Like many companies, Kaeser Kompressoren began their journey of spend management looking at the traditional catalog / indirect spend categories. However, they quickly realized that opportunities existed to extend their investments and deliver greater returns and continuity across broad indirect spend categories, temp labor, training, and much more. Learn the steps they’ve taken to become a leader in broad spend management strategies.

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@ariba
A Success Story: Managing Beyond
Indirect
Joerg Huelsmann, Head of Strategic Purchasing Department,
KAESER KOMPRESSOREN SE
09th June, 2015
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Managing Beyond Indirect
at KAESER KOMPRESSOREN

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KAESER KOMPRESSOREN – the Company
KAESER is a family-owned company in the field of machine and
plant construction
5,000 employees worldwide
Represented by subsidiaries and distribution partners in more
than 100 countries
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KAESER KOMPRESSOREN - Structure
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• 6 production plants, sorted by
product lines
• 1 distribution center
• 1 service center
• 2 training centers
• various central sectors
• 55 subsidiaries worldwide
(sales and service organizations)
with own operative purchaser each
• 1 stratetic purchasing department

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Initial Situation Before Starting the
SAP/Ariba Project
• The service contract for the previous catalog management system
(SAP SRM) expired.
• That time, there were only 8 electronic catalogs.
• Many orders for indirect material and services were mapped in SAP MM;
this impeded getting an overview of the requirements.
• SAP reporting possibilities were strongly limited.
• It was time-consuming to implement a large number of suppliers
in the old catalog management system.
• There was no approval workflow.
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Maverick Buying
`Maverick buying means that departments independently buy material or services without
incorporating the purchasing department.
Maverick buying is the purchasing outside of standard procurement processes.`
Especially for indirect material, it is difficult to reduce maverick buying.
„Man spricht von Maverick-Buying, wenn Abteilungen eigenmächtig
Materialien oder Dienstleistungen kaufen, ohne den Einkauf einzubeziehen.
Maverick-Buying ist die `Beschaffung außerhalb standardisierter Beschaffungswege`“.1
1 Helmut Wannenwetsch: Erfolgreiche Verhandlungsführung in Einkauf und Logistik, Springer Verlag; Auflage: 3.,
neu bearbeitete Auflage. (Oktober 2008), S. 68.
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Problems/Consequences of Maverick Buying
• Impossible to bundle orders  less market power
• Worse purchasing prices
• Increased administrative effort due to invoice assignment
and verification
• Suppliers that are not checked and approved get orders as well
 no procedure agreed in case of defects
 issues related to workplace safety are not taken into account
…
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Aims of KAESER KOMPRESSOREN in
Handling Indirect Spend
1. Selection of suppliers by strategic purchasing department
2. Negotiation of all prices, discounts and conditions before the first order
3. Safety for the buyer due to correct and complete framework data
4. Transparent and safe approval workflow
5. Reporting for all orders of indirect spend
6. Creation of possibilities to control and bundle demands
7. Basis for efficient negotiations
8. Checking orders for indirect spend that are not placed through Ariba
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Our Idea
Bringing all indirect spend on the Ariba platform
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Strategy for Using the SAP/Ariba Platform
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No electronic
catalog available
Supplier not
created in
SAP/Ariba
Use of electronic catalogs
Requirement notification for
non-catalog-articles by Ariba
Creation and monitoring of
an order in the ERP System

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Procedure for the SAP/Ariba Project
1. Analysis of ALL orders for indirect material and services
2. Creating a list of suppliers offering indirect material or services
3. Choosing a provider of a platform for electronic catalogs (in our case SAP/Ariba);
carrying out the common project to adjust the software
4. Informing and supporting suppliers regarding the platform for electronic catalogs
♦ Sending an email to suppliers asking for their cooperation in this project
♦ Supplier summit to explain how to work with Ariba
♦ Support for creating electronic catalogs
5. Training of own employees
6. Monitoring order transactions
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Definition: Indirect Spend
Is everything that is not directly link to a final product
(Definition of KAESER KOMPRESSOREN)
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Examples for Indirect Spend
• Office supplies
• Furnitures
• Tools
• Services for trainings and education
• IT-related services (hardware, software)
• …..
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KAESER Concept: How to Handle the
Indirect Spend for Services for Training
and Education
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Different Expenses
• The cost for services for training and education is a
combination of:
 Cost for the training
 Traveling cost of the trainer
– Traveling with the car + parking
– Costs for flights
– Costs for hotels
– Costs for traveling for the trainer itself
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How to Handle the Cost for Training
• Creating a catalogue with all the approved and
released trainings
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How to Handle the Costs for Flights
and Hotels
• KAESER is booking and paying for the flight also for the
external trainer.
 Working with Concur
• KAESER is organizing the hotel
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Ideas for Costs for Cars
• Negotiate the price per km
• Evaluating the distance between the starting point and
the destination
 Airport
 Venue
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How to Handle the Cost for Parking
at the Airport
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Create a line item
for different airport
(unit: 1 day)

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CIF File for the Catalogue for One
Supplier for Training and Education
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How an Order Looks
Expenses for parking at
the airport in Nuremberg
Costs for driving for
the trainer
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How an Order Looks
Expenses for the
workbooks
Costs for two days
of training
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Idea: Use the Commodity Code
Using the commodity code can help you to analyse the expense
for the training and separately the cost for traveling.
This can help you to come to the decision and help you arrange
the most cost-effective training.
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Idea: Build an Approval Workflow
• Organizing the trainings and education activities can
be decentralized.
• The requester can be sure that the order is approved.
• There is complete transparency in the entire business process.
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What We Have Achieved
• Approval workflow with the real costs
• The order and the invoice fit together. Any deviation can be
checked in detail.
• The expenses for training and education are reportable
• A cost-effective training concept can be established
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Handling Software Orders
• Software is normally a combination of:
 Signed contract
 The initial cost for software
 The costs for maintenance
  Problem:
– Keeping an overview on the signed contract, on the costs, especially
on the maintanence costs
– Duly termination of the agreement
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Structure for a Software Project
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UPSTREAM
• Creating a contract in Ariba Contract Management
• Using Abbyy to make the document searchable
DOWNSTREAM
• Create a CIF file with the initial price and the quarterly maintenance costs
• Upload a catalogue out of the CIF file
UPSTREAM
• Creating a frame contract with the economical datas
• Adding the lifetime of the software project
DOWNSTREAM
• Creating an order out of the electronic catalogue

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The Contract Workspace in Ariba
• Using the tool abbyy
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Creating a CIF Catalogue
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Advantages of This Procedure
• Having the combination between the contract and the orders
• Having a full overview on the whole costs for this product
• Not losing the date for the termination of the contract
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Summary
• Manage all indirect spend to help you retain control of expenses
• Have a strategy all indirect spend (our implementation is P2O)
• You are not limited by the technical capabilities, but only by
your ideas
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Thank you!
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