the sequel to savings: transforming source-to-pay ... richard has an extensive background in b2b...
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The Sequel to Savings: Transforming Source-to-Pay, Transitioning to Trusted Advisors
Presenter – Richard Waugh
Richard Waugh
VP Corporate Development, Zycus Inc.
• As Vice President for Corporate Development, Richard leadsstrategic initiatives in the areas of new product introduction,market development, thought leadership, analyst relations, andstrategic partner development programs.
• Richard has an extensive background in B2B E-Commerce. Hehelped launch GE's Trading Process Network (TPN), the first on-line Marketplace for Sourcing and Procurement. He was also Co-Founder of B2eMarkets, one of the first SaaS (Software as aService) Sourcing Suite providers and later covered the SupplyManagement market as an Industry Analyst for the AberdeenGroup.
540.454.5809
Presenter – Paul Stasko
Senior Director, Supply Chain Management
Curtiss Wright
Paul W. Stasko has been a member in good standing of ISM Pittsburgh for 11
years. Professionally, he has been working in Supply Chain for the past 12 of his
29 year career. Prior to working in Supply Chain, Paul held technical and
management roles in operations, all with Westinghouse / Curtiss-Wright in
Cheswick. His current title is Sr. Director, Corporate Supply Chain where his
team is chartered with bringing benefits of centralized procurement through
strategic sourcing to a decentralized business model. Paul holds a BSMET from
the University of Pittsburgh in Johnstown and a BSME from the University of
Pittsburgh.
Zycus Comprehensive Source-to-Pay Solution Suite
Zycus is among the only 3 Leaders in the Gartner’s 2017 Magic Quadrant for Strategic Sourcing Application Suites
Agenda
▪ Savings Still Matter
▪ S2P Value Levers
▪ Building the Business Case
▪ Case Study: Transforming S2P at Curtiss-Wright
▪ Sequencing Strategies
▪ Plot Twists – Anticipating and Managing Change
▪ Building the Brand
▪ Becoming a “Trusted Advisor”
▪ Promoting the Procurement Brand
Savings Still Matter
Source-to-Pay Technology Value Levers
Increase SUM – Discover Savings Opportunities
Higher Sourcing Throughput & Savings ID
Visibility & Compliance to Preferred Agreements
Rationalize Suppliers/Cleanse Master/Mitigate Risk
Track Finance-Approved Savings to P&L, Balance Sheet,
Cash Flow
Maximize Early Pay Discounts/P-Card Rebates
Reduce Transaction Process Cost
Reduce/Eliminate Maverick Spend
Source-to-Pay Technology Value Proposition
• Best-of-Breed S2P Technology Enables Best-in-Class Performance
• Maximum Benefits Achieved Through End-to-End Process Efficiency and Visibility
• ROI from S2P Technology Based on Incremental Improvement from Current Baseline to Best-in-Class Performance
Source-to-Pay Performance Benchmarks
SUM
Avg. – 57%
BIC – 91%
Spend Soured
Avg. – 47%
BIC – 67%
On-Contract
Spend
Avg. – 54%
BIC – 69%
Contracting Cycle
Avg. - 49 Days
BIC - 40 Days
Discount Spend%
Avg. - .002%
BIC - .11%
Cost per PO
Avg. - $17.37
BIC - $4.58
Maverick Spend
Savings
8%
Sourcing Savings
Avg. – 6.8%
BIC – 7.7%
Cost per Invoice
Avg. - $4.80
BIC - $2.27
P-Card Spend%
Avg. - .1.1%
BIC - 5.2%
Spend w/Line Item
Visibility
Avg. – 38%
BIC – 73%
Suppliers
w/Failing Scores
BIC – 3.8%
Sourcing Cycle
Avg. – 75 Days
BIC – 45 Days
Invoice Approval
Cycle
Avg. -16 Days
BIC - 3 Days
SM Productivity
Savings
20%
Suppliers per $1B
Avg. -10.838
BIC - 2,403
Source: Hackett Group Benchmarks Source: SpendMatters Benchmark
Source: Hackett Group Benchmark
Source: Aberdeen Group Benchmark
Source: Ardent Partners Benchmarks
Source: Ardent Partners Benchmark
Source: Ardent Partners Benchmark Source: Hackett Group Benchmark
