Analyzing Spend – You Can’t Fight What You Can’t See
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Supply chains across enterprises are infested with supplier risks, savings leakage issues, and sourcing inefficiencies which often go undetected due to the lack of good visibility in to spending data. By blending spend data with the right market intelligence, organizations stand to extract the best value from their sourcing initiatives.
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Analyzing Spend – You Can’t Fight What You Can’t See
- 1. Analyzing Spend: You Can’t Fight What You Can’t See Speakers: Phil Fisher – Dun & Bradstreet Brian Delaney – MetLife Craig Fischer – Las Vegas Sands Corp. Moderator: Keertan Rai – Ariba, an SAP Company © 2013 Ariba, Inc. All rights reserved.
- 2. #AribaLIVE Agenda • Overview and Introductions • Panel Presentations Phil Fisher - VP, Strategic Alliance Partner Solutions - D&B Brian Delaney - Director, Technology Liaison - MetLife Craig Fischer - Director, Business Strategy & Process - Las Vegas Sands Corp. • Q&A © 2013 Ariba, Inc. All rights reserved.2
- 3. #AribaLIVE Analyzing Spend: You Can’t Fight What You Can’t See 3 • 12 Trillion dollars is total spend through global 2000 companies last year • Enterprises are losing over USD 260 Billion per year due to the inability to organize and analyze spend data1 • To date, only 40% of the companies have good visibility on their spending2 • 60% of the firms that analyze spend still rely on paper and spreadsheets3 You Can’t Fight What You Can’t See 1: Aberdeen Research: Best Practices in Spend Analysis : Cure for a Corporate Epidemic, 2004; 2: SAP / Procurement Leaders Survey 2011 3: Spend Analysis : Working too Hard for the Money , 2007
- 4. #AribaLIVE © 2013 Ariba, Inc. All rights reserved.8 Panelists Craig Fischer Director - Business Strategy & Process Las Vegas Sands Corp. Phil Fisher Vice President, Strategic Alliance Partner Solutions Dun & Bradstreet, Inc Brian Delaney Director – Technology Liaison MetLife
- 5. #AribaLIVE Agenda • Overview and Introductions • Panel Presentations Phil Fisher - VP, Strategic Alliance Partner Solutions - D&B Brian Delaney - Director, Technology Liaison - MetLife Craig Fischer - Director, Business Strategy & Process - Las Vegas Sands Corp. • Q&A © 2013 Ariba, Inc. All rights reserved.9
- 6. #AribaLIVE Supplier and Spend Management – Moving Beyond the Numbers • D&B (NYSE:DNB) is the world's leading source of commercial information on businesses, enabling companies to Decide with Confidence® for over 170 years • The D&B database has information on 225+ million businesses in over 190 countries • More than 100,000 companies rely on D&B to help build strong business relationships with their customers, suppliers and partners • Supply management-specific data expertise gives the insights companies need for supply chain optimization © 2013 Ariba, Inc. All rights reserved.10 About D&B
- 7. #AribaLIVE Spending Clarity Starts with Asking the Right Questions • How can I get more detailed information on suppliers? • How much am I spending with suppliers at a corporate family level? • How diverse is my supply base? And how can I locate more diverse suppliers? • Where are the greatest risks in my supply chain? © 2013 Ariba, Inc. All rights reserved.11
- 8. #AribaLIVE Stay Ahead of the Curve Know How Your Suppliers May Behave Tomorrow © 2013 Ariba, Inc. All rights reserved.12 The Advantage • Get a sense of potential supply interruption before it can impact the: • Bottom line: through stock outs • Top line: through idling the manufacturing line • Brand: through damage to quality and product availability The Results • Source from financially stable suppliers • Get advance notice to reduce risk and protect supply chain continuity • Deliver consistent, objective treatment of suppliers
- 9. #AribaLIVE Sustain Your Success Down the Road with These Tips • Identify the categories your company cares about • Instill a cross-functional process Procurement Finance Operations • Establish processes for approving/managing suppliers © 2013 Ariba, Inc. All rights reserved.13
- 10. #AribaLIVE Agenda • Overview and Introductions • Panel Presentations Phil Fisher - VP, Strategic Alliance Partner Solutions - D&B Brian Delaney - Director, Technology Liaison - MetLife Craig Fischer - Director, Business Strategy & Process - Las Vegas Sands Corp. • Q&A © 2013 Ariba, Inc. All rights reserved.14
- 11. #AribaLIVE Challenges Ahead © 2013 Ariba, Inc. All rights reserved.15 Drive Down Expenses by 2016 Better leverage vendor agreements in a more global manner to drive down cost More efficient in the technology we use Increased global savings targets over $200M $600M $200M
- 12. #AribaLIVE MetLife’s Current State © 2013 Ariba, Inc. All rights reserved.16 Manual Data extracts and Review (Excel) … Control Tables Business Rules 18 countries Auto & Home (CAF) International Financials Treasury Workstation Computron PeopleSoft Ariba MS Access DB’s Shared Drive
