Procurement and sourcing continue to evolve into a strategic function within the enterprise and today’s teams oversee everything from supplier sourcing, contract negotiations, supplier relationship management and compliance. Best-in-class teams now drive successful business outcomes by collaborating closely with the lines of business and leveraging transparency to tie projects to business impact. Companies looking to manage more strategic spend quickly realize that effective collaboration is key to more efficient and effective source to pay processes and outcomes.
Attend this webinar to find how your sourcing and procurement teams can leverage new age collaboration to achieve seamless, connected and impactful source to pay processes in 2017.
Learn about:
-Embedding collaboration across source to pay processes and improve performance
-Predicting business impact before project investment to prioritize spend
-Championing quality of spend and supplier-led innovation
-Collaborating across the enterprise and supplier network to really transform the enterprise
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Agenda
• Key Priorities for CPOs
• Procurement Trends for the Future
• Age Old Challenges Across Source-to-Pay
• Source-to-Pay: Let’s Break it Down
• Recommendations for Lasting Collaboration
• Q&A
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Priorities Depend on Your Level of Maturity
Source: Procurement Priorities depend on your Level of Maturity was from the Corporate Executive Board
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Key Priorities
Articulating the
business case and
the burning platform
Building a high
performing team
True partnering
with the business
SRM and driving
innovation
Having a significant
impact on the
bottom line
Leveraging
technology to our
best advantage
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Procurement Trends for the Future
Use of the cloud to
improve
collaboration
Self service within
the organization
Improvements in
eProcurement to
reduce cycle times,
increase
compliance….
Procurement
playing a bigger role
in driving
innovation and
becoming a partner
of choice
Use of AI for service,
data analytics, etc.
Keen focus on
reducing the risk of
data breaches
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Supplier Relationship Management:
Collaboratively “enlarging the pie” for all
“At the time of commitment, no value has actually
been created. Post award management of supplier
performance, in all relevant dimensions—safety,
quality, delivery, and total cost—is essential to
realizing the value that strategic sourcing has made
available.”
Global Supply Chain Manager
BP Exploration
SRM
Governance
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Basic Principles For SRM
● Single channel of communication and coordination
● Gear discussions to primary categories of impact generation
○ Innovation/strategic partnership/cost savings
○ Leveraging existing services not currently used
○ Drive growth
● Engage key BU executives, pre-wire by
○ Sharing company and BU goals and aspirations
○ Obtaining a similar level of information from supplier/partners
○ Focus on where both organizations can drive impact, share best practices
○ Line up participants based on agenda topics, including key decision makers
● Create “joint business plans” based on discussions
○ Joint selection of initiatives
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Source-to-Pay - Ideal View
Spend
Analysis
Sourcing
Contract
Management
Procurement
Invoicing
&
Payment
Supplier
Management
Upstream
● Understand spend
● Strategic sourcing process for various
categories
● Contracts, preferred pricing, terms, etc
● Drive significant cost savings
● Book or reinvest those savings
Downstream
● Digitize transactions and processes
● Optimize spend, capture savings
● Monitor compliance to contracts
● Smarter buying decisions
● Process efficiency
Collaboration across process, internally and externally
Holistic supplier management throughout
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Reality - Disconnected Processes & Information
Spend
Analysis
Sourcing
Contract
Management Procurement
Invoicing
&
Payment
Supplier
Management
● Spend data incompleteness and after the fact
● Sourcing - a lengthy process, only to have non-
compliance
● Where has all the innovation gone
● Maverick buying, off-contract buying still prevalent
● User experience still poor
● Invoicing process often not linked to procurement
● Supplier management often an afterthought
Limited Collaboration
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Covering More Spend
Indirect
Spend
$1 Billion
37% ($370M)
Not influenced by
procurement
28% ($280M)
Spot Buying
Most solutions will largely be focused on this...
35% ($350M)
Strategic Sourcing
Spend
And maybe some of this
?
?
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Challenge: Visibility
Manual & Legacy Sourcing
- Siloed data per group
- Version control
- No single source of truth
vs Collaboration
- Get everybody on the same page
- Project pipeline and alerts
- Elevated enterprise visibility
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Challenge: Business Outcomes
Manual & Legacy Sourcing
- Time consuming
- Security risk (email, formula problems, etc.)
