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B2B E-BONDING WITH SUPPLIERSFOR GLOCO CORPORATION

Joseph Doud, Scott Kearney, Dmitry Rumberg, Deborah Watson

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Agenda

Introduction

Executive Summary

Business Requirements

Technical Specification and Prototype

Implementation Plan

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INTRODUCTION

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Roles and Responsibilities

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We are a consulting team, located in Cambridge, MA.

We specialize in business analysis and implementation of Supply Chain Management (SCM) platforms.

Our key expertise is in streamlining, integrating and automating inter-company processes by providing e-bonding solutions.

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GLOCO

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GLOCO is one of the world’s largest medical equipment manufacturers.

Based in the USA, GLOCO employs 29,000 people across 110 sites globally

Manufacture and provide support for medical equipment that it sells to customers in the hospital, medical service provider, and insurance industry.

In 2010, the company posted $7 billion in revenue.

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EXECUTIVE SUMMARY

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GLOCO Business Problem

GLOCO published an RFP to automate its procure-to-pay (P2P) processes via Business-To-Business (B2B) e-bonding with suppliers of medical equipment parts. GLOCO’s current work flow typically involves the following steps:

• Supplier selection research

• Negotiate individually with potential suppliers

• Email order info

• Verify order details over email

• Receive Invoice from Supplier, forward invoice to Accounting

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MedTech Proposed Solution

B2B e-bonding process between GLOCO and its suppliers. GLOCO and the suppliers will use an online portal as a communication channel for procure-to-pay processing. GLOCO’s new work flow will consist of the following steps:

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Select Supplie

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Place Order

PO sent and

Invoicing

Automate

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BUSINESS JUSTIFICATION

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Simplifies ordering, issue reporting, status review, and inventory checks.

Provides managers real time and historical reporting.

Reduces manual data entry and associated labor costs.

Improves accuracy and timeliness of orders.

Cumulative cost savings from strategic sourcing.

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PART 1: BUSINESS REQUIREMENTS

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Business Requirements

1. SUPPLIER RELATIONSHIP ➠ 2. INVENTORY ➠

GLOCO’s Supplier relationship managers GLOCO’s Stockroom and Inventory clerks

● Maintain supplier contact records

● Pursue supplier contracts

● Track GLOCO’s relationship to supplier

● Track and provide inventory info

● Provide “inventory low” alerts

● Request part replenishment

3. ORDERING ➠ 4. COMPLETION

GLOCO’s Inventory Managers and Suppliers GLOCO’s Stockroom and Accounting

● GLOCO orders part via:

○ Existing contractual terms

○ Request for Quotation (RFQ)

● GLOCO creates Purchase Order (PO)

● Supplier ships part & provides invoice

● Part is received & receipt recorded

● PO reconciled with shipment

● PO reconciled with invoice

● Payment issued to supplier

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Business Features

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Streamlines Inventory Management

Streamlines Supplier Relationship Management

Streamlines the Ordering and Completion processes

Provides new Integration Benefits

Provides new performance metrics.

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As-Is Business Process

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To-Be Business Process

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SOLUTION COST

• SaaS e-procurement network license

• Amount of software customization

• Employees needed for planning, implementation, and maintenance

• Training materials

• Any hardware and IT infrastructure expenses

Solution Cost Component System Integration Cost Annual Maintenance Cost

Software $2,000,000 $500,000 (Support)

Consulting $2,500,000 $1,500,000

Misc. Items (i.e. Training) $50,000 $5,000

Total Costs $4,550,000 2,005,000

Total Year 1 Cost $6,555,00015

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SOLUTION BENEFITS

• Reduces spending• Drives compliance to strategic agreements• Speeds the process of invoice matching

• Example:e-procurement helps you to figure out what to order

and from whom. This can save up to 20% on purchases.

The proposed procure-to-pay solution will support and streamline the existing process, while at the same time providing completely new capabilities that were previously not feasible.

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SUCCESS METRICS

To declare success on an e-procurement project, success must be measured and declared along these four processes.

The spending analysis process

The purchasing process

The strategic sourcing process

The supply base management process Following the implementation of an e-procurement solution, every Key Performance Indicator (KPI) potentially improves.

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PART 2: TECHNICAL SPECIFICATION AND PROTOTYPE

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Software Solution

Feature (Y = 1 pt) Cloud Hybrid LocalLocal, native DB Access N N YLocal DB access via ERP Y Y YApplication is globally availability Y Y YApplication consistent between GLOCO sites Y Y NCentralizes procurement data Y Y NApplication is available today Y N NDoes not require additional system administrators Y N NDoes not require maintenance and updates Y N N

Scores (highest is best) 7 4 3

Feature (Ranked 1 to 3 pts) Cloud Hybrid LocalImplementation simplicity 3 2 1Upfront cost (licenses) 3 2 1Ongoing cost (licenses) 1 2 3Ongoing cost (maintenance) 3 2 1

Scores (highest is best) 10 8 6

A cloud-based system was selected because it will provide a best-of-breed solution in the shortest amount of time with minimal impact on GLOCO's IT staff.