- 13. #AribaLIVE Why Spend Visibility • MetLife’s recent acquisitions have given us presence in over 60 countries globally • Gain the same visibility into each of the key markets spend, so we could apply the same principals to drive expense reduction • Need to converge multi-currency, multi-language data into single reporting environment • Automate as much of this process as possible – need to get out of the business of maintaining databases and into the business of providing the analytics (Shift from transactional to strategic) © 2013 Ariba, Inc. All rights reserved.17
- 14. #AribaLIVE MetLife’s Future State © 2013 Ariba, Inc. All rights reserved.18 22 Data Sources D&B Parentage Rationalization Data Transformation & Enrichment Ariba Spend Visibility Auto & Home (CAF) International Financials Treasury Workstation Computron PeopleSoft
- 15. #AribaLIVE Agenda • Overview and Introductions • Panel Presentations Phil Fisher - VP, Strategic Alliance Partner Solutions - D&B Brian Delaney - Director, Technology Liaison - MetLife Craig Fischer - Director, Business Strategy & Process - Las Vegas Sands Corp. • Q&A © 2013 Ariba, Inc. All rights reserved.19
- 16. #AribaLIVE Las Vegas Sands Corporation Las Vegas Sands Corporation (NYSE: LVS) • Leading global developer and operator of destination integrated resorts (IRs) • Properties include Las Vegas, Macao, Singapore and Bethlehem, Pennsylvania Gross Floor Area of IRs is 60,000,000 sq. ft. Total Hotel Rooms is 19,800 rooms Total Retail Mall Space is 4,500,000 sq. ft. Total MICE (Meeting, incentives, conferences and exhibitions) Space is 5,200,000 sq. ft. Total Gaming Space is 1,660,000 sq. ft. • Net Revenue for the past 5 years from LVSC’s 2012 10-K © 2013 Ariba, Inc. All rights reserved.20 Who We Are Year 2008 2009 2010 2011 2012 Net Revenue $4.38B $4.56B $6.85B $9.41B $11.13B
- 17. #AribaLIVE Spend Strategy at LVSC Three – step process to develop a sourcing strategy: 1. Identify Spends by Category / Sub – Categories Determine which spends are Procurement Influenced vs. Non- Procurement Influence 2. Align Sub – Categories into a Segmentation Quadrant Important factors are the Y – Axis and X - Axis 3. Develop Sub – Categories Strategies to source Key elements that must be understood and will drive a sourcing strategy © 2013 Ariba, Inc. All rights reserved.21
- 18. #AribaLIVE Identifying Spends by Categories at LVSC Procurement Influenced (2012- 40%) Non-Procurement Influenced (2012-60%) Food & Beverage Operating Supplies Marketing / Advertising / Print Facilities & Services Outside Services Gaming Surveillance Technology & IT Development & Construction FF&E Ferry Utilities Employee Benefits Retail Total 8.5% 5% 4.5% 4% 7.2% 6% .5% 8% 33.5% 4% 4.8% 8.8% 4.7% .5% 100% Entertainment Legal Leases Insurance Financial Services Aviation Commissions Taxes Third-Party Charges © 2013 Ariba, Inc. All rights reserved.22 * Areas in blue did not have Procurement & Supply Chain involvement prior to 2009
- 19. #AribaLIVE 2012 LVSC Procurement Influenced Spend Analysis Marketing, Advertising & Print (MAP) 4.5% Beverage 4.5% Facility & Facility Services 4% FF&E 4% Food 4% Gaming 6% Operating Supplies 5% Outside Services 7.2% Pre-Development & Design & Construction 33.5% Surveillance 0.5% Employee Benefits 4.7% Ferry 4.8% Technology 8% Utilities 8.8% Marketing, Advertising & Print (MAP) Beverage Facility & Facility Services FF&E Food Gaming Operating Supplies Outside Services Retail Pre-Development & Design & Construction Surveillance Employee Benefits Ferry Technology Retail 0.5% © 2013 Ariba, Inc. All rights reserved.23 2012 Procurement Influenced Spend: 40% of total spend
- 20. #AribaLIVE 2012 LVSC Non-Procurement Influenced Spend Analysis Taxes 78% Entertainment 2.5% Legal 2.0% Intercompany Charges 9.0% Other 3.0% Insurance 1.0% Financing 2.0% Aviation 1.0% Commissions 0.5% Other 1.0% Taxes Entertainment Legal Intercompany Charges Third-Party Charges Insurance Financing Aviation Commissions Other © 2013 Ariba, Inc. All rights reserved.24 2012 Non-Procurement Influenced Spend: 60% of total spend
- 21. #AribaLIVE Aligning Sub – Categories into a Segmentation Quadrant © 2013 Ariba, Inc. All rights reserved.25 CustomerImpact High Low Low High Category Segmentation Switching Costs Strategic Tactical Critical Alliance
- 22. #AribaLIVE Develop a Category Sourcing Strategy LVSC Category Strategy Template © 2013 Ariba, Inc. All rights reserved.26 Category: Duration:Scope: Competitor Benchmarking Who / What / Supplier Annual Spend - Currency Annualized Savings - Currency 2012 A 2013 F Total US Asia Total 2012 A 2013 F Total US Asia Total Category Pictures Segmentation Strategic Alliance Tactical Critical Category Analysis Cost Structure, Benchmarking, Supplier Comparison, Index Data, Etc Global Specification Value Chain Information Technology and Market Changes Key Cost Drivers Category Description / Scope Supplier Scoring (5 Highest , 1 Lowest) Cost (xx%) Quality (xx%) Total Supplier A Supplier B Supplier C Others Category Strategy / Sourcing Recommendation Current Situation: Strategy:
