Realizing the Strategic Sourcing Vision through an Ecosystem Approach
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Gaining actual savings from the best laid sourcing plans requires organizations to put in place a closed loop strategy―one that addresses operational sourcing as well as the processes around it. Be it cutting-edge analytics to drive better decisions, water-tight contract management to improve adherence, or disciplined supplier management to improve performance, this session features stories from organizations that have translated savings from paper to the bottom line through a tightly woven collaborative sourcing process.
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Realizing the Strategic Sourcing Vision through an Ecosystem Approach
- 1. #AribaLIVE @ariba Realizing the Strategic Sourcing Vision through an Ecosystem Approach Speakers: Scott Gray, MasterCard Zach Barber and Emily Laski, Abercrombie & Fitch Moderator: Sundar Kamak, Ariba, an SAP Company @ksundar1 © 2015 Ariba – an SAP company. All rights reserved.
- 2. #AribaLIVE @ariba Agenda © 2015 Ariba – an SAP company. All rights reserved.2 • Overview and Introductions • Panel Presentations • Q&A @ksundar1
- 3. #AribaLIVE @ariba The Panel Team 3 Zach Barber, Senior Manager, Global Expense Management Abercrombie & Fitch © 2015 Ariba – an SAP company. All rights reserved. Emily Laski, Associate Procurement Specialist Abercrombie & Fitch Scott Gray, Senior Director, Supplier Life-cycle Management MasterCard @ksundar1
- 4. #AribaLIVE @ariba Global Trends Are Driving Change in Sourcing and Procurement Increasing Globalization • Expansion into new markets • Global process standardization • International supply chains • Increased off/near shoring Economic Volatility • Volatility in markets • Decreased stock valuation • Slow economic growth • High expense ratio More Competition • Pricing pressures • New sources of competition • Decreased budgets and spending Greater Risk • Supply chain disruption • Financial risk and fraud • Commodity risk Accelerating Technological Change • Changing business models • Faster innovation cycles • Expanding partnerships and channels • Leveraging big data for decisions Regulatory Changes • Increasing disclosure requirements • Country-specific regulations • Industry-specific disclosures @ksundar1
- 5. #AribaLIVE @ariba Creating a Challenge/Opportunity for Procurement Top 3 Procurement Drivers 54% cutting cost 51% becoming more strategic 44% quality suppliers Source: Procurement Leaders Where is there “great” opportunity for Procurement to increase its contribution? Percentage of respondents rating the procurement function’s opportunity to contribute as a “great opportunity” 14% 25% 29% 36% 44% 57% 64% 73% Serving an advisory role in M&A deals Expanding into new markets / business lines Managing financial risk Managing working capital Managing risks to business performance Working with suppliers to enhance product offerings Strengthening relationships with suppliers Finding opportunities for cost savings Source: CFO Research Services © 2015 Ariba – an SAP company. All rights reserved.5
- 6. #AribaLIVE @ariba Innovation Source: CPO Rising, Ardent Partners Top CPO Strategies (Next 3 Years) © 2015 Ariba – an SAP company. All rights reserved.6
- 7. #AribaLIVE @ariba 55% 47% 42% 32% 31% 31% Collaboration Source: CPO Rising, Ardent Partners Top Strategies for Sourcing Teams in 2014 © 2015 Ariba – an SAP company. All rights reserved.7 @ksundar1
- 8. #AribaLIVE @ariba Approach to Building a Strategic Sourcing Program Vision Technology Metrics Process People Best Business Outcomes + Innovation © 2015 Ariba – an SAP company. All rights reserved.8 @ksundar1
- 9. Realizing the Strategic Sourcing Vision through an Ecosystem Approach Zach Barber and Emily Laski
- 10. AGENDA • Company Profile • Challenges • Strategic Sourcing Program
- 11. WHO WE ARE Abercrombie & Fitch Co. operates as a global retailer of casual apparel for men, women, and kids. Its stores sell casual apparel, such as knit shirts, graphic t-shirts, jeans, and woven shirts; and personal care and other accessories under Abercrombie & Fitch, abercrombie and Hollister. A&F operates a total of 1,022 stores across 22 countries. They include: • Domestic –278 Abercrombie & Fitch stores –154 abercrombie kids stores –486 Hollister Co. • International –17 Abercrombie & Fitch –6 abercrombie kids stores –101 Hollister Co. Our e-commerce websites can be found at www.abercrombie.com, www.abercrombiekids.com and www.hollisterco.com.
