Published on March 6, 2014
"Change" Is the New Normal - Building a Sustainable Strategic Sourcing Program Speakers • Johan Duba – CSC • Wen Buell – Avon Products • Craig Fischer – Las Vegas Sands Moderator: • Sundar Kamakshisundaram – Ariba, an SAP Company #AribaLIVE @ariba
Agenda • • • • 2 Introduction Panel Discussion Key Takeaways Q&A © 2014 Ariba – an SAP company. All rights reserved.
The Panel Team Speakers: Johan Duba – CSC Wen Buell – Avon Products Craig Fischer – LV Sands Moderator: Sundar Kamakshisundaram 3 © 2014 Ariba – an SAP company. All rights reserved.
Change Is the “New Normal” Inevitable 4 Accelerates Innovation © 2014 Ariba – an SAP company. All rights reserved. Improves Agility
Global Trends Are Driving Change in Sourcing and Procurement 5
Top Challenges for CPOs 61% of you will have increased cost savings targets 44% of these targets will be greater than 5% Creating procurement process efficiencies is the top priority for CFOs and CPOs Source: 2012 CPO Agenda, Aberdeen Group 6 © 2014 Ariba – an SAP company. All rights reserved.
Key Levers to Maximize Savings • • • • 7 Increase “Spend Under Management” (SUM) Accelerate Strategic Sourcing Efforts Drive Contract Compliance to Prevent Leakage Practice Continuous Improvement © 2014 Ariba – an SAP company. All rights reserved.
Agenda • • • • 8 Introduction Panel Discussion Key Takeaways Q&A © 2014 Ariba – an SAP company. All rights reserved.
ARIBA LIVE Sourcing Breakout session Johan Duba @JDuba01 March 18, 2014 CSC Proprietary and Confidential
Agenda • Overview of CSC • Sourcing Roll-out @ CSC • Lessons Learned • Next Steps CSC Proprietary and Confidential 10
Overview of CSC • CSC is a global IT services powerhouse. • Solutions for 6 Major Industries: – Chemical Energy and Natural Resources, Technology & Consumer, Manufacturing/Aerospace & Defense, Healthcare, Financial Services, Public Sector • Truly Global: – 2,500 Enterprise clients, 70 countries, six continents. • Outer Space – Fix the Hubble’s Primary Camera • By the Numbers: – 96,000 Employees, #162 on the Fortune 500, 100+ Global Alliances, $15.8 Billion in Revenue, 50-Year History CSC Proprietary and Confidential 11
Realizing the Vision of Finance APPROACH • • • • • Standardize end-to-end processes and modernize systems Dedicate experienced process specialists from Finance Leverage Shared Services and Centers of Excellence Enhance skills sets throughout Finance Leverage CSC go-to-market offerings PRIMARY OUTCOME: SECONDARY OUTCOME: FINANCE ENABLES THE BUSINESS Finance as a valued, trusted advisor and business partner, supporting CSC to achieve its market leadership and profitability goals with advanced analytics and decision-support capabilities, while ensuring strong controls with redefined roles: • Strategists • Operators • Stewards CSC Proprietary and Confidential CSC GO-TO-MARKET • Utilizes CSC’s portfolio of services from initial strategy through run and maintain • Enables proactive anticipation of customer issues with compelling and competitive solutions • Serves as a reference for transformation market opportunities 12
Ariba Sourcing and Contracting BEFORE NOW Multiple System Single Global Tool Contract Databases Contract Redlines • Centralized system for all sourcing events, (RFP’s, Auction’s) and for the creation, execution and storage of contracts. • On-line collaboration platform from business units, Supply Chain and Suppliers. • Enables consistent business rules, approvals, contract templates, project management and a single contract repository. Contract Approval Tool Project Management Global Supply Chain • Manual Project Reporting • Regional processes, templates tools • Manual business processes Project Management Executive Sponsors Mike McCarty, Rahul Shah CSC Proprietary and Confidential Sourcing Contract Supplier Contract Events Templates Collaboration Approvals Contract Dashboard Repository Reporting Program Management Ken Pierce, James Best 13
Source to Settle Business Process Opportunities in Sourcing Business Problem Unleveraged, non-aggregated spend affects CSC cost and pricing Current State Future State Multiple Systems Global visibility to leverage volume discounts Ariba funnels purchasing to negotiated contracts Controlled view of spending Single, simple, and monitored Up to 17 approval steps Difficult spend tracking and analysis Insufficient use of volume discounts Source to Settle Sourcing Requisition to PO Receiving and Inventory CSC Proprietary and Confidential Accounts Payable Source to Settle Master Data Spend Analysis Travel and Expense EEDM Catalog 14
Program Is Moving Aggressively Forward Realization May 2013 to Mid-2015 BAA Fall 2012 • Harmonized end-to-end processes • High-level architecture Global Blueprint Spring 2013 • Mapped global processes and functional requirements to standard SAP Detailed Design May to Sep 2013 Build Test Deploy Multiple Releases and Deployments • Localization • Detailed design for releases • Business Impact Assessment Key Realization Milestones Successful deployments of: • Target setting & labor planning (BPC) • Sourcing & contracting (Ariba) Remaining activities: • Complete build and test global solution • Data cleansing & conversion • Initial deployment of global solution • Two large deployments Project & Change Management CSC Proprietary and Confidential 15
