© 2010 Ariba, Inc. All rights reserved. © 2010 Ariba, Inc. All rights reserved.

Supplier Enablement &

Management

Presented By: Catherine Hills

© 2010 Ariba, Inc., All Rights Reserved. The contents of this document are confidential and proprietary information of Ariba, Inc.

CIPS Southern Africa Pan African Conference

20% or less of the supplier base is likely

to be electronically enabled

© 2010 Ariba, Inc. All rights reserved. 2

High administrative costs on non-

value add activities:

•data entries

•chasing approvals

•correcting paperwork errors

•finding missing paperwork

•solving invoicing unknowns

•taking phone calls

•expediting orders / payments

An enterprise often maintains

another set of processes to

support the rest (80% of the

supplier base) = time, money,

resources

What does this

mean?

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Key Message: Business As Usual Is No

Longer an Option

How Enterprises Plan to Communicate with Sellers*

% o

f R

espondents

Today’s communication methods

Planned methods

0%

20%

40%

60%

80%

EDI Supplier

networks

XML & other Web-

based protocols

Email

LessEDI

PhoneFax

Less manual

B2B Channel

N=1,400

• 30% of buyers are tasked to

reduce costs in the source to

pay process

• 72% of buyers rate supplier

enablement as a top priority

• Electronic sourcing, ordering

and invoicing has become the

preferred means of buyer-

seller communication

*SOURCE: Aberdeen Group and Ariba survey of 1,400 suppliers

© 2008 The Aberdeen Group

© 2010 Ariba, Inc. All rights reserved. 4

Collaborative Business Commerce Is More

Complex Across An Entire Supplier Base…..

Buyer 1

Sourcing

Procurement

Finance

Seller 1

Sales

OrderMgmt

Finance

Seller 2

Sales

OrderMgmt

Finance

Seller 3

Sales

OrderMgmt

Finance

© 2010 Ariba, Inc. All rights reserved. 5

…. Or Customer Base

Buyer 1

Sourcing

Procurement

Finance

Buyer 2

Sourcing

Procurement

Finance

Buyer 3

Sourcing

Procurement

Finance

Seller 1

Sales

OrderMgmt

Finance

Seller 2

Sales

OrderMgmt

Finance

Seller 3

Sales

OrderMgmt

Finance

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01-

Communication

The Business Problem in Supply Management

Buyers' and Suppliers' systems are designed to optimize their own

processes

Every system is different; no connectivity

The problem is multiplied for every

Buyer and Supplier connection

What is Supplier Enablement?

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The process of electronically

connecting suppliers (or other trading

partners) to a Buyer Enterprise’s

Supply Chain environment

A properly developed Supplier

Enablement initiative will …

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•Produce a higher % of supplier participation

• More effectively reduce costs

• Yield fewer transaction errors

• Shorten the time period for measurable ROI

• Provide Suppliers with full technical capability without the usual

high technical barriers, a minimal start up fee, low cost of ownership

& ability to use solution with multiple customers

# of suppliers enabled – BIC vs. ERP

71%

18%14%

92%

8%0%

0 to 100 101 to 1k Over 1k

BIC ERP

“ERP automation is confined

to the top 20% of suppliers,

and that’s only if you’re lucky.”

Source: Aberdeen Group, Supplier Networks, Supplier enablement strategies for ERP Customers by Vance Checketts, February 2007.

This approach integrates 80% of

transactions by value but fails to address

the remaining 80% by volume

Despite being

the most

challenging to

achieve,

participation of

the 80% of

suppliers by

volume must be

achieved to

realise

the full ROI &

benefits

© 2010 Ariba, Inc. All rights reserved. 10

How Suppliers are Defined

Goods OnlyGlobal IntegratedHigh Volume

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12

Differentiator - Connecting the Entire Supply Base

Integrated

Hosted / Email /Fax

Key SuppliersStrategic, high-dollar/high-volume

Infrequent / Low VolumeLow-dollar/low-volume, company-

specific

Mid-Tier SuppliersHigh-volume, high-dollar, high-

‘maintenance’ suppliers used by

many other buyers in community

Integrated / Hosted

Potential Value to Supplier From Engagement

Reduced

Cost of

Sales

Increased

Customer

Intimacy

Buyer Contract

Compliance

Reduced Manual

ProcessingInventory

Reduction

Order

Accuracy

Invoice

Accuracy

Reduced

DSO

Shorter Sales

Cycles

135/31/2011 © 2001-2009 Quadrem International, Ltd.

Alignment to

Customer Process

Improved

Responsiveness

Visibility into Buyer

systems

Increased Vendor

Ratings

SME’s perceived hurdles

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1. Limited Funding• Investment in EDI or XML technology is

expensive & unjustified for small volumes

2. Change• Overcoming change – psychological hurdle

(similar to postal to faxed POs)

3. Connectivity• Complexity to connectivity needs to be reduced

4. Limited Resources• With required level of expertise to accomplish

integration

• Complexity in integrating with multiple

customers

5. Business Benefits • Misperception that it is only the Buyer who

benefits

• Suppliers can eliminate costly manual

intervention, streamline processes & receive

quicker payment

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• Rapid deployment = Accelerated Benefit

Value

Internal

Effort

Time

“Do it yourself”

Most initiatives stall at less than 300 suppliers

Your program with outsourced supplier enablement & management

Untapped

potential

What makes us different?

