Sourcing and Procurement Excellence in a Networked World

Sourcing and Procurement Excellence in
a Networked World
Mr. Cor van der Scheer, Procurement Processes & Systems Manager, AusNet Services, Australia
Mr. Sam Cutruzzula – ERP Supply Chain Manager, Salt River Project
Sundar Kamak, SAP Ariba / March 16, 2016
Public

© 2016 SAP SE or an SAP affiliate company. All rights reserved. 2© 2016 SAP SE or an SAP affiliate company. All rights reserved. 2Public
Agenda
Introduction
Customer Story
 Ausnet Services
 The Salt River Project
Q & A

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

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

Successfully Transforming AusNet Services Procurement
with SAP Ariba Cloud and Network Solution
Mr. Cor van der Scheer, Procurement Processes & Systems Manager, AusNet Services, Australia

Agenda
About AusNet Services
AusNet’s Procurement Environment & Metrics
Part 1 – SAP Ariba tools application at AusNet
Part 2 – SAP Ariba tools for “Pole to Pit” activity
Part 3 – SAP Ariba and Adobe e-Sign (EchoSign)
Conclusion
Q & A

AusNet Services operates in regulated transmission and distribution sectors
Australian energy market structure
Competitive
Generation /
Production
Transmission Distribution Retail
Regulated Natural
Monopoly
Regulated Natural
Monopolies
CompetitiveCompetitive
Competitive
Regulated Natural
MonopoliesRegulated/
Contracted
Electricity
Market
Gas Market

Suite of high-quality assets
100% own, operate and control critical energy delivery infrastructure in Victoria
* All figures are approximate as at 31 March 2015
Electricity Transmission
• 6,573km of transmission lines
• 13,000 towers
Electricity Distribution
• 50,987km of electricity
distribution network
• 679,213 customers
Gas Distribution
• 10,630km of gas
distribution network
• 647,536 customers

Agenda
Conclusion

AusNet’s procurement transformation journey
Centralising key procurement activities and a move to best practice P2P
tools have led to process efficiencies, improved visibility and better
overall control of procurement outcomes

Spend with suppliers for 2014/15 by Procurement Involvement
Supplier spend
managed by
Procurement
Total - Supplier
Invoice Spend
16%
Not managed
by
Procurement
100%
84%
Uncontracted
Supplier Spend
6%
Non contracted
spend with
Contracted supplier
3%
On Contract
75%
Procurement reach

Comparative Spend for FY2015
Pole to Pit
Installation
Engineering
Logistics
Goods
15%
Other
Services
20%
Works Engineering
65%
43% of
Overall Spend
14%
Transaction and spend type – where is our challenge?

Agenda
Conclusion

AusNet Managed

Ariba
On Demand
Ariba Contract Management
• Manage all our Procurement Contracts and
associated documentation here
• Includes Bank Guarantees, Contract variations,
important communications
Ariba Sourcing
• Moved from On Premise to On Demand
• Optimised our Sourcing Event templates
• Refined Meta Data requirements

AusNet Managed
• Mirror SAP Outline Agreements as CIF catalogs
• Set up Punch-out catalog links with
selected suppliers
• Manage views of who sees what catalogs
Ariba
Catalogues
Manage prices,
Facilitate “shopping”

SAP
Our finance,
procurement, project
management system
• Manage Outline Agreements
• Link OA to Ariba Contract Terms
• Enable linking of Task Lists to OA items

Ariba
Network
The glue that connects
supplier content and
transactions with AusNet
Services’ transactions
• Picking correct Supply Partners
• On-boarding and training program not trivial
• Be sure to know the WIIFM for both parties

AusNet Managed

Agenda
Conclusion

The challenge of asset maintenance
Equipment count in SAP (thousands) by Eq_class
MISC
166K
SURGE
DIVERTER
58K
DIST
TRANS-
FORMER
65K
FUSE
DISCON-
NECTOR
2.139K
TOTAL
98K
INSULATOR
117K
GASMAINS
127K
CONDUC-
TOR
256K
CROSSARM
401K
CABLE
412K
POLE
439K
76% of
equipment count
in 5 main
categories

EAM core solution – PM link to MM & scheduling
Notification
• Work Requests
• Also used to record history
of work performed against
an asset.
• Captures
problem/cause/remedy codes.
• Connects with Mobility to
enable field workers to receive
work.
• Connects with GIS to spatially
group work
Mobility
Work Order
GIS (LatLonGo)
Project
• Captures costs associated
with work
• Notifications are attached to
work orders
• Have operations that can be
scheduled
• Settle/assigns costs to Fixed
Asset, WBS, Profit Centre or
Cost Centre
• Connects with Mobility to
enable field workers to receive
work
• Connects with GIS to spatially
group work
Fixed Asset
Register
Procurement
/ Inventory
MRS
• View of the work order
operations
• Assign the work to the
work teams
• Manipulate dates easily
• Sets work to dispatched
so mobility can pick it up
• Brings in HR resource
info
• Show the view spatially
HR Resource
Info
• Access and complete
work assigned.
• View my work
spatially
• View my work spatially
• Open selected work back in MRS or PM
PM