Lessons Learned Next Steps • Significant Investment in Training • Regional / Local Contract Templates – Partnered with Ariba – Super users & Project team supported training – 2 day required training for all Global SCM staff • Spend Information Performance Management (SIPM) • User Adoption • Business Process Improvement • Reporting Enhancements • Create “Envy” of success – Target early adopters – Create Win’s and Hero’s CSC Proprietary and Confidential 16
Thank You! CSC Proprietary and Confidential March 6, 2014 17
"Change" is the New Normal: Building a Sustainable Strategic Sourcing Program Wen Buell Sr. Sourcing Analyst Global Sourcing Center of Excellence
Corporate Overview Avon, the company for women, is a leading global beauty company with nearly $11 billion in annual revenue. As one of the world's largest direct sellers, Avon is sold through more than 6 million active independent Sales Representatives. Avon products are available in over 100 countries with a product line including color cosmetics, skincare, fragrance, fashion and home products, featuring such well-recognized brand names as Avon Color, ANEW, Skin-So-Soft, Advance Techniques, Liz Earle, and Mark
Product Portfolio Beauty Whether it’s industry-leading cosmetics, age reversing skin and hair care, or ground breaking fragrances, Avon has a proven history of delivering first-to-market beauty technologies, making the company a perennial game-changer. Time and again, Avon and its global team of scientists have led the industry in giving consumers breakthrough products that marry beauty and innovation. Lightadjusting makeup, more durable mascara, revolutionary anti-aging skincare products. The list goes on and on. Simply put, Avon offers women around the globe products that help them look and feel their best… Fashion & Home Avon Fashion & Home includes trend-right, must-have pieces. And they're the perfect way for a woman to reward herself and bring moments of beauty and delight to her friends and family. The category includes jewelry, watches, accessories, clothing, intimate apparel, house wares, as well as men's and children's wear. Avon jewelry and accessories add that all-important finishing touch, allowing a woman to create a style all her own. It's accessible glamour that gets noticed…
Our Approach to Build a Sustainable Sourcing Program People Establish Global category management and strategy development approach Clear identification of global and regional lead roles and initiatives Value Technology Process Deliver year over year value (cost savings and avoidance) Implement iSource globally for 100% of applicable spend Significant progress toward 100% Spend Under Management (SUM) Leverage Ariba Spend Visibility for spend reporting and savings tracking Ariba Contract management as the single repository for contracts 22 Consistent approach to benefits tracking and reporting Promote early engagement with Sourcing in business planning and strategies Manage creation of new supplier relationships in eSIM
Strategic Source-2-Contract Cycle USE KNOWLEDGE TO ESTABLISH AND ACHIEVE GOALS ANALYZE & SYNTHESIZE DERIVED INFORMATION Contract Management Sourcing GIVE MEANING TO OBTAINED DATA Spend Visibility Procurement OBTAIN RAW FACTS 23
7 – Step Sourcing Process 1 7-Step Strategic Sourcing Process 4 6 3 5 2 Analyze category spend Determine business needs 1 Understand internal spend 2 Understand current & future requirements Analyze supply markets 3 Understand supply market Ariba Spend Visibility Helps Answer: • • • • 24 What products/services am I buying? Who am I buying products/services from? What are my spending trends? Where can I better leverage my spend? Develop category strategy 4 Decide most appropriate execution strategy Select vendors, negotiate agreements 5 Conduct aggressive negotiations and select suppliers Plan transition to new contract 6 Operationally supplier agreements 7 Manage supplybase & stakeholders 7 Monitor market and supplier performance Knowing the Answer Enables: • Opportunity analysis for savings • Opportunity analysis for supplier rationalization • Negotiate strength opportunities
Ariba Spend Visibility Data input from multiple source systems (Enterprise One, Concur and other legacy financial systems) 25 $2.8B USD global indirect spend Included markets: NA: 3 markets (US, Canada, and Puerto Rico) EMEA: 11 markets (UK, PL, RU, Spain, etc) LATAM: 1 market ( Brazil) APAC: 2 markets ( China, India and the Philippines)
Ariba Data Sources Data into Ariba comes from two sources: E1 and P-Card Data Sources: • E1: Data from Invoices (ex: IT Consulting) • P-Card: Data that coming from Concur charged through Citibank (ex: Travel Expenses) Data Repository • Data is uploaded in Ariba to analyze spend visibility Ariba and Category Manager • Data Enrichment to improve and better utilize data. • 3x a year. (Supplier Name Enrichment and Reclassifications) 26
