Quantum Improvement in Procurement Efficiencies

DE

NV

ER FALL

SU MMIT

2014

Quantum Improvement in

Procurement Efficiencies with State-

Of-The-Art Services and

Applications

Procurement Physics:

Krishnan

Former Head of Strategic Sourcing at GE

Alex CaminoVP Marketing & Communications, Softtek

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DE

NV

ER FALL

SU MMIT

2014

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All Rights Reserved © Valores Corporativos Softtek S.A. de C.V. 2014.

Quantum Improvement in

Procurement Efficiencies

KrishnanFormer Head of Strategic Sourcing at GE

Alex Camino

VP Marketing & Communications


Company profile

4

United States (1)*

Mexico (4)*

Costa Rica

Puerto Rico

North America &

Central America

Argentina (1)*

Brazil (1)*

Chile

Colombia

Paraguay

Venezuela

Latin

America

Spain

A Coruna (1)*

Madrid

United Kingdom

Europe

China

Shanghai

Beijing

Wuxi (1)*

IndiaBangalore (1)*

Asia

Process driven

› Lean Six Sigma, CMMi Level 5, ISO, ITIL

› Robust, process-driven methodology

› Accomplished company with a 30-year history; global coverage & strong nearshore capabilities

Robust capabilities

› More than 8,00 professionals located across

30 sales and operations offices around the world.

› 10 Global Delivery Centers (GDCs)

› Full application lifecycle services

Proven reliability

› Serves top-tier organizations around the globe;

several Global Fortune 50 companies

› 92% revenue from recurring clients

› Independent industry analyst recognition

› IAOP Global Outsourcing 100 list 2009 – 2012

› “Strong Performer” for SAP implementation

services by Forrester

› Challenger in Gartner’s Magic Quadrant for

Offshore Application Providers (2006-2007)

Solid financial profile

› 15% Revenue CAGR 2006-2011

› 26 % EBITDA CAGR 2006-2011

› Global operations with strong revenue

diversity across industries and geography

Revenue by vertical

Financial Services & Insurance

Industrial & Manufacturing

CPG & Retail

Software & High-Tech

Government

Other

22%

29%

20%

15%

6%

8%


General Electric

5

› For almost 150 years, GE is a top 50 fortune global company, investing,

finding and developing solutions in:

› Appliances for businesses and consumers

› Energy

› Power and Water

› O&G

› Intelligent Platforms

› Healthcare

› Aviation

› Finance

› Transportation


Agenda

6

› Background: Why and what is procurement transformation?

› Tools and practices used for effective sourcing

› A roadmap to world class sourcing

› Discussions and Q&A


Some perspectives…

7

› What have companies done to incrementally to improve procurement?

› What has this lead to?

› What is the real end-state they hope to get to?


Typical Voice of customer and ideal state of Procurement Systems

8

Spend Analytics

Contract Life Cycle

E-Sourcing

Cost, Risk and

Performance review

Reporting Dashboards

& Visualization

Procurement Services @ Softtek aimed to support the above transition


› Integrate and leverage fragmented systems to help drive productivity and efficiency.

› Migrate to outcome based solution with partners using cutting edge technologies.

Challenge

9


SpendAnalytics

10


Spend AnalyticsDefined framework

Data Sources

GL

Business Modeling

Data Visualization

User Interaction

Legacy RelationalSpread Sheets ERP Social Web

Services

Business Rules

Data Integration

Alerta Data Quality Analysis Databases


Spend AnalyticsFramework in detail

12

Analyze and Report

KPIs / Measurements Deep dive analysis Opportunities & Benefits Flexible Visualization Easy Refresh

Classify

Flexible Classification (Multi Dimensional)

Commodity Groups Sourcing RulesClassification Structures

(Grouping – Items, Suppliers)

Cleanse

Supplier and Item Normalization Cleansing Rules for DatasetSupplier, Transactions, Items,

Sourcing group relations

Data Collection

Supplier Data Invoice Data PO Data Item Data Expense Data AP Data


Data Cleansing

13

Schema Level Problems

Instance Level Problems

Multi Source (Multiple Data

Sources.)

