This document summarizes a panel discussion on supplier management. It includes presentations from Frank van den Heuvel of DSM, Johan Ramström of SKF Group, and Kristin Ang of SKF Group. Frank's presentation focused on DSM's supplier lifecycle management program including supplier qualification, segmentation, performance measurement, and process improvements. Johan discussed SKF Group's purchasing transformation journey and implementation of SAP Ariba solutions for upstream strategic purchasing processes. Kristin discussed SKF's purchasing process framework and systems landscape prior to the new solutions. The panel discussed best practices for supplier management and system implementations.

1. Frank van den Heuvel, DSM
Johan Ramström, SKF Group
Kristin Ang, SKF Group / June 14, 2016
Zen and the Art of Supplier Management
Public

2. Agenda
Overview and introductions
Panel Presentations
 Frank van den Heuvel - Business Process Expert - Sourcing, DSM
 Johan Ramström - PMO Director, Group Purchasing, SKF Group
 Kristin Ang - Group Purchasing Strategy & Business Transformation Director, SKF Group
Q&A

3. The Art of Supplier Management

4. Panelists
Frank van den Heuvel
Business Process
Expert - Sourcing, DSM
Johan Ramström
PMO Director, Group
Purchasing, SKF Group
Kristin Ang
Group Purchasing Strategy
& Business Transformation
Director, SKF Group

5. Agenda
Overview and introductions
Panel Presentations
 Frank van den Heuvel - Business Process Expert - Sourcing, DSM
 Johan Ramström - PMO Director, Group Purchasing, SKF Group
 Kristin Ang - Group Purchasing Strategy & Business Transformation Director, SKF Group
Q&A

6. Frank van den Heuvel
Business Process Expert Sourcing and Vendor Master Data
June 2016
Supplier LifeCycle Management
“De-complexing – Beyond savings”

7. 1. Beyond
savings
• Complexity
2. Supplier
Lifecycle
management
• SQA
• Segmentation
• Performance
measurement
3. New SQA
functionality
• Standard
functionality
Supplier
Qualification
management project
4. Scrum
• Using scrum
methodology to become
agile in a rapid pace
5. 1 Source
• Single Source of Truth
6. Supplier
reduction
• Reducing the number of
suppliers
Agenda

8. 7+% average
annual savings
€ 2billion spend
4 Cluster
strategies
approved by PLT
20 suppliers in
KSM (Key Supplier
Management)
Perf Mngt SystPeople – Processes - Systems
125.000+ suppliers in
systems
45.000+ active
suppliers last year
Contract compliance
from 18% to 60%
Active support to
60+ sites
SRMsingle largest DSM
IT-platform
DSM Sourcing Indirect Snapshot
Global Online
Procurement Platform

9. 9
System landscape
9
SRMq-MDM
BW

10. Goal Supplier Lifecycle Management
• Become more agile and deliver highest customer value in drive towards
preferred suppliers and optimized PtP process
• De-Complexing
- Reducing the numbers of suppliers
- Reducing and simplifying the number of contracts
- Simplifying the processes

11. SAP Ariba Solutions: Supplier Lifecycle Management
• Supplier Qualification & Approval (SQA)
• Supplier Segmentation process
• Supplier Performance Measurement and Evaluation
• Complaint handling
• Supplier Off boarding

12. Supplier Classification and Segmentation
Temporary
Suppliers <10K
Max. 15 moths
Approved
Suppliers
Contracted
Suppliers
Preferred
Suppliers
Supplierclassification
Initial Approval by
Contract Manager
Suppliersegmentation
Ariba
Discovery
Operational
Suppliers
Tactical
Suppliers
Strategic
Suppliers
Potential
Suppliers
DSM SAP Ariba
solutions
SQA
Segmentation
approval by
Category &
RegionDirector
Supplier approval
by Category &
RegionDirector
Commercial approval
by Category Manager

13. Supplier Qualification & Approval
Check
Approval by Regional Director & Category Director
2. Credit Risk Assessment of
the supplier
1.Trade Control violations
3. Compliance to DSM’s
sustainability requirements
4. (Where applicable)
pre-qualification on
Safety performance
Through a uniform process
and approval route
Ensure the upfront assessment of 4 elements of risks
TradeControl
Compliance
CreditRisk
Assessment
Sustainability
Assessment
Safetycheck