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TAKE OneSCM - a best-of-breed solution

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OneSCM • TAKE Supply Chain provides service to the pharmaceutical and health care industries.

Experience • Merit Medical Systems, an OEM at Merit.com and MeritOEM.com, used TAKE Supply Chain to implement a similar solution.

Benefits• More fixed costs• Schedule measured in months not years• Robust technology infrastructure,• Experienced with medical technology supply

chain solutions• Reduced chance of failure.

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Software Product Selection

Requirements Module

Supplier Relationship

Access supplier contact records Core Data

Pursue supplier contracts Procure-to-Pay

Track GLOCO’s relationship to supplier Core Data

Procurement

GLOCO orders part via existing terms Procure-to-Pay

GLOCO orders part via RFQ Procure-to-Pay

GLOCO creates Purchase Order (PO) Procure-to-Pay

Supplier ships part and provides invoice

Procure-to-Pay

Paying

Part is received and receipt recorded Procure-to-Pay

PO reconciled with shipment Accounts Payable

PO reconciled with invoice Accounts Payable

Payment issued to supplier Accounts Payable21

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Architectural Approach

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Work Flow Integration

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Prototype - Login screen

Login screen: the screen all users are presented with when they visit the OneSCM web address.

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Prototype - Supplier Registration

Supplier Registration Form: a look at the UI and sample fields, which are included in a supplier record. These fields can be customized to need.

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Prototype - Purchase Orders

Purchase Orders Center: Example listing of PO’s entered into the system. GLOCO would see a list of all PO’s it has issued, whereas a supplier would see only PO’s addressed to it.

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Prototype - Invoicing

Invoice Center: List of invoices delivered from suppliers. Again GLOCO has access to the complete list. Suppliers have access only to invoices they have created.

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PART 3: IMPLEMENTATION PLAN

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Project Governance Structure

Steering Committee and Change Board

(Zoya Kinstler, Takayuki Iida)

MedTech Project Team

Project Manager(Deborah Watson)

Executive Project Sponsor

(Zoya Kinstler)

Deployment Specialist

(Joseph Doud)

Senior Consultant(Scott Kearney)

Technical Architect(Dmitry Rumberg)

GLOCO Subject Matter Experts

GLOCO PMO

OneSCM Implementation Consultants

MedTech Subject Matter Experts

MedTech Resources

GLOCO Resources

TAKE Solutions Resources

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Project Management: Project Phases

The project management approach to be used is based on the Guide to the Project Management Body of Knowledge (PMBOK Guide) and has five standard phases including:

• Initiating• Lanning• Executing,• Monitoring and Controlling,• Closing

Initiating Planning Executing Monitoring Controlling Closing

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Project Management: Project Schedule

ID Task Name Start Finish DurationJan 2012 Feb 2012 Mar 2012

1/1 1/8 2/5 3/4 4/1

1 2.2w1/16/20121/2/2012Initiating

2 3.4w2/1/20121/10/2012Planning

3 9w3/30/20121/30/2012Executing

4 9w3/30/20121/30/2012Monitoring and Controlling

5 1.4w4/9/20123/30/2012Closing

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Project Management: Deliverables

Project Management Level Deliverables Project plan Resource plan Financial plan Quality plan Risk plan Communications plan Procurement Plan

Project Deployment Deliverables

Deployment process documentation Processes and procedures for onboarding suppliers Standardized OneSCM Computer Based Training (CBT)s Service Desk processes and procedures Knowledgebase data for process information

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Project Management: Project Issue and Risk Management

Issue and Risk management will be managed by the project manager using a standardized Issue and Risk log.

Due to the short timeline of the project, Issues and Risks will be reviewed formally on a weekly basis with the project stakeholders.

Any urgent issues will be addressed as they are identified.

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Number Risk/Issue Description

R001 Resource shortage

GLOCO resources are currently focused on other ERP activities and this could cause us to miss our initial schedules

R002 Pilot supplier Identification delay

GLOCO has not selected pilot suppliers - this must be done by the required date or project will be delayed

R003 OneSCM patching

We need to ensure we pay attention to the OneSCM patching schedule so that the roll-out date doesn't coincide with the OneSCM patch window

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Project Deployment

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Deployment will take place for a single, well defined region, the United States.