- 12. CHALLENGES WE FACED • Disparate systems and methodologies • Inconsistent reporting • No formal contract management process • Goals and objectives not aligned across the business • Enterprise understanding of what is strategic sourcing • No aggregate view of spend data
- 13. OUR AREAS OF FOCUS • Savings • Improved Payment Terms • Reduced Risk • Improved Budget Productivity / Increased ROI • Decreased Effort with Contracts under Legal Review • Increased Compliance with Legal Approved Contract Language • Corporate Procurement Policy • Procurement as a Financial Control
- 15. HOW WE DO ITProcessPeopleTechnology ANALYZE CATEGORY SPEND DEVELOP BUSINESS NEEDS ASSESS SUPPLY MARKETS DEVELOP CATEGORY STRATEGY EXECUTE STRATEGY IMPLEMENT NEW AGREEMENTS SUSTAIN RESULTS 1 2 3 4 5 6 7 Understand internal spend and current state Understand business requirements Understand market players and key market drivers Develop strategy to effectively source category Develop and execute sourcing strategy and negotiation plan Sign new agreement, develop implementation plan Monitor supplier performance, capture savings, evaluate market
- 16. ANALYZE CATEGORY SPEND DEVELOP BUSINESS NEEDS ASSESS SUPPLY MARKETS DEVELOP CATEGORY STRATEGY EXECUTE STRATEGY IMPLEMENT NEW AGREEMENT S SUSTAIN RESULTS •ID stakeholders, sourcing team •Roles and responsibilities •Work plan •Collect internal baseline •Understand requirements •Sign-off on baseline •Document current sourcing approach •Develop market insight •ID opportunities •Develop sourcing strategy •Align on potential opportunity •Finalize objectives •Develop supplier selection criteria •Develop supplier list •Profile supplier capabilities •Filter using pre- screening criteria •Review final list •ID Strategic Sourcing position •Align stakeholders with strategy and workplan •Develop go-to- market approach •Develop/publish RFPs •Analyze bids •Develop negotiation plan •Develop award scenarios, anticipated benefits •Create negotiation team, hold negotiations •Finalize awards •Notify suppliers •Create transition team •Develop implementation plan •Finalize contracts •Implement new agreements •Track performance •Participate in savings audits •Periodically re- evaluate purchases and supplier performance •Team member/ stakeholder list •Workplan •Draft cost model •SWOT analysis •Current procurement process map •Incumbent supplier list •Supplier assessment matrix •Sourcing Strategy •Negotiation plan •Draft transition plan •Stakeholder approval checklist •Signed contracts •Finalized transition plan •Key Learning report •Supplier management plan •Savings tracking plan KEYACTIVITIESDELIVERABLES FINANCIAL BASELINE SOURCING STRATEGY EXECUTE CONTRACT GATES A&F STRATEGIC SOURCING PROCESS 1 2 3 4 5 6 7
- 17. HOW WE DO ITProcessPeopleTechnology Sourcing / Category Leads ANALYZE CATEGORY SPEND DEVELOP BUSINESS NEEDS ASSESS SUPPLY MARKETS DEVELOP CATEGORY STRATEGY EXECUTE STRATEGY IMPLEMENT NEW AGREEMENTS SUSTAIN RESULTS 1 2 3 4 5 6 7 Understand internal spend and current state Understand business requirements Understand market players and key market drivers Develop strategy to effectively source category Develop and execute sourcing strategy and negotiation plan Sign new agreement, develop implementation plan Monitor supplier performance, capture savings, evaluate market
- 18. TEAM STRUCTURE VP GEMS TRAVEL GLOBAL UTILITIES IT/DTC STORE SUPPORT SUSTAINABILITY EUROPEAN UTILITIES VENDOR SETUPS IT/DTC HOME OFFICE SUPPORT TRAVEL & EXPENSE TRAVEL AGENTS TRAVEL & EXPENSE $500MM+ SPEND UNDER MANAGEMENT SUPPLY CHAIN
- 19. HOW WE DO ITProcessPeopleTechnology SOURCE GEMS PROCURE AP PAY AP Sourcing / Category Leads ANALYZE CATEGORY SPEND DEVELOP BUSINESS NEEDS ASSESS SUPPLY MARKETS DEVELOP CATEGORY STRATEGY EXECUTE STRATEGY IMPLEMENT NEW AGREEMENTS SUSTAIN RESULTS 1 2 3 4 5 6 7 Understand internal spend and current state Understand business requirements Understand market players and key market drivers Develop strategy to effectively source category Develop and execute sourcing strategy and negotiation plan Sign new agreement, develop implementation plan Monitor supplier performance, capture savings, evaluate market