14. Supplier Segmentation
• competitive
position
• strategic alignment
• supplier regards
DSM as a strategic
customer
Strategic fit
• impact on bottom
line
• potential value
• growth
opportunities
Business
value
• uniqueness of offer
and supplier
dependency
• potential business
risks
Business
criticality
• joint development
and innovation
opportunities
Innovation
potential
• comply with code
of conduct
• contribute to
sustainable
solutions for the
value chain
Sustainability
potential
Suppliersegmentation
Operational
Suppliers
Tactical
Suppliers
Strategic
Suppliers
SQ
A

15. Supplier Performance Measurement and Evaluation
• Business Commitment
• Security of supply
• Sustainability
• Quality and safety

16. Improvement project: Supplier Qualification
Management project
Customized SQA process
replaced by standard
Supplier Qualification
management project

17. Improvement project: Scrum
Expert Sourcing approver between Requisitioner and Budget approver
to steer the PtP process towards preferred suppliers:
1
•Ensure use of more preferred suppliers
2
•Creates better transparency of unused suppliers to off board
3
•Changing behavior of Requisitioner in a more effective & proactive way
4
•Will help to clean up wrong e-class in contracts
5
•Increases speed in follow up process for PSSC due to “first time right” shopping cart
6
•Sourcing is taking ownership
Expert Sourcing approver
Requisitioner Budget approver PSSC POSC >10K Buyer approver

18. Improvement project: 1 Source
“Single Source of Truth” of data streams with interfaces
SAP Ariba solution is single source of truth for e-sourcing
project data, except for Results Achieved document
SAP Ariba solution is single source of truth segmentation,
and qualification & approval
SAP Ariba solution is single source of truth contract data
MDM is the single source of truth for vendor master data
E-class is the single source of truth to identify the spend
category
Supplier guide is single source of truth for preferred
supplier status
VTT is single source of truth for purchase performance
and Results Achieved documents
SAP BW is the single source of truth for Spend Reporting
SAP® BW

19. Improvement program: Reduction of suppliers

20. Critical Success factors for solution adoption
• Management Commitment
• Global design team with DSM sourcing professionals
• Global support with regional champions / key users
• Keep it simple – De-Complex!
• Stable solution – no customizing
• Functional and Technical Training approach
• Room for business improvements – scrum projects
• SPE content improvements initiated by global users

21. Agenda
Overview and introductions
Panel Presentations
 Frank van den Heuvel - Business Process Expert - Sourcing, DSM
 Johan Ramström - PMO Director, Group Purchasing, SKF Group
 Kristin Ang - Group Purchasing Strategy & Business Transformation Director, SKF Group
Q&A

22. © SKF Group
SKF
SAP Ariba Solutions Upstream at SKF

23. © SKF Group
© SKF Group 16-06-08
A world of reliable rotation
The undisputed leader
in the bearing business
Slide 23
SKF vision and mission

24. © SKF Group
© SKF Group
SKF – a truly global company
• Established 1907
• Sales 2015 SEK 75,997 million
• Employees 46,635
• Production sites around 115 in 29 countries
• SKF presence in over 130 countries
• Distributors/dealers 17,000 locations
• Global certificates ISO 14001
OHSAS 18001 certification
ISO 50001
• # of buyers 435
• Purchased spend 40 BSEK
16-06-08Slide 24

25. © SKF Group
© SKF Group 16-06-08Slide 25
SKF Sales 2015

26. © SKF Group
© SKF Group 2016-06-08Slide 26
Poznan
Tver
St Cyr DGBB /
Sensors & Axleboxes Steyr
Gothenburg
Mekan
Luton
SuPB Torino
SuPB VP / TBU VP
SuPB & SB Charleston
Flowery Branch SuPB Pinghu / Y unit Pinghu
TBU Nankou / China Mfg Nankou
Nilai
SRB Dalian / China Mfg Dalian
Ahmedabad
Pune
TRB Jinan / China Mfg Jinan
Jakarta
Haridwar
Sopot
Lutsk
Cassino
Bangalore
SRB
Slewing & Thin Sections Bearings
China Manufacturing
SLB Cajamar
Massa
Bari
Ball Bearing SSBC / China Mfg SSBC
SLB Muskegon, MI
Sumter, SC
Plants 12a & 12b
Thin Section Suzhou
Monterrey
SLB La Silla&
SLB Kalos
Ball Bearings
CRB / TRB
Tortuguitas
Schw CRB / PB / Comp
Schw mTRB / LSB / Sheet metal
F&R Karnare
Schw Special Solutions & Tools
France PSD
PSD Germany
Luechow
SLB Avon, OH Xinchang – PEER
DGBB & Y-bearings
Ningbo – GBC
DGBB and TRB
Shanghai – GBC
TRB
Changshan – PEER
TRB
SRB Hanover /
MPU / PSD
SLB Avallon
Manufacturing Footprint

