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Staying focused on procurement’s business value: CEVA’s CPO shares strategy
Jennifer SikoraVP Marketing
CombineNet, Inc
Steve HallModerator
Procurement Leaders
Simon Boggis FCIPSCPO & Executive Vice President Global
Procurement CEVA Logistics
25th September 2012 3:00pm BST | 4:00pm CEST | 10:00am EST
Copyright © 2012. CombineNet, Inc.
Next-Generation E-Sourcing for Increasing Spend Under
ManagementCombineNet Introduction
CombineNet Company Overview
Copyright © 2012. CombineNet, Inc.
Established in 2000.
Global: Offices in Pittsburgh, PA; London, UK; Hamburg, Germany. Partners for Latin America, Middle East, APAC.
Customers: Global 2000 spanning CPG, Food & Bev, Retail, Manufacturing, Transportation, and more.
The Company The Technology Customer Value
Capture >2X spend under E-Sourcing management.
Address complex spendswith advanced functionality.
Fast implementation and broad adoption for any type of user.
Nearly 100% see full payback after 1st sourcing event.
Best of Breed Solutions that improve Strategic Sourcing – holding 21 U.S. patents.
Software-as-a-Service (SaaS) delivery model for ease of adoption and scale
Easy integration into your environment to complement existing applications.
Best of Breed E-Sourcing Solutions
Copyright © 2012. CombineNet, Inc.
CombineNetSpend
Analysis
CombineNetContract
Management
CombineNet ASAP
CreateRFxpress for E-RFX or E-Auction
BidExpressive Bidding®Expressive FeedbackEvent Management
AwardScenario Analysis & Bid Optimization
Supporting End-to-End E-Sourcing for All Spend Categories with Advanced Technology Solutions
CombineNet ASAP® for Strategic E-Sourcing
SaaS-based Best-of-Breed product used by sourcing teams and their suppliers.
Speeds, simplifies, and centralizes the creation and management of sourcing events of any size, scale, or complexity.
For any spend category (direct materials, indirect materials, transportation, services).
Complements and enhances existing solutions and processes.
Key Differentiators:
Optimization Engine handles extensive data inputs; 21 patents.
Scenario Builder enables rapid and advanced ‘what-if’ analysis.
Expressive Bidding® and Expressive Feedback support an expressive, collaborative marketplace between buyers and suppliers.
Fast Implementation – 1 ½ day training, quick-start wizards, template uploads, event editing, and more enable fast, smooth adoption and immediate ROI.
Copyright © 2012. CombineNet, Inc.
Copyright © 2012. CombineNet, Inc.
Where Do Our Customers Use Us Today?
Based on FY2011 data
Across All Spend Categories:Direct, Indirect, Transportation, Packaging, Services
- Spends Sourced (sampling) -ChemicalsCommoditiesFats & OilsFood IngredientsRaw MaterialsResinsSteel
Capital ExpensesConstruction Mat’sDisplaysFleet VehiclesOffice SuppliesMarketing/MediaTelecom/IT Equip
Air FreightDrayageOceanLTLParcelTruckloadRail/Intermodal
Armored Car SvcsFacility ServicesLaborLegal ServicesMeetingsPrintingTreasury/Finance
Bottles/VialsCansCartonsCorrugateFlexible FilmsPrinted LabelsPallets
From the Routine… 51% of events have <100 items
… To the Complex 20% have >1,000 items 20% have >50 suppliers 18% have >10,000 bids
Increasing Spend Under Management:Large European Conglomerate
>1,000 e-sourcing events conducted annually.Ariba user since 2007.Adopted CombineNet in January 2011.More than 2X Increase in Corporate Spend Managed between years 1 and 2 since implementing CombineNet ASAP.
Copyright © 2012. CombineNet, Inc.
$7.5 Billion E-Sourced in 2012
(projected)
Ariba CombineNet
2010 2011 2012012345678
Customer Example #1:$ Billion in Spend Managed Annually
Increasing Spend Under Management:Large Retailer
Procurement organization tasked with capturing non-merchandise (Indirect) spend.Long-term Procurement Suite user.Adopted CombineNet ASAP in 2010:– Captured “Sacred-Cow” spends
including Transportation.– With CombineNet ASAP, able to
leverage the collective spend across all stores in sourcing events.
