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20131003 Erste Group Procurement Supplier Relationship Management
- 2. EGP – Member of Erste Group © 2013
All rights reserved Page 2
Erste Group went public in 1997
with a strategy to expand its retail
business model into CEE
Acquisition of more than 10
banks between 1997 and 2008
Erste Group now runs market
leading retail banking operations
in the new EU member states,
which remain underpenetrated
compared to their Western
European markets
2000
2001
2005
2006
2007
1997
2004
2003
New holding
structure
improving
Group
Governance
2008
History: Austria‟s first savings bank: Founded in 1819
Erste Group‟s customer base
grew from 600 000 in 1997 to
17,3 million in 2011
- 3. EGP – Member of Erste Group © 2013
All rights reserved Page 3
Erste Group in Central and Eastern Europe
Source: http://www.sparkasse.at/erstebank
- 4. EGP – Member of Erste Group © 2013
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History: Erste Group Procurement (EGP)
Page 4
2006
2007
In the new Erste
Holding structure s
Proserv reports to
the CFO
(previously to the
COO).
2011
s Proserv renamed to
Procurement Services
GmbH in HQ and Erste
Group Procurement on
group level
2012
Groupwide roll-out of:
• Procurement Policy
• Procurement
Handbook
Foundation of s
Proserv
100% subsidiaries in
• AT (HQ)
• CZ
• HU
• SK
2009
`07-`09
Onboarding
further
subsidiaries:
• HR
• RO
• RS Proc.
Dept.
Start of NGPS
project
(New Group
Procurement
Solution)
2013
`09-`10
`10-`11
Onboarding of
• UA Proc. Dept.
• ME Proc. Dept.
2010
Start implementation of
Lean Enterprise Order
Management (LEO)
New reporting tool
(Qulick View)
Service optimisation
• SRM Management
• Category Management
Increase the value of a
centralised procurement
company
• Transparency
• Service Quality in Sourcing
and Procurement
• Cost Reduction and Cost
Avoidance
• Ethical Standards
• Fraud Prevention
Finalisation of new
structure and
documents:
• Business plan in place
• Alignement with
Procurement
Handbook
`11-`12
• New RFx and eAuction
tool (Electool)
• New Project Tool (CAP)
- 5. EGP – Member of Erste Group © 2013
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Erste Group Procurement: Procurement of the Erste Group
Functional
LeadershipbyEGP
Erste Group Bank AG - Holding Board
CEO CFO COO CRO Group Markets Group Retail
Group Property
Group Org/IT
Erste Group Procurement
(Procurement Services GmbH)
Operations/Processing
EGP AT
(incl. Centre Functions, as Finance,
HRM, Org/IT)
EGP RO
EGP CZ
EGP SK
EGP HU
EGP HR
Procurement RS
Procurement ME
SPV DRUCK
Erste Group Procurement Facts & Figures:
Central procurement function within Erste Group
Headcount approximately 180 employees
Process owner for group-wide S2P process
AT: Warehouse with more than 3 000 sqm
GCIB
Source: http://www.sparkasse.at/erstebank
Finance
Sourcing AT
Sourcing CZ
Sourcing SK
Sourcing HU
Sourcing HR
Sourcing RO Erste Group Procurement RO
Erste Group Procurement SK
Erste Group Procurement HU
Erste Group Procurement AT
Erste Group Procurement CZ
Erste Group Procurement HR
RS3)
1) Department of Erste Bank AD Podgorica – Montenegro
2) Department of Sparkasse Bank Makedonija AD Skoplje
3) Department of Erste Bank Novi Sad
SPV – DRUCK
EBSPK
Sourcing RS
Sourcing
Board Division Team in Matrix
Org/ITHRM
ME1)
Management Board
Erste Group Procurement – (Procurement Services GmbH)
MK2)
Procurement MK
- 6. EGP – Member of Erste Group © 2013
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Clearly defined EGP in Erste Group
EGP Cooperation with customers based on:
Contract (SLAs)
Responsibility (NDAs)
Code of conduct
Purchasing Policy & Handbook
Aligned priniciples within Erste Group:
…The central and single competence for procurement activities within Erste Group lies in Erste Group Procurement (EGP)…
…EGP has to be involved in any external spend of any Erste Group majority owned entity. Any exception has to be agreed between EGP
and the respective Erste Group entity…
…All external spend should follow the principle of Total Cost of Ownership (TCO) and Quality, Cost and Delivery. In balance with socio-
economic, ecological and customer relationship factors the assignment of a contract has to follow the highest added value for Erste
Group principle…
…EGP owns, defines and aligns with the local entities the procurement processes within Erste Group...