27. © SKF Group
© SKF Group 16-06-08Slide 27
Purchasing Transformation Journey
© SKF Group
The new purchasing process framework - 2013
Manage supply market
analytics incl supplier
innovation scouting
Optimize contracts
Manage Vision & strategy,
Operating model &
governance model
Conduct Regular Spend &
opportunity Analysis
Provide sourcing support
incl purchasing analytics
Execute & place purchase
orders
Target Setting &
Performance mgmt
Develop Annual plan for
strategic sourcing projects
Manage performance
reporting & budget
integration
Perform invoice
processing
Manage People &
Competencies
Execute Strategic
Sourcing Projects
Drive purchasing part of
product development
projects
Contract administration
Manage Purchasing
Processes & IT
Technology Systems
Manage QCDIM strategy
Manage supplier
development program
Master data maintenance
Manage Supplier
Relationship Management
Strategy
Demand management
strategy (indirect)
Manage supplier
onboarding & execute
local contract implement.
Goods receiving
Manage Communication
Manage commercial
relationship with suppliers
Perform & evaluate SQA
audits
Operational reporting
Manage Stakeholder
interaction
Manage purchasing risk
strategy
Manage spot buys
Supplier information
management
Management
Processes
Strategic Processes Operational
Processes
Transactional
Processes
Vision, strategy &
future state
New process
framework
New competence
framework
New organizational
design
Operational set-up
What should purchasing
be doing?
Which processes are
necessary to execute the
role?
Which competencies are
required to execute the
processes?
What organizational design
best ensures we match
processes, competencies and
roles?
What is the most efficient
way of delivering cost down
and align internally?
New RAPID model
Who is responsible for what
decision in the processes?
© SKF Group
Purchasing report EMT 12w42.2 Security Class: Confidential
The New Purchasing Competence Framework 2013
Purchasing Strategy
Purchasing Strategy
Opera ng model (solu on architecture)
Governance Model
Target se ng & performance management
Project Management
Project management
Change management
Strategic Sourcing
Supply Market analysis
Spend Analysis
Demand Management/Consump on
Policies
Supplier selec on criteria
Bid strategy
RFx Management
Nego a on strategy planning
Fact Based Nego a on
Contract design
Supplier Rela onship
Management
Supplier development
Supplier joint cost workshops
Supplier performance management
Supplier Quality
ISO 9000/ISO 14000
ISO 14001/ISO 50001
Supplier QA Audit/Supplier Quality
Performance
APQP/PPAP
Six sigma methodology
Cost management
Total cost of ownership modeling
Should cost modeling/clean sheet cos ng
Value Analysis/Value Engineering
Working Capital efficiency improvement
Business case design
Category Management
Category strategy & target se ng
Compliance management
Purchasing IT system support
Purchasing applica ons
Purchase-to-pay process
P2P process design
Transac on management
Risk Management
Currency Risk management
Supplier Financial health
Supply Chain disrup on
Geopoli cal risk
Commodity price development and vola lity
Supply chain visibility
Sustainability
Sustainable sourcing
CSR - Corporate Social
Responsibility
Code of conduct
New job roles
Current state &
opportunity
assessment
How are we performing
today?
What titles and job roles
do we need to perform
the processes?