Estimated 225% Increase in Spend E-Sourced in 2 Years
Copyright © 2012. CombineNet, Inc.
Ariba/SAP CombineNet
2010 2011 20120
0.5
1
1.5
2
2.5
3
3.5
Customer Example #2:$ Billion in Spend Managed Annually
We Do this for Companies Just Like Yours
Copyright © 2012. CombineNet, Inc.
A Wide Variety of Customers across All Industries
CEVA’s Procurement function:Creating superior value
Simon Boggis FCIPSChief Procurement Officer
CEVA in a nutshell
11
Revenue: €7 billion
Employees: over 51,000
Locations: over 1,000
Presence: in over 170 countries
Combined storage space: 10 million sq m
Figures for Year Ended, 31 December 2011
CEVA's Procurement function | Creating superior value
Balanced sector portfolio
12
Automotive 28%
Technology 22%Consumer & Retail 21%
Industrial 16%
Other 7%
Energy 6%
CEVA's Procurement function | Creating superior value
Strong and diversified customer base
CEVA's Procurement function | Creating superior value
CEVA’s Procurement functionDiverse global team
Global team
•Diverse community of procurement professionals•Experienced team with category expertise driving thought leadership and shared best practices•Center-led eSourcing program and strategy.
Rigorous process
•Five step sourcing methodology•Supplier performance management•Balanced scorecard (including risk evaluation).
Supported by innovative technology
•Spend Analysis – C-GAP•eSourcing Solutions•BAIT – savings tracking solution•GUARD – asset redeployment solution.
• Category Management: global, regional and local approach• Supplier Relationship Management: think globally, act locally• Risk Management: assessment, management, monitoring• Global Procurement Accredited by Chartered Institute of Purchasing and Supply
CEVA's Procurement function | Creating superior value
Market conditions are driving requirements for innovative sourcing solutions
• Requirements for better quality and more adaptive service and products
• Demand for higher flexibility in operations
• Ability to foster options and stay flexible – taking into account such “soft factors” as safety, quality, environmental concerns and overall supplier stability
• More demanding end customers
• Classic strategic sourcing modelsare inflexible and in fact limit the options that are on the table
• Traditional sourcing approaches limit the ability of suppliers to suggest or propose alternatives to a standard specification
Increased complexity of the supply chain
Today’s supply chain
Early 2000s supply chain
• Component standardization allows production to be spread globally to optimize costs
• Multi-country sourcing with consolidation hubs before shipping to end customers
• Supply chain control and visibility are critical
• Compliance to regulations throughout the supply chain
Globalization driving increasing complexity
CEVA’s eSourcing evolution (2008 – 2012)
2007 2008 2009 2010 2011 20120
20406080
100
Number of e-Auctions
Advanced eSourcing Traditional Sourcing E-Auctions, Online RFX
• 2008 – Limited Experience. 100% of e-Auctions supported by Global Procurement. Limited Number of eSourcing Champions.
• 2009 & 2010 – Advancing. 20% of addressable spend covered by eSourcing. 51 events conducted in major BUs. eSourcing Policy.
• 2011 - Building Business Unit competency and eSourcing confidence. 75 e-Auctions completed in 2011 covering over €152 million spend. Global three year eSourcing strategy .
• 2012 - Strategic approach for category eSourcing. Increase value proposition for Business Development and Ocean. Accelerate benefits delivery through Advanced eSourcing - CombineNet.
Completed Categories Ongoing
Ground Transportation Packaging Optimization
Temporary Labour Intermodal
Office Supplies and Print Payroll
Packaging
Transport Modelling:
Ground Rail Ocean Air
Security
Fuel Margins
Outsourcing
Marketing
Hardware
Warehouse Racking
CEVA's Procurement function | Creating superior value
Where do we want to be in 2013?