- 7. EGP – Member of Erste Group © 2013
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EGP Focus
Before
RFxP/RFQ
RFx
Supplier Relation Management
Contract Management
Category Management
Today
Foundation
and
Core
Supplier Relation Management
Contract Management
Category Management
Implemen-
tation
- 8. EGP – Member of Erste Group © 2013
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Clearly defined EGP Services in Scope
based on Lean Enterprise Order Management (LEO) Principles
Sourcing
International/Local
Tactical
Purchasing
Order
Management
Business
Process
Outsourcing
Operations of
support
processes
for the local
entities, i.e.
• Print Shop
• Warehouse
Provide
cost-efficient
services
Purchasing Project
Contract Creation
Category Mgmt
Vendor Mgmt
Contract Mgmt
Requisition
&
Ordering
Documentation
&
CR/CA Calculation
Receipting
&
Evaluating
Invoice
Processing
Erste Group Procurement
Purchasing Project
Contract Creation
Category Mgmt
Vendor Mgmt
Contract Mgmt
Requisition
&
Ordering
Documentation
&
CR/CA Calculation
Receipting
&
Evaluating
Invoice
Processing
Purchasing Project
Contract Creation
Category Mgmt
Vendor Mgmt
Contract Mgmt
Requisition
&
Ordering
Documentation
&
CR/CA Calculation
Receipting
&
Evaluating
Invoice
Processing
Customised
Procurement
Services
Additional
requirements
requested
by customer
and are not in
the scope of
procurement
Customer
Satisfaction
Compliance with
Outsourcing
Policy Provision
of Outsourcing
Project
Documentation
Compliance to
regulatory
and
internal
requirements
Outsourcing
Competence
Center
Strategic, monitored
purchasing in a team
approach
Ensure fast, easy and efficient execution
By EGP By EGP or Customer
On Customer‟s
Demand
Additional Services
for the customer‟s benefit
Invoicing as a % of 3rd party spend Invoicing in a separate fee (SLA)
In Scope
Out of Scope
LEO principles
- 9. EGP – Member of Erste Group © 2013
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external data
• Analysing
supplier sales
data
Page 9
Sourcing
internal data
• Analysing spend
of entity/
supplier/
category
• Strategic basis
for purchasing
projects
Reporting Package
(SAP FI / QLIKVIEW)
• Allows the linking of information
to a 360° view of projects,
contracts, product categories
and suppliers.
• “In-house” development
supplier / Country /
Project Management tool (“CAP”)
• Live eAuctions
• Collecting of informationen (RfI*)
and offers (RfQ*) in a defined
specification form
eAuction, RFx
(Electool)
Sourcing is the strategic process of identifying potential suppliers, conducting
negotiations, and agreeing on supply contracts in order to achieve a sustainable cost
reduction and meet the customer‟s expectations.
Supporting tools
*RfI = Request for Information
*RfQ = Request for Quotation
Demand analyses
based on
Category Management
Supplier Management
Contract Management
Identification of potential suppliers
to conclude a GMA
support through
eAuction/RFx/negotiation
GMA
Cross – checking internal vs external data
LEO principles
- 10. EGP – Member of Erste Group © 2013
All rights reserved Page 10
Sourcing International/Local
Supplier Relationship Management Tools
• Standardised
Questionnaire for
Assessment and Self
Assessment
• Document Management
System, Reminders
periodically and
automatically
• Scoring through
Business Line
• Risk Management
(restricted party
screening & financial
screening)
• Ethics
Supplier
Audits
• Similar to Category
Management
• Long Lists and Short
Lists
Supplier
Strategies
• Escalation management
• Single Point of Contact
and coordination of all
participants (Business
Line, Legal, Countries,
Suppliers)
• Identification of
disqualified suppliers
Escalation
Identify and focus on key suppliers.
Implement supplier relationship model in cooperation with Business Line.
• HYR/QBR
• Standardised
presentations
• Participants: Business
Line, Supplier and EGP
• Measuring the
cooperation
• Search out further
cooperation/collaboration
Business Reviews
• Standardised
Questionnaire for
Assessment and Self
Assessment
• Document Management
System, Reminders
periodically and
automatically
• Scoring through
Business Line
• Risk Management
(restricted party
screening & financial
screening)
• Ethics
• Similar to Category
Management
• Long Lists and Short
Lists
• HYR/QBR
• Standardised
presentations
• Participants: Business
Line, Supplier and EGP
• Measuring the
cooperation
• Search out further
cooperation/collaboration
- 11. EGP – Member of Erste Group © 2013
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Supplier Relationship Management Tools
Standardised Questionnaire for Assessment and Self Assessment
Page 11
Supplier Audit Scorecard
Weighting
• Financial Healthcheck – 30%
• Quality & IT System – 25%
• Governance – 15%
• Social – 15%
• Environmental – 15%
Scoring
• < 2.5 - failed the audit, no business
• 2.5 - 5 opportunity to do business,
but should provide a plan for
correcting the areas where they
performed weakest.
