moving from transactional to strategic procurement
DESCRIPTION
Maximizing Business ValuesTRANSCRIPT
Jerker GunnarssonJerker GunnarssonMarch 9th, 2012March 9th, 2012
SSOW Orlando 2012 – Jerker Gunnarsson Page
Deutsche Post DHL - Our strength in numbers
We are a logistics powerhouse with a phenomenal worldwide presence
220 5%
500,000 1million
We have a truly global operation, with locations in
different countries and territories
We touch approximately
of the global trade volume through our extensive network and infrastructure
We employ more than
Employees, and are one of the top ten biggest employers worldwide customer interactions every hour
We manage more than
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SSOW Orlando 2012 – Jerker Gunnarsson Page
Deutsche Post DHL Facts & Figures
Global Business Services (GBS)Global Business Services (GBS)
MAIL•82 high-tech mail sorting centres•80,000 mail delivery staff•34,600 vehicles for mail delivery•~ 3,300 delivery bases•~ 54,700 delivery districts•Nearly 40 million households•108,000 letter boxes•69 million mail items every day•930,000 P.O. boxes•More than 12,500 retail outlets
EXPRESS•Operations in 220 countries and territories•More than 124,000 Express employees•36 express hubs worldwide•More than 4,700 express facilities worldwide•420 aircraft operating on behalf of DHL Express•Around 72,000 express vehicles
GLOBAL FORWARDING
FREIGHT•~ 11,000 employees•More than 40m tons transported per year•More than 160 Freight terminals in Europe
SUPPLYCHAIN
•Facilities in over 3,000 locations with more than 148,000 employees•Around 1,400 logistics centres, terminals and warehouses worldwide•35,000,000 sqm warehouse storage capacities worldwide•More than 30 countries covered
Corporate Center (CC)Corporate Center (CC)
DP DHL FinancialKey Indicators (2010):Revenue: 51.5 bn €Net Profit : 2.5 bn €
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SSOW Orlando 2012 – Jerker Gunnarsson Page
Key enablers for a successful Purchasing organization
How we organize ourselves to be cost efficient while improving Business Value
How we organize ourselves to be cost efficient while improving Business Value
How we organize ourselves to be cost efficient while improving Business Value
How we organize ourselves to be cost efficient while improving Business Value
The Processes we implement to optimize performance of the organization
The Processes we implement to optimize performance of the organization
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BUSINESS PROCESSES
ORGANIZATIONAL STRUCTURE
TECHNOLOGY
Success Depends on Us Covering ALL THREE of These Areas!
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SSOW Orlando 2012 – Jerker Gunnarsson Page
Global Business Services –Powering Business from the Inside
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DP DHL bundled in 2006 all major internal support functions in a new division “Global Business Services” to streamline and strengthen service and efficiency.
GBS – a worldwide
organization
• ~10,000 FTE Europe (incl. Germany)
• ~2,000 FTE Americas• ~1,000 FTE Asia Pacific
220 Countries
• ~10,000 FTE Europe (incl. Germany)
• ~2,000 FTE Americas• ~1,000 FTE Asia Pacific
220 Countries
Global CoverageGlobal CoverageGlobal Coverage
• IT Services• Finance Operations• Real Estate• Procurement• HR Operations• Legal• Risk & Insurance• Fleet• Business Consulting• Global Customer Solutions
• IT Services• Finance Operations• Real Estate• Procurement• HR Operations• Legal• Risk & Insurance• Fleet• Business Consulting• Global Customer Solutions
10 Service Lines 10 Service Lines 10 Service Lines