• Penetration of eSourcing tools: exceeds 50% of the total addressable spend of the BU projects in the budgets• Country eSourcing Competencies - at least one ‘proficiency level 1’ within four geographical regions (Northern Europe, SEMEA, Americas, Asia Pacific)
• Drive maximum value from advanced eSourcing solutions (CombineNet)• Realize business wide engagement• Drive eSourcing excellence through organizational capability and impeccable execution
eSourcing Strategy Implementation Objectives
Deliverables
Performance Metrics
• eSourcing integration with analytics tools
• Business Units self sufficient
• Reporting of eSourcing savings
• Extended collaboration with functions and operations teams
CEVA's Procurement function | Creating superior value
CEVA’s strategic approach for category eSourcing Co
mpl
exity
Value/Spend
Advanced e-Sourcing Advanced e-Sourcing
Traditional e-SourcingQuick Wins/Supplier Margin Reduction
Traditional & Advanced e-Sourcing - Maximize Commercial Advantage
Hig
h
High Low
D
AB
C
High complexity and low value/spend initiatives
High complexity and high value/spend strategic initiatives
High value/spend and low complexity initiatives
Low complexity and Low value/spend
CEVA's Procurement function | Creating superior value
Why advanced eSourcing? Categories Sourced with CombineNet
UK Ground Transportation (FTL) Australia and New Zealand Forklift Trucks European Pallets
• €27 million spend, 1,360 Lanes, 42 Suppliers
• Six sites, 119 starting postcode locations
• Five percent savings identified• The right balance of cost and
supply chain value achieved• Stronger carrier relationships
through system engagement• Fast time to market - saved two
to three weeks of data crunching
Key Differentiators:• Suppliers can add value through expressive, creative and alternative bids (equipment type, transit time, volume offers, discounts, capacity levels, rebates)• TCO Modelling – rates, accessorial, fuel• Flexible RFI - analysis of all KPIs (capacity, service levels, sustainability safety and risk factors• Flexible scenario analysis and award optimization - rapidly review the data and compare different possible award outcomes• Real time Expressive feedback – configurable ways to show suppliers their competitiveness • Flexible Training: web-based training for buyers and participating suppliers, comprehensive user guides.
• Netherlands, Belgium, Germany, France
• Top 10 pallets with historic volume of 240,000 pallets, Spend - €1.2 million
• Seven European suppliers engaged
• Nine percent savings identified - RFX advanced sourcing.
• Non price attributes captured: min volume, lead time, payment terms.
• 237 Forklift leases• 20 CEVA sites impacted• Suppliers bid on same template
structure• Comprehensive specifications
made possible• Enabled packages to provide
lower-cost options• Supplier feedback enabled• Savings TBC.
Global spend analytics:Transforming data into value
The value of data with integrity
Data
Challenge• Having a single
source of the truth for both identifying opportunities and measuring cost reduction success
• Ability to implement and track progress on areas such as working capital, contract compliance and invoice rationalization programs
CEVA’s Solution• Spend analysis -
CEVA’s C-GAP - the first and the last step of the strategic sourcing process that drives total value
• “Companies that do Spend Analysis save 67% more than companies that do not.” Aberdeen Group
Benefits• Acceleration of
Sourcing Initiatives
• Driving NWC Improvements
• Supplier rationalization
• Invoice rationalization
• Procurement compliance
• Customer development opportunities
CEVA's Procurement function | Creating superior value
Criticality of data integrity:Data that is processed, organized and structured
CEVA's Procurement function | Creating superior value
C-GAP
ERP ecosystems External Business Risk Data
Integrating spend analysis with eSourcing:Transport modelling illustration
• Scenario building/analytics and optimization enables:
• Information orchestration to meet desired end state•Set-up of agile, scalable solutions to
rapidly sense and respond to changes in customer requirements•Risk mitigation by managing
promotions, demand, seasonal product and ‘early buy’ opportunities• Information visibility to facilitate fact-
based decisions.CEVA's Procurement function | Creating superior value
Compliance
Carrier management
SustainabilityMarket intelligence
Risk scorecard
Working capital
Conclusion
• Procurement professionals assisted with advanced sourcing tools should yield far more than just cost reduction
• In order to continue to advance the procurement profession and delight customers we must continue:- Doing things better- Pushing the boundaries where we never could do before - Ensure continuous innovation is a catalyst for creating superior value.
CEVA's Procurement function | Creating superior value
CEVA's Procurement function | Creating superior value
Q & A
Jennifer SikoraVP Marketing
CombineNet, Inc
Steve HallModerator
Procurement Leaders
Simon Boggis FCIPSCPO & Executive Vice President Global
Procurement CEVA Logistics
25th September 2012 3:00pm BST | 4:00pm CEST | 10:00am EST