Avon Customized Spend Visibility Dashboard • • • Customized list of fields for users to choose • Pivot table functionality for users to view spend by different dimensions 27 Customized reports for regions Graph of the global spend by category
7 – Step Sourcing Process 1 7-Step Strategic Sourcing Process 4 6 3 5 2 Analyze category spend Determine business needs 1 Understand internal spend 2 Understand current & future requirements Analyze supply markets 3 Understand supply market Develop category strategy 4 Decide most appropriate execution strategy Select vendors, negotiate agreements 5 Conduct aggressive negotiations and select suppliers Plan transition to new contract 6 Operationally supplier agreements Knowing the Answers Enables: • Create competition and drive best pricing • Obtain information on Alternative sourcing opportunities • Gather Information on innovative technology 28 7 Manage Supply base & stakeholders 7 Monitor market and supplier performance
eSourcing Metrics at-a-glance Run-rate at $1Billion/year 50% indirect and direct spend through via RFx 2013 Average savings of 20% Total RFx created in 2013: 1300 Auction All Region Event by Commodity and Type N = 670 RFI RFP 350 # of Events Events created by Category 306 300 250 202 200 162 150 100 50 78 4050 61 44 4 60 45 23 54 3021 Packaging Purchased Finished Goods 77 60 17 4 2 0 Corporate Indirect 29 Facilities/ MRO Raw Materials Sales/ Marketing Grand Total
Minimizing Change Management Leverage Sourcing Library Sourcing documents to be shared in Library 30 Pre-built contents by sourcing categories to be added into RFx
7 – Step Sourcing Process 7-Step Strategic Sourcing Process 4 6 3 5 2 1 1 Analyze category spend Understand internal spend Determine business needs 2 Understand current & future requirements Analyze supply markets 3 Understand supply market Develop category strategy Select vendors, negotiate agreements 4 5 Decide most appropriate execution strategy Conduct aggressive negotiations and select suppliers • • • • 31 Plan transition to new contract 6 Operationally supplier agreements 7 Manage supplybase & stakeholders 7 Monitor market and supplier performance Knowing the Answers Enables: Which contract template should I use? Who needs to review and approve contracts? When will our contracts start/expire? What is the owner of this contract?
Contract Management - Global Roll out and Results Global governance with regional approach Contract Workflow roll out to UK, Poland, Russia, Brazil, Argentina, and Hong Kong in 2013 Plan 2417 to roll out to 10 markets in 2014 contracts were created since the implementation with total contract amount of $2.6B USD 32
Contract Management Lessons Learned Organization and design process • Legal team’s full support and involvement is essential • Clearly define region or country contract policy and “to be process” • Involve and communicate with all parties in process design Implementation • Collect and harmonize business agreement documents • Roll out by waves with simple and frequent contracts as starting point • Ensure proper delegation of roles and responsibilities • Ensure relevant permissions are granted to all relevant users • Perform testing to cover all use case scenarios Training • Conduct training by user role ( Contract Manager and contract approver) • Contract Manager requires extensive training on clause library management • Train administrative assistants to help their managers in contract approval tasks 34
Implemented Standardized Contract Approval Option to use Supplier paper when required Legal assistants are added to help attorneys in task administration 35
KPI – Contract Creation – FY – MM / USD Request Dept. 200.00 250 100.00 50.00 200 193 150.00 151 $66 36 Mkt $140.00 140 $120.00 $100.00 99 120 115 109 100 150 46 $18 F&MRO IT $80.00 80 100 99 $167 $103 $93 Millions Amount USD and Volume / YTD Sourcing Category Millions Amount USD and Volume / YTD $60.00 $127 60 60 59 $109 40 43 $72 $58 20 20 3 16 $32 $18 $15 10 0 $0$13$5 50 9 0 $1 $40.00 $20.00 $0.00 Comm SC Fin Manufac Legal Contract Amount (USD) Contar de Project Id 36 Contract Amount (USD) Contar de Project Id • 424Contract Created – Total USD 448 MM •195 Contract Created by Legal Team – Old Version •339 Contract Created by Sourcing Team – New Version Based on: Ariba Contracts
KPI – Contract Creation – FY – Status process Number Contract Completed / In Process 140 190 - Completed 344 - In process 120 30 7 40 320 - Ariba 85 55 53 Comm 43 41 9 20 50 62 1 36 19 1 7 8 8 2 SC Draft Based on: Ariba Contracts Fin 43 Manufac Published Legal 10 7 3 30 27 22 22 24 23 22 19 30 0 37 55 54 162 – Out Ariba 40 47 44 60 20 60 50 100 80 Tool Leakage 14 12 4 5 3 10 8 1 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Out Ariba Based on : Internal Controls Ariba