Realized Savings – Best-in-Class Advantage
Best-in-Class• $1B Spend
• $2.5M Supplier Management Cost
• 75K POs
• 150K Invoices
Savings Management
Spend Analysis
eSourcing
Procure-to-Pay
Contract Management
Supplier Management
₊ 34% More SUM₊ 20% Incremental Spend Sourced₊ .9% Higher Savings Capture Rate₊ 15% Higher Compliance to Contract₋ 20% Lower Supplier Management Cost√ Best-in-Class Cost per Transaction√ Best-in-Class Discount Capture Rate
$200M Incremental Spend Sourced$15.5M Incremental Savings Identified
$10.7M Retained Sourcing Savings$.5M Supplier Management Cost Savings
$1.3M Transaction Cost Savings$1.1M Early Pay Discounts
-------------$13.6M Incremental Realized Savings
Best-in-Class Advantage
Source-to-Cash Cycle Time – Best-in-Class Advantage
Best-in-Class Achieve Higher
NPV of Savings Realized 53
Days Faster
Best-in-
Class
Industry
Average
45 DaysSourcing Cycle
75 Days
40 DaysContracting Cycle
49 Days
1 Days Order Cycle
2 Days3 Days Invoice Cycle
16 Days
89 Days
142 Days
RFX
Award
Contract
Order
Invoice
Pay
Case Study: Transforming Source-to-Pay at Curtiss Wright
Case Study: Transforming Procurement at Curtiss-Wright
Supply Chain Transformation Strategy
80%of our time is spent on only 5% of our spend!
Our focus is moved to where the vital spend is!
Pareto everything. Save on the “A” items and simplify the process on the “C” items.
ProCard™MRO Integration
P2P
Phasing Approach Follows Best Practice S2P Technology Sequencing
Spend analysis E-Sourcing SBM
Map external spendNegotiate Strategic Agreements
Manage complianceManage Supplier Relationships
Key Success Factors• Identify and use data from
relevant transaction systems
• Deduplicate and classify• Assign ownership of spend
categories
Key Success Factors• Promote a culture of
control and responsibility• Involve stakeholders in
category plans, work flow and templates
Key Success Factors• Build a pipeline of cost
reduction opportunities• Create a center of excellence• Make use of e-sourcing
mandatory
Key Success Factors• Segment supplier base to
rightsize management• Deploy solutions that support
supplier collaboration
CLM
VMSP2P
Source: Gartner “Best Practices for Sequencing Procurement Solution Investments” December 2014
Step 1 Step 2 Step 3 Step 4
Step 1: Deployed Spend Analytics to Achieve World-Class Spend Under Management
• CW SUM @ World-Class for Direct• Leveraging Spend Analytics to Target
World-Class for Indirect
• Normalized Spend Taxonomy Across 40+ Disparate ERPs/Part # Schemas
• Multi-dimensional Spend Cube – Supplier, Category, Part, $, Compliance
Benchmarks
Application
• Triage and Prioritize Savings Projects• Pinpoint Non-Compliance for Root Cause
and Remediation
Value
Direct Materials Direct Services Indirect Materials Indirect Services
Source: Hackett Group
Spend Analysis
Step 2: e-Sourcing Event Savings Fund S2P Transformation Program
• Direct vs. Indirect Spend – 75/25• Historical Cost Savings Correlate to
Industry Averages
• Prioritize Direct Materials due to Greater Spend Leverage
• Maximize Savings Impact by Balancing Scale ($, # BUs) with Ease of Execution
Benchmarks
Strategy
• Per Project Event Savings Exceed World-Class Savings Rate
• Utilizing Automation to Target World-Class Spend Sourced and Savings
Value
Source: Hackett Group
% of Spend Competitively Sourced
Cost Savings as % of Spend
Direct Indirect
eSourcing
Building the Brand
Step 3: P2P Transformation – Catalysts for Change
1 Better, Faster, Cheaper
A key component of the Finance Transformation is the ability to transition the end-to-end procure-to-pay process from a heavily manual and paper based environment to an environment that introduces best in class automation or EDI (Electronic Data Interchange) between our business partners.
