

Mahindra

“Executing our new strategies could only happen through SAP . . . it’s an enabler of integrated processes

Pemex Gas


Customers Quotes on SRM


700+ Organizations Run SRM


Over 80+ Live Customers in Asia includesC

ust

om

ers


Agenda



Roadmap ahead ..

Summary

ONGC Scenario


ONGC Scenario

Create Bid Invitation

Publish Bid Invitation

Bid Invitation Display

Domestic Bid

Submission

Foreign Vendor Bid

Bid Return

Bid Re- submission

Technical Bid

Rejection

Adjust Price Bid

Price Bid Opening

Bid Comparison

Report


Thank You!


Raj Kumar SinghSolution Architect

[email protected]

managing spend for continuous profitability with mysap srm 13 th feb. 2007

Documents

mysap srm13th

mysap srmsrmmysap srmsap

agendasap srm vision

supplier scorecard

supplier selfservice

monitoringsap ag

procurementsap ag

boundariessap ag