Work order example
Contract #
Buyer

Auto PO creation is critical, as is fixed pricing
Purchase
Order
Purchase
Requisition
Work
Order
ARIBA
Network
Then SAP automatically generates a Purchase Requisition
Subsequently a modified ME59N is triggered when the OA
referenced is a ZDP type to convert the PRs into POs
Finally, the PO is routed through Ariba Network to the supplier
(based on the PO transmission setting on the vendor record)
When the work order calls out CUs with task lists,
and the “control key” is set to PM03 and the Purchase Req field is
set to “immediate”, and WO status is Released

End to end – scheduling work to invoice:
3rd party processing via SAP Ariba
26
Service Entry
Sheet
Purchase Order
Requisition for 3rd
Party Service
Work Order
SAP Ariba Service Provider
PO /
WO list
SES
csv file
RCTI or
Invoice
1
2
3
5
4
6
7
7
3PI

Agenda
Conclusion

Calling Adobe e-Sign from Ariba Contract Management
1. Sourcing
Event
4. Add
Signers
5. Adobe
eSign
launched
6. Signatures
obtained
3. Signature
Task
2. Contract
Workspace
7. Signed Contract is
automatically loaded into
Ariba Contract Workspace
Docs copied
from Sourcing
Event
From dropdown
or added
manually
Adobe task automatically
launched by Ariba when
clicking “submit” in
signature task
Steps 5 and 6 are Adobe
eSign processes, intuitive,
requires no training

Project learnings and issues
 Started early, yet still ran out of time
 Stakeholder identification – 5 groupings
 Full impact on suppliers
 Impact of Ariba Network fees – Benefits vs. Cost consideration
Stakeholder Management

In summary
 Define business problems
 Understand E2E solution across all work-streams
 Don’t expect perfection
 Stakeholder management
Focus on where you can have a real impact

Thank You Cor van der Scheer
Procurement Processes &
Systems Manager
+61 413 150 545
Transmission Distribution

Salt River Project
Sam Cutruzzula, ERP Supply Chain Manager

What I’ll Cover
About Salt River Project (SRP)
SAP ERP Landscape
Strategic Sourcing Results
Key Points to Take Home
Q&A

SRP is the 3rd largest public utility in the US
Provides electricity and water to more than 2 million customers in
central Arizona
Integrated utility, providing generation, transmission and distribution services
Operates or owns multiple power sources including Nuclear, Coal, Gas, Hydroelectric, Solar,
Wind, & Biomass
Ranked #1 by JD Power among large western electric utilities for residential electric service.
Who is Salt River Project?

SAP ERP landscape
SAP implementation kicked off in May 2011 with a go live of May 2013
Scope included SAP ECC 6.0 ,MM, FI, OpenText, Power Plant, Vertex & BW/BI modules
Heavy integration with Maximo work management system
October 2015 upgrade to ECC Enhancement Pack 6

Application selection process
On Premise vs. Cloud
Custom interfaces by application
Fit/Gap by application
Business demonstrations
Cost analysis
Software selection
Deployment

SAP Ariba application landscape
OUTBOUND
Transaction cXML
SAP ERP
Ariba
Network
Supplier
Supplier Receives PO,
Change PO, Cancel PO
Supplier Creates SHIP NOTICE
Supplier Creates SERVICE SHEET
Supplier Creates INVOICE
INBOUND
Transaction cXML
Firewall
SAP
Business
Suite Add-On
(Mediated)
PI
Server
Buyer
Buyer
Buyer
PAYMENT Dispersed to Supplier
Supplier Creates ORDER CONF.
Invoice Status
Payment
Solution
Online
CSV
cXML
EDI
Early Payment Proposal
Remittance Advice
Email
Fax
cXML
EDI
Open
Text VIM
Inv
POs
ECC
Procurement
Content
Supplier Creates Catalogs
Shopping
Cart
Requisition

SAP Ariba solution usage and adoption
Ariba Sourcing Pro
Multiple templates for RFPs
Ariba Spend Visibility
Data enrichment & categorization
Ariba Procurement Content (Catalog)
Punch-out & External catalogs for indirect material
PO & Invoice Automation
3 way match PO & Invoice totals

SAP Ariba driving results
Ariba Sourcing Pro
Standardized Templates = increased throughput
Date enrichment identifies maverick spend & sourcing opportunities
Point and click indirect ordering and automation
Electronic collaboration
Immediate error correction
Reduced match exceptions

Results-driven measurement
Ariba Sourcing Pro
Governance driven – “All RFP’s over $100k”
Identify 5 Strategic Sourcing events
Reduce Req to PO time by 40%
Increase on-time-delivery by 5%
Reduce duplicate invoice count by 75%
Reduce scanned invoices by 95%

Key points to take home
Thorough Analysis
Application version verification
Business buy-in for selection
Demonstrations
Utilize SMEs in development & roll-out
Staged roll-out vs. Big Bang
Benefits Realization Plan

Thank you
Contact information:
Sam Cutruzzula
Salt River Project
Sam.cutruzzula@srpnet.com
linkedin.com/in/Samcut

Sundar Kamak
Vice President, Solutions Management
Products & Innovation
SAP Ariba
One Towne Center, Suite 1550, Southfield, MI
T +1 650.390.1030 M +1 734.985.5900
sundar.kamak@sap.com
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