28. © SKF Group
© SKF Group 16-06-08Slide 28
A new system and new way of working…

29. © SKF Group
© SKF Group
16-06-08Slide 29
Identified savings Captured savings Sustained savings
Approve
requisition
Complete
requisition
Invoice
payment
Invoice
verification
Receive
goods
or service
Procure
To Pay
Place
order
Manage RfQ &
Negotiate
Implement
Sourcing
Strategy
Develop
Category
Sourcing
Strategy
Perform
Market
Analysis
Determine
Business
Requirements
Conduct
Spend
Analysis
Select
Supplier
& Execute
Contract Manage
Contracts &
Compliance
Select good
or service
Supplier
Performance
Management
Contract & Supplier
Relationship
Management
Strategic
Purchasing
SKF Purchasing Process & Systems

30. © SKF Group
© SKF Group
Approve
requisition
Complete
requisition
Invoice
payment
Invoice
verification
Receive
goods
or service
Procure
To Pay
Place
order
Manage RfQ &
Negotiate
Implement
Sourcing
Strategy
Develop
Category
Sourcing
Strategy
Perform
Market
Analysis
Determine
Business
Requirements
Conduct
Spend
Analysis
Select
Supplier
& Execute
Contract Manage
Contracts &
Compliance
Select good
or service
Supplier
Performance
Management
Contract & Supplier
Relationship
ManagementStrategic
Purchasing
25 May, 2012 © SKF Group Slide 30
Master Data Management
Savings Activity
Reports (SAR)
Document and Manage
Saving projects
A to Z list
Approve and Document
Steel Route processes
Supplier PPAP Follow-Up
Approve and Document Product Part
Approval process
Purchasing Data Warehouse (PDW)
Analyze Purchasing Spend based on
various dimensions
Prognos
Analyze global
market price
indices (e.g.
oil, labor cost)
Impact Ordering
Manage IDM&S
catalog procurement
BPOpen
Governance and
Management
of Vendor Master Data
Purchasing Common
Coding (PCC)
Management of Links
between MCSS Local
vendors and Global Vendors
Code Master
Management of general
codifications (Categories,
Commodities, Global
vendors, Incoterms, Unit
of measurements)
Factory
Management of Sales and
Manufacturing units
information (organization,
responsibilities)
Supplier Master List (SML)
Management of Vendors information (Quality,
Development, Environment, Links with
factories, etc.)
Vendor Conformance Complaints (VCC)
Vendor Delivery Complaints (VDC)
Document and Follow-up vendors failures
Supplier Monitoring
Evaluate QCDIM
performance of vendors
Legacy 1
Legacy 2
Legacy 3
Legacy 4
Legacy n…
Purchasing As-Is Systems vs. Processes-REALITY

31. © SKF Group
8 June, 2016Slide 31
Manual synchronization Pulling
Picking &
Automatic synchronization
Jump
Picking
Picking ,
Automatic synchronization
& Update
ERP Systems
(MCSS,
MAPICS,
Movex, SAP)
Cognos cubes
& reports
(PDW,
SDP/Supperf)
Manual synchronization Pushing
Purchasing Lotus Notes applications links…this is just a fraction of our
complexity…

32. © SKF Group
© SKF Group 16-06-08Slide 32
Identified savings Captured savings Sustained savings
Approve
requisition
Complete
requisition
Invoice
payment
Invoice
verification
Receive
goods
or service
Procure
to Pay
Place
order
Manage RfQ &
Negotiate
Implement
Sourcing
Strategy
Develop
Category
Sourcing
Strategy
Perform
Market
Analysis
Determine
Business
Requirements
Conduct
Spend
Analysis
Select
Supplier
& Execute
Contract Manage
Contracts &
Compliance
Select good
or service
Supplier
Performance
Management
Contract & Supplier
Relationship
Management
Strategic
Purchasing
SAP Ariba Solutions
Upstream
SAP ERP & SAP Ariba Solutions
Downstream
SKF Purchasing Process & Systems

33. © SKF Group
© SKF Group 16-06-08Slide 33
Manage RfQ &
Negotiate
Implement
Sourcing
Strategy
Develop
Category
Sourcing
Strategy
Perform
Market
Analysis
Determine
Business
Requirements
Conduct
Spend
Analysis
Select
Supplier
& Execute
Contract Manage
Contracts &
Compliance
Select good
or service
Supplier
Performance
Management
Contract & Supplier
Relationship
Management
Strategic
Purchasing
SAP Ariba Solutions
Upstream
• The objective with the
Strategic Purchasing project
(STAR) is to implement a
standardized and common
way of working enabling
transparency, visibility and
compliance.
• All strategic purchasing and
contract & supplier
relationship management
processes are in scope.
Work in progress…Strategic Purchasing