Schema Level Problems

Instance level Problems

› Illegal Values

› Uniqueness

Violations

› Ref. Integrity

Violations

› Dependencies

Violations

› Missing Values

› Misspellings

› Abbreviations

› Embedded Values

› Misfielded Values

› Dependency

Violations

› Word Transportation

issues

› Duplicate Records

› Contradicting

Records

› Wrong References

› Naming Problems

› Same name for

different objects or

different names for

same objects

› Structural Problems

› Different Data

Types, Different

Integrity constraints,

Different Structure

etc.

› Overlapping data

› Aggregation level

issues

› Duplicate

Information issues

› Source Specific

Identifiers Issues

Data Cleansing

Single Source (Each

Business ERP)


Spend Analytics - Outputs

14

Client Spend Data

Savings

Opportunities

Process Excellence

Supplier

Management

Compliance

› Deliver savings Opportunities

› Qualify savings

› Manage off-contracted Spend

› Recover Discounts and over payments

› Process Improvement Opportunities

› Co-operative Procurement Opportunities

› Benchmark Procurement/Spend

› Supplier Consolidation Opportunities

› Manage Risk

› Increasing Diversity opportunities

› Leveraging Global Suppliers

› International Legal Compliance

› Internal Sourcing Process compliance


ContractLife CycleManagement

15


Contract Life Cycle Management(CLCM) ServicesStreamline. Automate. Perform. Measure. Comply

8

What is CLCM?Process to automate and streamline

the complete contract and agreement lifecycle

from creation to execution, tracking and archiving.

Applicable for new and existing:

› Customer Contracts

› Supplier Contracts

› Contractor Contracts

Benefits:Productivity – Process Efficiency, Collaborative Negotiation, Compliance Management

Revenue Optimization – Cost control and Return on Investment

Analytics – Business Insights, Performance Tracking, Revision history

Rollout Delivery: Flexible options , Tailored Solutions, Integrations

Accessibility – Web access, Reliable Search, secure permissions, strong user adoption

Review existing contracts in any stageWorkflow Integration

Ready to deploy

from August 2014

TrackCapture ApproveCreate SignNegotiate

2. Contract

Collaboration

and Negotiation

1. Contract Creation

and Authoring

5. Contract

Closeout / renewal

and analysis

4. Contract

Administration3. Contract

Execution

The

Contract

lifecycle


Contract initiation and

creation

Contract collaboration

Redlining & negotiations

Execution and upload of SLA and Metrics

Administration to check for

compliance and monitor value

Close Out. Renewals and

Analysis for savings

› Use of Contract

Software

› Transactional SLA

› Task orientation

› Guided by Application

Define a plan to monitor

performance and compliance

and create renewal prep

documents

Analysis: Proposed strategy for

renewal negotiations› Check for clause consistency

› Propose control mechanism

› Review industry benchmarks

› Provide ‘prep documents’ to

negotiate

Transition Strategy for Contract Management Services


Procurement Transactions:› Request to Pay

› Marketplace

› Vendor Payment support

› Supplier Collaboration Systems

18


Options for E Sourcing – Buy to PayMarketplace

Demand Order Receive Enter Pay

Purchase

requisition

Purchase

Order

Receipts Invoice

Purchasing – Buy to Pay activities

› Buying the good or service and working with the supplier to ensure the purchase order was received correctly

› Receiving the requested goods or services in either a centralized receiving group or received by the person who

ordered the goods or services

› Management of the incoming invoice that is received from the supplier who provided the good or service