Deployment will require the definition of a reporting structure, user roles, escalation clauses, as well as a release schedule.

Deployment will require the definition of supplier product lists and customer definitions.

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Project Deployment - Training

OneSCM was selected for its ease of use however users still sometimes benefit from guidance.

A “train the trainer” approach, with OneSCM consultants and trainers, is offered to key end users at client sites and at designated OneSCM Learning Centers.

If requested, the OneSCM team will create job aids and videos to teach the information necessary for deployment.

Each OneSCM user will receive information specific to their job role, including business processes specific to MedTech.

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Project Deployment – User Adoption

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OneSCM will work with us to encourage and facilitate user adoption, both internally and externally.

GLOCO will call the suppliers, suggesting the features and the savings of the OneSCM solution.

OneSCM’s experienced consultants will encourage and guide the supplier through the process of adoption, giving sound advice and access to a library of informative videos.

Guidance will help the suppliers to convert their catalogs and other data into the OneSCM system.

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Project Deployment – Pilot

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Gradual transition for suppliers and MedTech employees

Includes 10 key

suppliers

Post testing user survey

Key end users will be trained and monitored

Optimize release to the wider community of end users.

Feedback

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Project Deployment – Testing

Customized user acceptance tests, with defined the range of severity levels.

Suppliers and the MedTech employees, will participate in the user acceptance testing tests.

Acceptance tests will be designed to ensure that user requirement specifications, including any legal and contractual requirement are fulfilled.

Additional load and functional tests will ensure that the expected results and performance are appropriate for production use.

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Project Deployment – Rollback

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Rollback

• During the pilot, we will run the old business processes for 12 weeks alongside the new.

• All data will be synced into both systems using a customized script.

• If the transition fails, as indicated by our user feedback and acceptance test results, our roll out, limited to a specific region and a small pilot, will be undone, but the old business processes will remain.

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Post Deployment Activities – Measuring Success

KPI: Spending Analysis• Staffing Requirements - Reduce by 50%• Cost per Order -Reduce by 10%+• Number of Escalated Procurement Inquiries - Reduce by 80%

KPI: Purchasing • Order-to-Ship time - Reduce by 75%• Ship-to-Delivery time - Constant• Order-to-Delivery time - Reduce by 40%• Payment Render Time - Reduce by 80%• Order per Month - Improve peak capacity by 50%• Number of Corrections Made to Orders - Reduce by 50%

KPI: Strategic Sourcing• Time Required to Onboard Suppliers - Decrease over time• Percentage of Suppliers Onboarded - Reach 80%

KPI: Supply Base Management • Accuracy of Supplier Data - Increase over time

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Post Deployment Activities – System Upgrades and Maintenance

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Connectivity for procurement personnel

Workstation provisioning and patching

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Post Deployment Activities – System Upgrades and Maintenance (cont.)

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OneSCM upgradesPerformed by OneSCM

OneSCM will notify GLOCO

CAB review

ERP upgrades and DeploymentsVerify compatibility with OneSCM

CAB review

Support Considerations

Support Categories:

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Requirement: Supplier’s ERP systems must be up and running.

Fallback: Supplier monitors alternative contact methods such as email for incoming orders.

Requirement: GLOCO’s ERP systems must be up and running.

Fallback: GLOCO’s accounting team reverts to a paper PO/Invoice process; any PO’s or Invoices that require entry to into GLOCO’s ERP are filed until ERP functionality is restored.

Requirement: Email must be functional.

Fallback: GLOCO and/or its suppliers must resort to alternative communication methods such as fax, phone, or text messaging

Post Deployment Activities – Fallback Processes

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Post Deployment Activities – Disaster Recovery Plan

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• Fallback: GLOCO and its Suppliers must revert to a paper-based PO/Invoice system and file the paperwork. Once OneSCM service is restored, PO data will be manually entered into OneSCM. Invoice data will retrieved automatically via the database connector to GLOCO’s ERP system.

Requirement: The OneSCM portal itself must be up and running.

• Fallback: GLOCO and its Suppliers must take the combined actions of the previous two fallback measures: loss of email and loss of OneSCM functionality.

Requirement: Internet connectivity must exist.

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Post Deployment Activities – Recovery Processes

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GLOCO ERP recovery plans must account for:

• Restoration of ERP invoicing data from backup• Restoration of network and access privileges to enable OneSCM’s ERP

connector

OneSCM recovery plans must account for:

• Restoration of operational procurement data from backup• Reestablishment of ERP connections

Post-deployment Handoff

• Transfer of primary business contacts at OneSCM and/or Suppliers• Supplementary two-day review/training session after project conclusion

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Questions

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