- 20. THE SOURCE-TO-PAY TECHNOLOGY SOURCE GEMS PROCURE AP PAY AP Spend Classification Commodity Management eSourcing Contract Management Supplier Registration Spend Analysis Opportunity Identification Supplier Enablement Requisition Management Invoice Exceptions Catalog Supplier Collaboration Payment Gateway ERP Supplier Collaboration Invoice Imaging & Workflow Vendor Portal Payment Audit Supplier Performance Management
- 21. THE SOURCE-TO-PAY TECHNOLOGY ARIBA IMPLEMENTATION Spend Analytics Contracts eSourcing • $3B in total spend • 5 source systems • Quarterly refreshes • +80 data elements loaded based on source system • Scope: all Non-Merch Agreements • +1,400 contracts, loaded • 49 fields of data extracted • “Call for all contracts” • Legacy Load of +8,000 agreements • +50 events • 45 users • RFP • Reverse Auction
- 22. OUR SOURCE-TO-PAY MODEL Procurement Supplier Registrations Supplier Management Spend Analytics 7-step Sourcing Contract Management Pay GEMS Manage supplier information and track performance Ensure compliant procure-to-pay cycle on a daily basis Create, store, search contracts & track compliance Use this information to source efficiently
- 23. LESSONS LEARNED Grow into Solution – “Evolve at a Steady Rate” Leverage Existing Budgets – “Avoid Special Funding Requests Obtain Executive Support – “Leverage Organizational Alignment“ Build Transparency – “Maintain Pipeline” Create Center of Excellence – “Drive Adoption” Optimize Sourcing Process – “Add Velocity Alignment of Resources – “Do what you do best” BE PATIENT!!
- 24. WHAT ARE WE FOCUSED ON Continued Mastery of eSourcing Leverage Spend Analytics Explore Workflow in Contracts Management Fully Load Legacy Contracts Supplier Performance Management
- 25. #AribaLIVE @ariba Realizing the Strategic Sourcing Vision through an Ecosystem Approach Scott Gray – MasterCard Sr. Director – Supplier Management Lifecycle Management © 2015 Ariba – an SAP company. All rights reserved.
- 26. #AribaLIVE @ariba MasterCard Today *This represents MasterCard-branded GDV, does not include Maestro or Cirrus. All figures as of Dec. 31, 2013 210 countries and territories 2 Billion branded cards issued 8,200 employees 38.6 billion processed transactions US $4.1 trillion* gross dollar volume
- 27. #AribaLIVE @ariba Life Cycle Management • Onboarding • Information Management • Risk Management • Spend • Performance • Contract • Social Responsibility Supply Chain Systems & Processes Governance & Compliance Merger & Acquisition Integration Training & Communications Manage Spend Per Policy Demand Management Cost Saving Enablement Supplier Selection Fair Value Analysis Category Strategies Long-Term Savings Impact Global Spend Analysis Market Intelligence Cost Structure Development Functional Roles Sourcing Global Strategy Sourcing Operations Supplier Management Sourcing & Supplier Management © 2015 Ariba – an SAP company. All rights reserved.27
- 28. #AribaLIVE @ariba 4/6/2015 Supplier Lifecycle Management © 2015 Ariba – an SAP company. All rights reserved.28
- 29. #AribaLIVE @ariba MasterCard Sourcing Technology © 2015 Ariba – an SAP company. All rights reserved.29
- 30. #AribaLIVE @ariba • Partnerships & Stakeholders • Measuring the Value – Data Accessibility – Savings – Rationalized Supply Base – Risk and Performance • Managed Spend ROI Results © 2015 Ariba – an SAP company. All rights reserved.30
- 31. SUMMARY - WRAP UP Establish a clear Vision Standardize Process/Policy Automate with Business Network Build a Strong Talented team Drive Business Outcomes
- 32. © 2015 SAP SE or an SAP affiliate company. All rights reserved. Thank you! Contact information: Sundar Kamak Global Vice President – Solutions Marketing Email: sundar.kamak@sap.com | Twitter: ksundar1
- 33. #AribaLIVE @ariba © 2015 Ariba – an SAP company. All rights reserved. Q&A Realizing the Strategic Sourcing Vision through an Ecosystem Approach