› Disbursing the payment to the supplier for the received good or service

› Reporting on purchases, payments and monitoring flow of cash

Receipt

of Goods

& Services

Purchase Goods

& Services

Invoice

Processing

Payment

Processing


Options for E Sourcing – Buy to Pay


To

llga

te 3

To

llga

te 2

Due

DiligencePilot

Kick-off

Knowledge

Transfer

Transition

Planning

Steady-

state

OperationsTo

llga

te 4

To

llga

te 1

VoC

Built on proven Transition Toolkit for hundreds of transitions

VoC

› Failure Mode Effect Analysis

› Best practices from other

transitions

› Clear hand-offs, segregation of

duties

› Project management team

supports End-to-End transition

› One-on-one alignment of support

team with business; IT, HR and

Quality

› Key operating leaders to be

aligned

Prevention

› Service-level monitoring and

reporting

› Checkpoint reviews by team of

domain experts

› Frequent and joint tollgate review

mechanism

› Overall governance framework

› Voice of customer survey

› Escalation process

Detection

› Single point of contact for each

location

› Team structure aligned to client

organization

› Transition structure alignment

with business

› Alert – Escalation to Senior

Leadership

Responsiveness

Time tested transition process that accelerates change and minimizes risk

Transition Strategy

5


Global Procurement Transformation Services – Overview and Approaches

22


GO

VE

RN

AN

CE

, RIS

K

AN

D C

OM

PL

IAN

CE

Global Procurement Model supported by integrated architecture

23

Supplier, Contract,

Commodity, Item, etc.

Supplier self-service: setup, update, content

management, PO transfer, invoicing

Materials

Management

Buy-to-PayCategory

Management

Sourcing

Market

analysis

Bid

analysis

Demand

analysis

Compliance

analysis

Performance

analysis

Total cost

analysis

Analytics (“opportunity identification”)

Information Management Strategy

GL / Budgeting / Project management / HRIS

System of

Record

System of

Decision

Web-based information exchange networks

Suppliers

System of

Process

Quality Control

E-RFx/

Should Costing/

Auctions

Contract

Management

Supplier

Management

eProcurement,

eInvoicing,

T&E, PCard

Inventory

Control, Logistics,

Asset

Management

Spend

analysis

Inventory

analysis

Cash/Payment

analysis

System of

Engagement


Roadmap to a Global Procurement Model

24

Year4-Year5

Bu

y-t

o-P

ay

Cate

go

ry

ma

na

ge

me

nt

Str

ate

gic

So

urc

ing

Year2- Year3Year 1

Supplier on boarding

P2P transactions

Cash payment analysis

Compliance/Risk review

Category Spend analytics

Common Taxonomy

Supplier consolidation

Preferred/critical supplier

Spend Portal/collaboration

Contract management

RFx of vital few

Spend Analytics - slices

Self service PO

E-invoicing

Supplier punch-outs

Critical price books

Preferred supplier

strategies

Market data inputs

Channel strategies

Market data inputs

Channel strategies

BCC Sourcing

Marketplace

Services Catalogs

P2P Collaboration

Indexed contracts

Aggregators/ ISM

DMP/ Cost outDMP = Direct Material Productivity

ISM = Integrated Supply Management

Contract Life cycle

Predictive Analytics

Supplier Perf. Analysis


Change Management

25

Outsourcing

ImplementationFocused on

creating new

delivery model

Change

ManagementMaximize

performance with

new model

Service

Management &

Governance

Adoption(easy to use)

Alignment(flexible configuration)

Compliance(Governance checks)

Business Results

› Performance

› Growth

› Benefits

› Sustainbility

3 step process of managing transitioning BPO outsourcing @Softtek

Adopt and Align to

comply from As-Is to

To-be

Knowledge Transfer

of As-Is Process

Define End State

Metrics/SLA

12

All Rights Reserved © Valores Corporativos Softtek S.A. de C.V. 2013. All Rights Reserved © Valores Corporativos Softtek S.A. de C.V. 2014.Confidential.


Alex Camino

VP Marketing & Communications,

Softtek

[email protected]

Krishnan

Former Head of Strategic Sourcing

at GE

DE

NV

ER FALL

SU MMIT

2014

Session #10

Procurement Physics: Quantum Improvement in

Procurement Efficiencies with State-Of-The-Art Services and

Applications

Speakers:

Alex Camino

VP Marketing &

Communications, Softtek

[email protected]

Krishnan

Former Head of Strategic

Sourcing at GE

Documents

Quantum Improvement in Procurement Efficiencies