- 23. #AribaLIVE LVSC Category Strategy Template Excel based – 11” by 17” © 2013 Ariba, Inc. All rights reserved.27
- 24. #AribaLIVE The Exciting World of Slippers Category sourcing strategy – Part 1 © 2013 Ariba, Inc. All rights reserved.28
- 25. #AribaLIVE The Exciting World of Slippers Category sourcing strategy – Part 2 © 2013 Ariba, Inc. All rights reserved.29 Category Analysis
- 26. #AribaLIVE The Exciting World of Slippers Category sourcing strategy – Part 3 © 2013 Ariba, Inc. All rights reserved.30
- 27. #AribaLIVE Agenda • Overview and Introductions • Panel Presentations Phil Fisher - VP, Strategic Alliance Partner Solutions - D&B Brian Delaney - Director, Technology Liaison - MetLife Craig Fischer - Director, Business Strategy & Process - Las Vegas Sands Corp. • Q&A © 2013 Ariba, Inc. All rights reserved.31
- 28. Questions? Contact info: Keertan Rai : krai@ariba.com © 2013 Ariba, Inc. All rights reserved. 32
Editor's Notes
- Overview slide by Keertan
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- Eric and Greg both spoke to the importance of identifying corporate linkage, diversity status and total spend when working with their suppliers. These are just some of the categories that we’d recommend companies explore to get a clear, overall snapshot of supplier health. Companies must also take into consideration overall financial health, socio-political stability of the supplier’s location, and the health of tier-2 suppliers. Establishing a central repository of all supplier data gives companies the ability to see the entire supply chain at a glance. From my days managing supply chains for HP, I know that compiling all that information can be challenging – and worse, can lead to incorrect information being used to make decisions. As a best practice, it is always beneficial to employ some sort of third-party review of the data – that not only validates the quality of the data, but can uncover opportunities as well. At D&B we use the DUNS-Right system – every supplier/organization has a unique identifying number which allows us to identify parent and children companies, branches, violations, etc.
- Fourth: “How can I get advance warning of a supplier disruption or change in the status quo?”Advance warning of supplier trouble can mean the difference between avoiding a disruption and coming out on top or scrambling to pick up the pieces. Your options for resolution are so much broader when you have the luxury of time.
- And most importantly: “What can your company do to stay out ahead of the competition?” Having the right information, in the right place is the first step in staying ahead of the competition. It gives you the tools you need to do the proper analysis to make informed business decisions.
- 2001 – MetLife managed $400M worth of spend in the US with 70 buyers. Very little strategic activity, highly transactionalToday – MetLife manages over $2.5B in the US handled by 15 buyers, much more focus on the strategic activity. With recent acquisitions, looking to expand our Spend Management Program globally.How did we get here, and how do we get where we want to be…Reporting and Metrics team pulls in data from our domestic systems into a homegrown (Access) database. Reporting and Metrics team performs all the normalization of data, apply taxonomies, D&B searches on our critical suppliers. Current State Challenges Manually Maintained Access DatabaseHours spent updating and validating data, then producing reports on a monthly basisMinimal bandwidth to expand the reporting program (International)
- 2001 – MetLife managed $400M worth of spend in the US with 70 buyers. Very little strategic activity, highly transactionalToday – MetLife manages over $2.5B in the US handled by 15 buyers, much more focus on the strategic activity. With recent acquisitions, looking to expand our Spend Management Program globally.How did we get here, and how do we get where we want to be…Reporting and Metrics team pulls in data from our domestic systems into a homegrown (Access) database. Reporting and Metrics team performs all the normalization of data, apply taxonomies, D&B searches on our critical suppliers. Current State Challenges Manually Maintained Access DatabaseHours spent updating and validating data, then producing reports on a monthly basisMinimal bandwidth to expand the reporting program (International)
- Notes: Other examples of quadrants are Strategic Importance & Supply Risk/Complexity, Profit Impact & Supply Risk/Criticality, Impact & Spend, Complexity of adding capacity & Supplier willingness to add capacity
- Notes: Other examples of quadrants are Strategic Importance & Supply Risk/Complexity, Profit Impact & Supply Risk/Criticality, Impact & Spend, Complexity of adding capacity & Supplier willingness to add capacity