Supplier Evaluation Scorecard
Weighting
• Quality – 15%
• Delivery – 15%
• Costs – 15 %
• Responsivness – 15%
• Innovation – 15%
• Risk – 10%
• Company & Corporate Social
Responsibility (CSR) – 15%
Any supplier who fails to obtain a score
of 75% or more, maybe put on probation
or even removed from an preffered supplier.
Supplier Audit Questionnaire
Type of data collected
• Company Information
• Financial Information
• Operational
• Governance
• Social
• Environmental
• Business Reference
• Additional Information
- 12. EGP – Member of Erste Group © 2013
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Supplier Relationship Management Tools
Document Management System
Page 12
DMS
Supplier ‚A„ on Group Level
Content:
• Business Reviews
Documentation (ppt,
minutes, approvals, tasks)
• Reports, Questionnaires,
Scorecards
• Financial Reports
Supplier ‚A„
local country
Contract System
Supplier ‚A„ on Group Level
Content:
• Contracts (e.g. GMA)
• NDA
Project Tool
Supplier ‚A„ on Group Level
Content:
• Project Documentation
• CR/CA
Supplier ‚A„
local country
Supplier ‚A„
local country
Content on local level:
• Project
documentation
Content on local level:
• Business Reviews
Documentation (ppt, minutes,
approvals, tasks)
• Reports, Questionnaires,
Scorecards
• Financial Reports
Content on local level:
• SLAs
Supplier ‚A„
local country Supplier ‚A„
local country
Supplier ‚A„
local country
- 13. EGP – Member of Erste Group © 2013
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Supplier Relationship Management Tools
Risk Management
Page 13
Process
• All supplier records from all systems are compared to the lists
• A fuzzy algorithm returns a list of technical matches
• The results are manually vetted and
• False positives are marked to avoid next run
• Positives are rechecked (on additional dimensions) and if confirmed escalated to Compliance Manager
• Part of the „know your business line resp. counterpart‟ process
• Flags a compliance issue against up-to-date information on embargoed country, restricted
party, and business rules lists.
SAP
Suppliers
Electool
suppliers
Other
Contractors
Query List
(automatic
search)
US Consolidated
Screening List
- Dept. of Commerce
- Dept. of State
- Dept. of the Treasury
EU Financial
Sanctions
AT National Bank
(Terror List)
Restricted
Party List
- 14. EGP – Member of Erste Group © 2013
All rights reserved Page 14
Q3/2013
CR/CA
3rd party
managed
spend
~ 4% CR
~ 1,36% CA
3rd Party
Spend
Cost Reduction / Cost Avoidance
In Q3/2013 – 4,6% CR as credible, transparent and
auditable savings achieved.
→ Real and permanent reduction in the unit cost of goods manufactured or
services rendered without impairing their suitability for the use intended or
diminution in the quality of the product.
Peer Group Benchmark*: 1.80%, World Class Benchmark*: 3.00%
In Q3/2013 - 0,95% CA achieved.
→ A purchasing action by means of which certain material/supplier increases are
not incurred by the purchasing firm.
Peer Group Benchmark*: 0.20%, World Class Benchmark*: 1.39%
Savings resulting from structured purchasing activities
How much do we save?
EGP Cost Reduction/Cost Avoidance evolution since 2011
*based on Hackett Report
~ 4,6% CR
~ 0,95% CA
~ 2,5% CR
~ 0,6% CA
2011
CR/CA
2012
CR/CA
Positive trend as outcome
of structured procurement
processes.
- 15. EGP – Member of Erste Group © 2013
All rights reserved Page 15
Drove continuous high level of customer satisfaction while at the
same time decreasing budget and Cost of Acquisition.
3% 2% 1,5% 1,4% 1,2% 1,1%
87%
93%
98%
92% 93%
2008 2009 2010 2011 2012 2013
Cost
Development
In Mio €
CoA
Customer
Satisfaction*
*completely satisfied and satisfied cumulated
Erste Group Procurement (EGP) KPIs since 2008
- 16. EGP – Member of Erste Group © 2013
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Thank you!
Erste Group Procurement
Procurement Services GmbH
Robert SEMETHY
Managing Director
Chief Procurement Officer
Email: robert.semethy@erstegroup.com
- 17. EGP – Member of Erste Group © 2013
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Maverick Spend: Identification
Page 17
Maverick Spend is any spend of money to any external supplier/company covered by the EGP “In Scope”
definition, where EGP was either too late or not at all involved* in the set-up of the commercial agreement.