- Suppliers and contracts
vs Purpose Driven Impact
- Target & support strategic initiatives
- Reduced risk and compliance exposure
- Real-time view of all initiatives, metrics, and outcomes
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“Spreadsheets bog down processes in many different
ways that have a noticeable impact on how long it
takes to get work done. They're fast and easy to set up,
but when they're used in collaborative, repetitive
enterprise processes, they become time wasters.
- Rob Kugel, Analyst, Ventana Research
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Project Pipeline & Spend Analysis
Expedite time to value
• Optimize for success by identifying projects with the highest potential impact upstream
Elevate enterprise visibility
• Spotlight sourcing with custom dashboarding for better cross-functional visibility
Champion internal wins
• Report on wins effectively across the enterprise to build rapport with the lines of business
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Sourcing: Organize - Systemize
Organize & template business process for speed to sourcing
• Make compliance simple with easily replicated models of success
• Eliminate overlap of process, job function & establish jr. training programs
Standardize processes
• Ensure consistency across regions & departments for shortened ramping
• Automate repeatable, resource-intense activities
Create a flexible & scalable sourcing system
• Deploy agile systems that allow teams to stay ahead of projects
• Continuously track & evaluate performance & adjust course accordingly
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Contract Management
Better understand today’s and prior project investment decisions
• Enterprise-smart application that prioritizes data for maximum value
• Real-time contract notifications are sent to your team and stakeholders
• Set reminders to conduct business reviews to track performance against a contract
• No surprises! Your team has lead-time to complete a detailed RFx.
Understand enterprise needs to source the right opportunities to grow revenue
• Identify expiring contracts to build your RFx pipeline
• Strategic payoff: plan your team resources in advance to focus on the most value add contracts
• A collaborative platform “teaches” your stakeholders about your enterprise operations and
contract process
• Complete your planning, sourcing, and contract process in a native platform
• Prevent rework! Information flow through each Scout product
• Efficiency and speed
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E-Procurement
• Remove the barriers and make buying
process simple and intuitive
• Allow for collaboration across
procurement, AP, employees,
managers, suppliers.
• Find solution for non-contracted
spend
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AP Automation
Collaboration across AP and P2P
process is key
• Improve efficiency, cycle time
• Reduce errors, disputes
• Visibility for the business &
suppliers
Globally compliant
• E-invoicing regulations
• VAT
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Recommendations
● Look for quick wins with stakeholder collaboration
● Think internally and externally
● Modern technologies allow you to implement and see ROI
in months not years
● Consider where collaboration can make an impact in S2P
Tony has more than 30 years of experience in supply management and finance at two highly respected Fortune 50 companies and started his professional career with Price Waterhouse in the audit department. As Chief Procurement Officer at WellPoint, Tony led the transformation, building the organization, processes and technology needed to meet the significant challenges Wellpoint faced. At Bristol-Myers Squibb, Tony was responsible for Global Sourcing & Supply Management. Prior to his supply management, Tony served as VP Finance and VP Financial Shared Services.
Stan Garber is Co-Founder of Scout RFP, a new breed, cloud-based strategic sourcing solution that allows organizations to make more informed purchasing decisions, faster. Prior to Scout, Stan Co-Founded ONOSYS, which was acquired by LivingSocial in 2012.
Tony
Tony
Tony
Tony
TONY -- I thought that this was an interesting graphic representation of three different ways of working with suppliers—SRM and driving innovation and input; supplier management or governance and lastly, signing the supply agreement and hoping for the best or what might be called “Not so benign neglect”.
You can see the dramatic difference in benefits derived from a well run SRM program, over simple governance and especially over Not so benign neglect.
TONY -- One aspect of an SRM program is holding supplier meetings where suppliers and their customers interact to innovate around a list of challenges and opportunities for their customers. Often, this takes the form of unstructured brainstorming. This chart shows a different approach used by Whirlpool where first Whirlpool evaluated their suppliers on their desire and capability to innovate. And then framed the areas of interest by Whirlpool in order to get more “shots on goal” or ideas that Whirlpool was interested in and would therefore pursue. I believe that the data ultimately showed that by using this approach, Whirlpool more than doubled the value that they got from their suppliers.