• 3 Global Data Centers• 5 Regional Accounting Centers• 350 milo square feet properties• >90,000 Fleet managed
• 3 Global Data Centers• 5 Regional Accounting Centers• 350 milo square feet properties• >90,000 Fleet managed
Basic VolumeBasic VolumeBasic Volume
SSOW Orlando 2012 – Jerker Gunnarsson Page
Building the House of Procurement
The
Who
The W
hat
Climbing Trees
Steven R CoveyThe 7 Habits
of Highly Effective People
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SSOW Orlando 2012 – Jerker Gunnarsson Page
Align Complimentary Roles
• Conduct standardized sourcing process
• Perform spend analytics/benchmarking
• Utilize advanced eSourcing platform
• Leverage volumes and best practices
•• Establish demand Establish demand requirementsrequirements
•• Define initial specificationsDefine initial specifications
•• Transfer technical Transfer technical understanding understanding
•• Communicate customer Communicate customer needsneeds
PROCUREMENTBUSINESSBUSINESS
faster decision making supplier bid management templates
documented audit trail supported end-end solution contract management
standardized sourcing process risk database spend analytics
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SSOW Orlando 2012 – Jerker Gunnarsson Page
Cost Levers from Shared Services
• Process harmonization• Best practice integration• Deployment of end-to-end process
view• ERP deployment• IT system standardization
• Process harmonization• Best practice integration• Deployment of end-to-end process
view• ERP deployment• IT system standardization
Standardization and AutomationStandardization and AutomationStandardization and Automation
• Deployment of efficiency-enhancing innovative technologies
• Simplification of the organization and effective governance
• Service management drive
• Deployment of efficiency-enhancing innovative technologies
• Simplification of the organization and effective governance
• Service management drive
ConsolidationConsolidationConsolidation
• Leverage of off-shore / lower cost location
• Leverage of off-shore / lower cost location
Wage ArbitrageWage ArbitrageWage Arbitrage
Cos
t Bas
elin
eC
ost B
asel
ine
Futu
re
Bas
elin
eFu
ture
B
asel
ine
Wage Arbitrage
Standardization and Automation
Consolidation
Sources: Accenture – Raising the bar – Accenture’s Global Service Center Organization
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SSOW Orlando 2012 – Jerker Gunnarsson Page
Purchasing MonitoringPurchasing Monitoring
Procurement Solution – Strategic and Operational Procurement
Demand
Sourcing(Strategic procurement)
4
3
2
1
5
1 2 3 4 5 6 7Contract & CatalogueManagement
(Demand Identification)Requisitions Approval Purchase
OrderDelivery InvoiceInvoice ReconciReconci
liations*liations*PaymentPayment
Get ToolPurchasing
(Operative procurement)Transactional Transactional MarketplaceMarketplace
The Procurement process consists of two major parts. These are Sourcing (strategic Procurement) and Purchasing (operative Procurement).Where Sourcing comprises five steps that are considered continuous prerequisites to the following seven steps of Purchasing.
The Procurement process consists of two The Procurement process consists of two major parts. These are Sourcing (strategic major parts. These are Sourcing (strategic Procurement) and Purchasing (operative Procurement) and Purchasing (operative Procurement).Where Sourcing comprises five Procurement).Where Sourcing comprises five steps that are considered continuous steps that are considered continuous prerequisites to the following seven steps of prerequisites to the following seven steps of Purchasing.Purchasing.