EGP Maverick Spend Report
Covered by
Purchase
orders
Covered by
contracts
Spend to be
processed
by EGP
Maverick
spend
Maverick Spend Definition graph
1. Based on SAP/FI, Contracts, Purchase Orders
2. Responsible is EGP
3. Considering
• Spend relevance
• Involvement of EGP
• Service Agreements
Maverick Spend Calculation
*currently not measuring late involvement
• The numbers have to be understand in a full context.
• Periodically reviews with the customers
• Ensures alignment and agreement on Maverick Spend data.
• Reporting to show progress on data clean-up.
• Agreement with customers, on concrete actions in order to
decrease the Maverick
- 18. EGP – Member of Erste Group © 2013
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Valuable Customer (customers as suppliers)
Objective:
To clarify WHO is treated as a „valuable customer“ and HOW this group of customers is treated within
ERSTE Group as supplier. It shall avoid that special customers are not considered in tenders within
product/service classes of their business operations.
Basic principles:
• Valuable customers are the top customers per country, based on data provided by Large Corporate or
Corporate.
• The valuable customers are identified and updated in regular intervals
Supplier Long List Supplier Short List Selection
Valuable customers are
automatically on the Long
List if they can provide a
service in a
category/region
If a valuable customer is not
qualified for the short
list, Management Board of
EGP can overrule and
enforce inclusion
If a valuable customer is not
the best bidder, the opportunity
loss is calculated and the decision
is taken jointly by Management
Board EGP and an according EG
Board Member.
- 19. EGP – Member of Erste Group © 2013
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Our Way to World Class Procurement
Financial Perspective:
- COA < 1%
- CR/CA > 4,4%
- 20 mio av. spend by buyers
Learning Perspective:
- A team of good purchasers
- Pro-active working
- Willingness of responsibility
- Good working atmosphere
Vision:
World Class Procurement
organisation in the
financial area
Customer Perspective:
- Our customers adhere to our vision and support it
- Our customers see high value added
in EGP services and are ready to pay for this
- Our strategy supports customers targets
Processes Perspective:
- Paying PO‟s only
- Maverick spend < 10%
- Spend coverage > 90%
- Delivering core processes
- Fully integrated AR/CM/CR-CA/PM/eSourcing
- Mature Category Mgmt and SRM
- 20. EGP – Member of Erste Group © 2013
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Sourcing International/Local
Category Management/Matrixorganisation
Sourcing Specialist, the first contact for the customer and
groupwide Category Manager and Supplier Relationship
Manager.
145 categories divided according to local and international opportunities.
Find opportunities, create & implement a strategy in a
team approach with the Business Line.
Matrixorganisation Category Classification
Category Management
FM Facility Management (FM) IT Informationstechnology (IT) S&O&M Service & Operations & Marketing (S&O&M)
FM FM Maintenancerelated Services/Work IT Personal and Office Computing S&O&M Car Fleet
FM FM Investmentrelated Services/Work IT Telephony and Communication S&O&M Cards
FM Goods IT Networks S&O&M Consulting
FM Energy IT Branch Equipment S&O&M Logistic
FM Security Equipment IT Servers/Storage/Host Components S&O&M Marketing
FM Property Management IT Infrastructure Software S&O&M Office Equipment & Office Operation
IT Direct Application Software S&O&M Personnel Management
IT IT Services S&O&M Travel
IT Indirect Application Software S&O&M Security Service
Sourcing Categories
- 21. EGP – Member of Erste Group © 2013
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Sourcing International/Local
Contract Management/Spend Data Analysis/Data Reporting
Structure spend by suppliers, categories, countries and entities
Real-time Business Intelligence Tool for management
Define Spend categories, analyse it (spend & suppliers)
In a team approach with the Business Line.
Budget and Category Analysis Tool Data Reporting
Integrate all supplier contracts in Contract management solution and establish proactive & timely contract activity plan
Contract Management
- 22. EGP – Member of Erste Group © 2013
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Tactical Purchasing (TP) and Order Management (OM)
Purchasing Project
• In 3 countries available
• Integration with MM / Accounting
• Covering about 55% of the spend
SAP SRM
The fast, easy and efficient execution of routine administrative tasks. These are day-
to-day buying activities, which are low volume with no strategic importance or based
on agreements that have been set in place.
Supporting tools
• In all EGP countries available
• Efficient eAuction through web based
forms
• Supplier‟s self registration for saving
resources
eAuction
(Electool)
• Standardised articles
• Order Processing for low purchases
• Integration in Warehouse Management
System
Catalogue/OM Software
(Online E-Shop)
Demand
(online or
catalogue)
Purchase requisition
through GMA or catalogue(OM)
Tender Project (TP)
Offer Agreement
LEO principles