GE had another interesting approach to innovation. In a sense they valued ideas brought in from outside the company , more than internally developed ideas. The thinking was that if an idea was successful elsewhere, someone had kicked the tires and worked out the bugs.
TONY -- SRM needs to be a well coordinated process that has a long term focus. While cost savings may be the initial focus, more evolved SRM relationships move on to improving quality and cycle times, product innovation and even revenue generation, the holy grail.
Pre-planning for the event is critical. Both companies need to be prepared to share information about their goals, challenges, capabilities and key areas of focus. An agenda should be jointly developed and the appropriate resources from both parties should be scheduled to participate in the meetings. It is critical to involve key decision makers in order to get the right focus and resourcing for the ideas and projects that come out the meetings. This often results in the supplier winning business or recognizing new areas of investment for the future.
And most important, is to be clear about what will be done, quantifying the value of the ideas, committing the resources and then executing and tracking the progress.
So - source to pay or source to settle or upstream and downstream procurement...call it what you want. I think we would all agree that this is an ideal view of how it works.
Understand what/where you’re spending, enable a sourcing approach to address as much of this as possible, develop agreements, contracts with preferred suppliers and achieve savings. Try to figure out the accounting of those savings and hopefully invest some of these into areas of need.
On the downstream process...this ideally is where the savings are captured, transactions are digital and process is automated. Spend is optimized and compliance to contracts generates the savings. Great user experience makes procurement a partner rather than a roadblock.
Ideally - there is also collaboration throughout this process with the many many stakeholders involved from buyers, employees to procurement, suppliers, accounts payable, IT, finance.
Lastly, a big part of the process or at least very closely aligned with the process is supplier management.
The reality is this… it is a disconnected process and siloed information in many cases.
With spend analysis - often it is incomplete
Sourcing can be a very lengthy process, achieving a long term contract and terms...only to have often a high percentage of maverick spend.
And also for procurement - where has all the innovation gone...this is certainly something that has not been a traditional focus of procurement - but it should be.
And then you have a disconnected downstream process which itself can be siloed.
One of the oldest challenges in procurement really comes down to being able to influence more spend. As an example...take a company which has $1B in indirect spend….this is an example used by hackett. According to them…
And traditionally procurement solutions will tend to focus on this….maybe some of this...but have no way of addressing this.
Visibility is a huge problem in the process - as we just saw with the example many companies have spend happening in several parts of the business and procurement/sourcing are not in the loop on these types of purchases - we often fall back on a manual processes which causes the data to live within a few people’s inboxes.
To help drive visibility it’s critical to embrace collaboration. You want to bring the team together to have a constant flow of information. If we look at other parts of the business - marketing, sales, finance, HR, and others use tools and systems to get everybody on the same page and bring visibility to the enterprise.
Additionally, another big challenge we often hear about is a focus on business outcomes. Today it’s all about having access to data on-demand. If getting that information is extremely time consuming to the team or the information isn’t all in one spot - it can quickly impact business outcome and hurt the level of trust you’re building with the business partner.
Purpose driven impact is a phrase that we’ve started to hear in several companies. The idea is simply to focus on the business’ strategic initiatives and making sure those teams have access to real-time data so they can see what’s happening with their projects in a collaborative environment.
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Lets face it - when comes to eprocurement, the technologies that most are used to is old and outdated. It is not easy to use and typically has very low adoption. Focus solutions that remove barriers and make buying a simple process and a collaborative process...as you can see on the right here. Collaboration is at the heart of successful relationships with suppliers and stakeholders, and we make it easy for buyers, suppliers, and employees to collaborate. When you have all of the constituents on one system, you can ask questions, exchange ideas, or resolve disputes throughout a process
Also, there are solutions that can help in targetting non-contracted spend...e.g., tradeshift can do this by using a virtual card.
And the last mile of the the source to pay process. This is really where you want to be efficient but also effective and collaboration in the invoicing process also is key to faster cycle times, resolving disputes, accurate supplier information. Of course this should be done in an digital format and fully compliant wherever you do business.