Summary and Key Take-away Change management and training are essential for project success Clearly articulate the benefits of a technology-enabled process to drive adoption Policy creation and executive support are important for program success 38 Standardize processes and leverage technology to improve sourcing efficiency Building collaborative relationships with business partners
"Change" is the New Normal - Building a Sustainable Strategic Sourcing Program Craig Fischer Las Vegas Sands #AribaLIVE
LAS VEGAS SANDS CORPORATION (LVSC) Las Vegas Sands Corporation (NYSE: LVS) Leading global developer and operator of destination integrated resorts (IRs) Properties include Las Vegas, Macao, Singapore, and Bethlehem (PA) Net Revenue for the past 6 years from LVSC’s 2013 10-K Year Net Revenue 2008 2009 2010 2011 2012 2013 $4.38B $4.56B $6.85B $9.41B $11.13B $13.77B Confidential 41
EVOLVING FROM TACTICAL TO STRATEGIC Moving procurement from a Tactical to a Strategic organization allows employees to focus on value-added work. To become Strategic, Procurement organizations continuously need to evolve and make improvements to their processes and solutions. Strategic Tactical • • • • Reactive Day-to-day wants Managing people and work Manual processes and paperwork • One-off/short term solutions • Doing Non-value work • Proactive • Longer-term needs • Setting direction/developing people • Electronic processes and files • Relationship/long term solutions • Working on value-added items Confidential 42
IDENTIFYING OPPORTUNITIES “Unless you have the data, you are only giving me your opinion!” • Business need or opportunity is identified • Reuse or expand an existing solution • “Borrow with pride” on a good idea used elsewhere • Consolidate processes into global standards Confidential 43
BUSINESS NEED IS IDENTIFIED Third Party Due Diligence Forms Internal Requestor fills out Paper Form #1. Paper Form #2 sent to Third Parties for them to complete. Upon completion the forms route through three departments for approval • Inefficient process involving paper and multiple parties • Follow-up work with Third Parties and internal requestors • 100% of forms are resent to Third Parties due to incomplete information • Will become a global process Deployed a Supplier Information portal as a solution to the Third Party Due Diligence forms. • Consolidates multiple forms into one profile • Guides the Third Party to fill in the required information • Conditions can request additional information or customize the workflow • Profile data is reportable Confidential 44
REUSE AN EXISTING SOLUTION Getting rid of physical signatures Bid Analysis Worksheet (BAW) is an internal document that is physically signed by management in procurement and requesting departments • Many issues makes the signature process cumbersome Procurement successful deployed an eSignature solution for buy-side contracts that brought great efficiency and compliance • • Cloud solution that is accessible through many options Documents stored in one location Discussion of BAW issues in Procurement staff generated a suggestion of “why don’t we just eSign BAWs?” eSignature was expanded to additional procurement items. Expansion will continue as other departments are asking “why can’t we do this?” Confidential 45
BORROW WITH PRIDE Innovate with someone’s proven idea For commoditized items that can be sourced from multiple suppliers, an eAuction is a strategy option to get pricing • Need to factor pricing into the overall value of good or service Find sourcing scenarios in the department with willing coworkers that can go through an eAuction: • Success with typical commodities such as MRO and Marketing goods • Experimented with commodities such as Utilities, Uniforms, Logistic Services, and Fine Wine • Experienced some challenges and learned lessons, but understood that it trial and error is a potential scenario Confidential 46
CONSOLIDATE PROCESSES INTO GLOBAL STANDARDS Example of developing standards 100+ commodity managers (CMs) across LVSC Procurement using various RFP/RFI templates or forms. • • Collected 37 different forms from 19 CMs; scenarios where teammates who sat next to each other used different RFP forms. Assuming more forms are in use by others because some of larger spend commodities did not supply RFP forms. Expected to complete initiative to develop global RFP/RFI templates for specific commodity areas by the end of Q1 ’14 • • Areas are IT – Construction – Gaming – Facilities – Food & Beverage Will be built as available templates in the Sourcing solution NOTE: 2nd Initiative in progress is Global Contract Templates Confidential 47
Summary - Wrap Up Align Results to Objectives Embrace change and not fight it! Be Flexible ACCELERATE SAVINGS, IMPROVE COMPLIANCE & MITIGATE RISK! © 2014 Ariba – an SAP company. All rights reserved.
Thank you Q& A Contact information: Sundar Kamakshisundaram Sr. Director – Global Solutions Marketing E: firstname.lastname@example.org
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