34. © SKF Group
© SKF Group
Global Roll-Out
Q1
2017
Jan Feb Mar Apr JunMay Jul Aug Sep Oct Nov Dec Jan Feb
Q2 Q4Q3
2016
Mar
SAP Ariba Solutions Strategic Purchasing
Project scope
Q1
Global Roll-OutTemplate project Pilot roll-out
Wave 1
Main features:
• Sourcing process -RFx based on generic templates
• Legal contract repository incl. workflows
• Basic collection of supplier info via the Ariba Network
• Start the out-phasing of SAP SRM
Wave 2
Main features:
• Strategic sourcing (7 steps)
• SKF-specific questionnaires to collect
and manage supplier information (SPQ)
Wave 3
Main features:
• Creation of legal contracts based on pre-approved
clauses (clause library)
• Supplier Monitoring / Performance Management
(survey results reported in scorecards)
• Repository for category-related documents
• Project repository
Pilot
roll-out
Pilot
roll-out
Pilot
roll-out
Strategic Purchasing project plan

35. © SKF Group
© SKF Group
In scope Not in scope
Target audience
Group Purchasing (GPU)
(+ additional stakeholders potentially
involved in workflows: e.g. legal approvers)
N.A.
Regional scope All countries globally N.A.
Process coverage
Strategic purchasing:
- Contract management
- Strategic Sourcing
- Category Management
- Supplier Management
Operational purchasing:
- (Operational) contract management
- Ordering process, invoicing process
- Catalogues
- ...
Remark: Integration between legal contracts and operational contracts will be implemented with SAP
Systems SAP Ariba Solutions Upstream
• SAP Ariba Solutions Downstream
• SAP ERP
Purchasing
categories
All categories N.A.
Roll-Out
Pilot roll-out to a target group per wave
Q4 Global roll out
Integration
 Simple integration via upload of .csv files
 Integration to Identity Management (IDM)
Integration to SAP software
 
Scope clarification

36. © SKF Group
© SKF Group 16-06-08Slide 36
• SKF has approximately 35 000 suppliers, managed all over
the world (121 production sites in 29 countries)
• A segmentation model is developed with supporting
sourcing strategies, however not fully utilized.
• Supplier evaluations have different formats and even KPI’s.
• Difficult to track who has sent in evaluations
• Supplier information not contained in one central place.
• No central repository for contracts.
• Category strategies are being developed but in different
formats and various analytical framework.
• SAP Ariba solutions will enable standardization of supplier
data and contract repository
Supplier Management - Today

37. © SKF Group
© SKF Group
• A common system to manage supplier information
and performance across multiple sites
• Enables each business unit to independently
manage the performance of their suppliers, while
simultaneously aggregating data from across
business units to provide a comprehensive, top-
level view of supplier performance.
• Standard formats- standard KPI’s
• A true implementation of segmentation model,
usage of supplier champions.
• A harmonisation and standardization between all
our sites
16-06-08Slide 37
Supplier Management - Tomorrow

38. © SKF Group
© SKF Group
• A True 360 view
• Common shared view of Supplier
performance and Supplier Quality
• New solution for Saving Database
16-06-08Slide 38
Supplier Management - After Tomorrow

39. © SKF Group
© SKF Group
And then we can tell you about experiences
from the Journey that we just started
16-06-08Slide 39
Looking Forward to meet you in the Future

40. Agenda
Overview and introductions
Panel Presentations
 Frank van den Heuvel - Business Process Expert - Sourcing, DSM
 Johan Ramström - PMO Director, Group Purchasing, SKF Group
 Kristin Ang - Group Purchasing Strategy & Business Transformation Director, SKF Group
Q&A

41. Thank you
Speakers
Frank van den Heuvel
Frank.Heuvel-van-den@dsm.com
Kristin Ang
Kristin.Ang@skf.com
Johan Ramström
Johan.Ramstrom@skf.com
Martin Kotula
martin.kotula@sap.com
Moderator:
Keertan Rai
keertan.rai@sap.com

42. © 2016 SAP SE or an SAP affiliate company. All rights reserved. 42Public
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