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SSOW Orlando 2012 – Jerker Gunnarsson Page
Optimizing Operational Procurement –US & CA case study
Expanded eProcurement “light” with standardized Purchasing processCentralization of Operational staff to headquartersCatalog solutions for all high transaction itemsSuper users with authority to transact with preferred vendors under “sandbox”conceptP-card with spending limits and blocked merchants for all low value ad hoc transactionsReduction in Operational Purchasing cost by >50%
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SSOW Orlando 2012 – Jerker Gunnarsson Page
Internally – KPI Balance Scorecard
Development of KPIs need to consider the balance of the expected performance of the Procurement organization
Development of KPIs need to consider the balance of the expected performance of the Procurement organization
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SSOW Orlando 2012 – Jerker Gunnarsson Page
Externally – Procurement Dashboard
The Procurement Dashboard is an automated report pushed from a data warehouse to Business Partners
directly
The Procurement Dashboard is an automated report pushed from a data warehouse to Business Partners
directly
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SSOW Orlando 2012 – Jerker Gunnarsson Page
Procurement Solution – Tools
GeT GeT eProcurement eProcurement
SystemSystem
ee--MarketplaceMarketplace
Hosted Catalogs Hosted Catalogs / Punch/ Punch--out out
CatalogsCatalogs
Catalog & nonCatalog & non--catalog via catalog via
same same requisitionrequisition
Global Global Sourcing Sourcing
ApplicationApplication
Strategic Strategic SourcingSourcing
Reverse eReverse e--AuctionAuction
Supplier Supplier DatabaseDatabase
Procurement Procurement Data WarehouseData Warehouse
Reporting Reporting capabilities for capabilities for
the wholethe whole
““Procure to Pay Procure to Pay ProcessProcess””
Spend CubeSpend Cube
Information Information ManagementManagement
Document Document SharePointSharePoint
Contract Contract Repository/ManaRepository/Mana
gementgement
Supplier Supplier ManagementManagement
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SSOW Orlando 2012 – Jerker Gunnarsson Page
Backend ERPs
Procurement content and transaction management
https/OCI or cXML
https/cXML HTML
AS2
cXML
EDI
EmailCSV
cXMLPaper
• Item search/Punchout• eCatalog Management• Content Enrichment
• Item search/Punchout• eCatalog Management• Content Enrichment
Procurement ContentProcurement Content
• Transaction Routing• Vendor Self-Service Portal • Transaction Routing• Vendor Self-Service Portal
PO & Inv AutomationPO & Inv Automation
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SSOW Orlando 2012 – Jerker Gunnarsson Page
eProcurement “Small country solution”
eProcurement “Standard”eProcurement eProcurement ““StandardStandard”” eProcurement “Small Country”eProcurement eProcurement ““Small CountrySmall Country””
MasterdataMasterdata• Automatic synchronization of Master data
from Finance and ERP backend: Cost Centers, GL-coding, Approval workflow, Vendor Master data
• Manual generation and updating Master data into eProcurement tool. Manual mapping of master data between eProcurement and Finance backend
Invoice reconciliation
Invoice reconciliation
• Automated Matching of invoice with PO and Goods Receipt
• Solving of discrepancies
• Manual matching of POs to invoices and Goods receipts
InterfacesInterfacesAutomatic replication of:•PO document to backend•Goods Receipt documents
• No Materials mgmt module needed, PO and GR documents stored only in eProcurement database
Process coverageProcess coverage
• Non-stock• Assets The details of the PO (items, ordered
price, received quantities) will be displayed• Flexible Services• Fixed Services• Leasing• Stock reservations• Stock replenishment
• Non-stock• Assets• Flexible Services• Fixed Services
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SSOW Orlando 2012 – Jerker Gunnarsson Page
Conclusion
• Evaluate technology options and optimize usage of existing tools
• Redefine scope for eProcurement coverage to fit all all sizes of organizations and wallets
• Evaluate technology options and optimize usage of existing tools
• Redefine scope for eProcurement coverage to fit all all sizes of organizations and wallets
• Implement Shared Services Structure to drive cost efficiencies and synergies.
• Maintain Business Partner intimacy and clarify roles and responsibilities
• Implement Shared Services Structure to drive cost efficiencies and synergies.
• Maintain Business Partner intimacy and clarify roles and responsibilities
• Standardize product offering/processes
• Consolidate and Automate Operational Procurement (not necessarily outsource)
• Implement KPIs and scorecards to drive behaviour
• Standardize product offering/processes
• Consolidate and Automate Operational Procurement (not necessarily outsource)
• Implement KPIs and scorecards to drive behaviour
BUSINESS PROCESSES
ORGANIZATIONAL STRUCTURE
TECHNOLOGY
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SSOW Orlando 2012 – Jerker Gunnarsson Page
Continuously Improving on Our Priorities
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SSOW Orlando 2012 – Jerker Gunnarsson Page
THANK YOU
Questions
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