2 Change from Cost Center to High-End Value Add
Re-engineer the P2P process to be a strategic advantage to:
• Create process efficiencies and improve effectiveness, and
• Enhance spend management, contract compliance, and cash management capabilities
3 Inextricable value partners
Critical to align strategies of procurement and payables to maximize the end-to-end value stream. Disparate strategies and lack of communication and transparency between AP and procurement prevents smooth processing of purchase orders and invoices.
4 Multiple touches vs. Once & Done
Based on the volume of paper that CW processes including invoices, paper checks, supplier contracts, exceptions and discrepancies, incongruent systems over AP and procurement produce excess costs, slow processing times, and inconsistent quality.
Procure-to-Pay
Expected Benefits of P2P Transformation
Key Features
• Easy-to-use, configurable & comprehensive P2P solution
• Artificial intelligence-based Guided buying allowing end-users to pick the right items, and select the right category, suggest the right suppliers & route to the
appropriate buyer
• Auto-flipping- Eliminates duplicate data-entry by Auto flipping Requisition-to-PO & PO-to-Invoice
• 2-way, 3-way Auto match - Rules-based 2-way and 3-way auto-matching ensures accurate invoice payment
Key Benefits
• Rapid and mass user adoption- near zero training software
• Faster process turnaround – considerably reduced Requisition to PO cycle
• Potential for on-the-fly spend analysis for all purchases
• Increase compliance & visibility into purchases across the organization
• Accelerated implementation timelines – set-up time expedited through on-screen configuration and customization without any programming
Critical Success Factors
P2P transformation drives significant bottom-line savings for CW:
• IF systems change is accompanied by process change
• IF compliance is mandated from top down
• IF exceptions are managed
• IF the right path forward in prioritization of BUs and Categories is selected
• IF the user interface is simple and intuitive to drive user adoption
Must-haves for P2P Success:
• Standardized process – configurable (not customized) to BU requirements
• Single channel for all spend – Direct as well as Indirect
• Payback in Year 1
• Digitization of PO’s and Invoices
Step 4: Create a Culture of Compliance
Savings Management
Contract Management
Supplier Management
• Aggregate agreements in central, searchable repository
• Proactively monitor compliance – preempt auto-renewals
• Streamline on-boarding, governance
• Standardize performance and risk management disciplines
• Establish consistent savings project methodologies
• Create transparent savings pipeline visibility
Building the Brand
Hierarchy of Procurement Roles
Source: The Hackett Group
Achieving Trusted Advisor Status
77%
64%
Consistently deliver on the basics
Hire and retain high-caliber staff
Build better awareness of procurement’s services
Discover and recommend innovative suppliers
Prove value through small projects
Improve the overall buying experience
Other
N/A
Develop category management strategies
Deliver high-quality market insights and research
61%Increase agility
Cost quality performance
Which capabilities will help the most to achieve this status?
Credible with people who matter to me
Brings knowledge and insight
Excellence
Source: Key Issues Study, The Hackett Group, 2016
Stakeholder Perceptions of Procurement’s Value
Source: The Hackett Group, Procurement Stakeholder Survey, 2015
30%
24%
20%
20%
34%
35%
16%
21%
Peer Group
World Class
Administrator Gatekeeper Negotiations/Sourcing Expert Valued Business Partner
Higher Value Correlates to Performance
3.5%
2.6%
2.1%2.2%
1.2%
0.9%
0.7%0.1%
Valued Business PartnerNegotiations/Sourcing ExpertGatekeeperAdministrator
Cost Reduction Cost Avoidance
Savings and the Current Role of Procurement
Source: The Hackett Group, Procurement Benchmark, 2015
Understand
Engage
Define
Create
Understand the key areas of importance
for internal customers
Define details of processes and the
new role of procurement
Create a distinctive brand for your programEngage and communicate with
stakeholders on an ongoing basis
4 Steps to Re-branding Procurement
Branding – Technology Platform
Promoting the Brand: The Elevator Speech
P2P is a Corporate mandate to Automate, Simplify and Standardize our Purchasing and Payables
P2P is a web based common platform across all of CW
Requisitioners use web platform – to complete an on-line purchasing experience (like Amazon purchase)
Purchasing rules and controls are built into process
No need to route to purchasing/buyer
Approvers receive notification with all appropriate details
Easy approvals include mobile devices
Goal is to save money via better contract pricing, compliance to existing contracts, elimination of paper
Goal is to make the process easier, faster, cheaper
We are “All In” as One Curtiss-Wright
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