Buyer

Buyer

Buyer

3rd Part Services

(e.g. qualification)

Buyer Network Supplier Network

16

Buyer

Effective Supplier Enablement

Buyers’ point of view

© 2010 Ariba, Inc. All rights reserved. 17

1. Concern about imposing a cost on

the supplier• Integration & connectivity needs to be

accomplished simply & affordably

2. Shear number of suppliers• When hundreds of suppliers are involved,

enablement can be measured in years &

therefore unachievable without adding

significant resources

3. Lack of understanding about the

supplier community• Little is usually known about the 80% of

suppliers doing smaller volumes of transactions

• Supplier management is critical

4. Internal commitment• The importance of supplier enablement &

management is to be understood & embraced

by the Buyers that interface with suppliers to

achieve common, shared goals for the

Enterprise across all Depts

Best Practices for Supplier Enablement

… to maximize supplier participation & minimize supplier

disruption

• Take a supplier orientated approach Recognize that every supplier is an independent business

Suppliers are capable of making decisions that make best sense for them

Structure the campaign so suppliers can choose the best connectivity & integration

approach for their business – avoid one size fits all

Maximize supplier participation – communication strategy

• Create a broad range of non-exclusive technology solutions

Suppliers have a wide divergence in deployment of technology

– Some at an advanced stage

– Others adverse to using technology

Suppliers need to a range of non-exclusive technology solutions

to accommodate different levels of technological sophistications

185/31/2011 © 2001-2009 Quadrem International, Ltd.

Case Study: Anglo American

Enterprise Development Hubs

© 2010 Ariba, Inc. All rights reserved. 19

Anglo ED Hubs

Anglo ED Hubs

Small hub PC

Hubs

connected

via Internet

Buyers use Source Centre to

generate RFP & adjudicate winning

quote

Hub Servers

Hub

Servers

Suppliers access SupplyCentre in the

ED Hubs3

3

Local Community access via Anglo Enterprise Development hubs Supplier Benefits:

Increased Sales

Enhanced Customer

Satisfaction

Improved Competitive

Position

Reduction of costs

Streamlined efficiencies –

quicker payment

Best Practices for Supplier Enablement

… to maximize supplier participation & minimize supplier

disruption

• Develop a planned, orchestrated communication process A Communication Strategy is key

Internal communication - garner internal commitment– One common message to suppliers

– Identify a Business Champion - to be fully engaged & fully endorse the initiative

– IT participation – integrations standards

– Accounts Payable participation – eInvoice is key to ROI

– Supplier enablement targets linked to internal KPIs

External communication– Communiqué – details on e-procurement programme, electronic document roll out, compliance dates etc

– Strong written message from the Buyer, supported by webcasts, supplier days, follow up calls, escalation

point etc.

© 2010 Ariba, Inc. All rights reserved. 20

Best Practices for Supplier Enablement

… to maximize supplier participation & minimize supplier

disruption

• Use a Phased Implementation Approach for example:

Phase 1 - MRO purchasing– POs to 80% of the supplier community based on supplier invoices received

Phase 2 – MRO Purchasing– Migrate suppliers to eInvoicing

Phase 3 – MRO Purchasing– Add additional documents e.g. Invoice Response, Remittance Advice

A phased approach provides an opportunity to measure the actual ROI

returned in each phase

The learning curve for each phase will produce refinements in the overall

process to be realized in subsequent phases

© 2010 Ariba, Inc. All rights reserved. 21

Best Practices for Supplier Enablement

… to maximize supplier participation & minimize supplier

disruption

• Provide ongoing dedicated support

Resources are needed to keep the programme going & move it forward when the next

challenge in the journey arises

Suppliers need help staying informed of the Buying Enterprise’s requirements as well

as answering their day-to-day technology & process questions

© 2010 Ariba, Inc. All rights reserved. 22

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Supplier ROI

Benefits Suppliers Are Realizing Today

• 20% year over year growth in the business

Even during the economic downturn

• 15-20% reduction in days sales outstanding

6 to 25 days shaved off the cycle

• 10-20% productivity gains in invoice and order processing

60-75% gains for sellers using cXML and PunchOut

• 10-15% increase in customer retention

• 45-60% reduction in error rates and error reconciliation costs through cXML

• Increased accuracy of customer orders through catalog-driven orders

10%+ increase through CIF catalogs

60-80% increase through PunchOut catalogs

• Higher revenue by increasing wallet share 26-32% through increased buyer compliance

• Greater visibility into catalogue usage, orders/change orders, and invoice/payment status

Roll-Out Lessons Learned / Direct Feedback /

Results

Supplier on-boarding isn’t complete until Training is finished

• Recorded materials improving speed of training

Annual Updates / Refresher Important – supplier maintenance

e-Procurement is a journey that results in constant improvement in

the breadth & depth of electronic integration between a buyer

enterprise & its suppliers

Extend the depth of supplier enablement from 20% to 90% participation

Extend breadth of supplier enablement to include a new set of electronic

business transactions

Measure the extensions through KPIs

245/31/2011 © 2001-2009 Quadrem International, Ltd.

Thank you for your time!

© 2010 Ariba, Inc. All rights reserved. 25