More Related Content Similar to Efficient Spend Analytics to Drive Sourcing Pipeline and Savings Similar to Efficient Spend Analytics to Drive Sourcing Pipeline and Savings (20) 1. B Efficient Spend
Analytics to Drive
Sourcing Pipeline
and Savings
BMO Financial Group
Reed Elsevier
Dun & Bradstreet
© 2012 Ariba, Inc. All rights reserved.
2. Efficient Spend Analytics to Drive
Sourcing Pipeline and Savings
Clarity of spend is key to the management of any
profitable business. Many companies are forced to be
reactive due to lack of visibility across their spend
dynamics. In this session we will explore different
scenarios in which spend visibility became challenged,
the root causes for these issues, and the most
effective solutions.
2 © 2012 Ariba, Inc. All rights reserved.
3. Our Speakers
Greg Keeling, MA, MBA, FICB Eric Walsworth, Jim Lawton
Senior Manager, Strategic Director, Procurement President and General
Planning & Programs & Tools Manager
Infrastructure, Procurement &
Strategic Sourcing Reed Elsevier D&B Supply Management
Solutions
BMO Financial Group
3 © 2012 Ariba, Inc. All rights reserved.
4. Efficient Spend
B Analytics to Drive
Sourcing Pipeline
and Savings
The Spend Trend:
Ariba Spend Visibility @ BMO Financial Group
Gregory Keeling
Sr. Manager, Strategic Planning & Infrastructure
Procurement & Strategic Sourcing
BMO Financial Group
© 2012 Ariba, Inc. All rights reserved.
5. BMO Financial Group Disclaimer
BMO Financial Group (BMO) does not make any representation that the
results included in this presentation can be expected or obtained in any
implementation of any such products and services.
The information in this document is provided "as is" without any
warranty, either expressed or implied, for your private use only on the
understanding that BMO Financial Group does not have any liability to
you for providing this information whether or not you rely on it.
5 © 2012 Ariba, Inc. All rights reserved.
6. BMO Financial Group
• Established in 1817, BMO Financial Group is a highly diversified North American
financial services organization.
• With total assets of $538 billion as of January 31, 2012 and more than 47,000
employees, BMO serves more than 12 million personal, commercial, corporate
and institutional customers in North America and internationally.
• We serve Canadian clients through BMO Bank of Montreal®, our personal and
commercial banking business, BMO Nesbitt Burns®, one of Canada’s leading
wealth management firms, and BMO Capital MarketsTM, our North American
investment and corporate banking division.
• In the United States, clients are served through BMO Harris Bank, a major U.S.
Midwest personal and commercial bank, Harris Private Bank, with wealth
management offices across the United States, and BMO Capital MarketsTM.
6 © 2012 Ariba, Inc. All rights reserved.
8. BMO’s History with Ariba
1,500+ Enterprise Users
• Sourcing 100 core users (+ growing)
2008 piloted eSourcing with 3 - 4 RFPs 3,300+ Supplier Users
2009 almost 100% RFPs issued via Ariba
• Spend Visibility
2009 inaugurated spend analysis, launched with 2008 data for level set
Monthly enrichment of accounts payable data
• Electronic Invoicing
2011 design, build and launch
2012 deployment: goal 2,100 suppliers, eliminate 150,000 paper invoices
2013 complete deployment
• Contract Management
2011 design, build and launch
2012 full deployment and migration of 12,500 contracts
8 © 2012 Ariba, Inc. All rights reserved.
9. Ariba Sourcing
• Used for all sourcing events, including Opportunities
Assessments, RFx and Reverse Auctions
• Used for Workload Planning and managing sourcing projects
• Unified Sourcing Process template based on methodology;
incorporates conditional user tasks and workflows
• Approvals integrated into sourcing events
• Multiple dashboards for easy-access reporting
• Savings Form used to monitor project savings
• Leveraging tool for non-Sourcing project management
9 © 2012 Ariba, Inc. All rights reserved.
10. Ariba Invoice Pro
• Launched late 2011; broad supplier enablement in 2012
• E-Invoicing will:
Reduce number of paper invoices (currently 51% of total)
Reduce number of cheque remittances (currently 59% of total)
Reduce number of supplier inquires regarding payment
Reduce work effort to receive and manage invoices
and
Increase cash optimization – payment based on contract terms
Increase savings due to active discount management capability
Increase spend compliance by matching invoices to contracts
Increase visibility into invoice spend prior to data enrichment
10 © 2012 Ariba, Inc. All rights reserved.
11. Ariba Contract Management
• Migrate contracts from stand-alone
legacy system
~12,500 contracts
• Next areas of work
Contract compliant invoicing (non-PO invoices)
Contract authoring
Customized templates (contract workspaces
from Sourcing events)
11 © 2012 Ariba, Inc. All rights reserved.
12. Ariba Spend Visibility @ BMO
• Analysis of enterprise supplier and employee spend
• Consolidated data combines accounts payable data from all legal entities
(7 GLs) through a single UI for efficient analysis
• Centralized reporting group manages tool and data
• Data Enrichment: Oracle A/P is source of truth for spend data
• Top 90%+ of “sourceable” spend is enriched monthly
• Utilized for monthly cost management C-Level reporting
• Supports Strategic Sourcing decision-making
• Provides Sourcing category managers visibility into spend details
• Offers detailed reports for group Spend Efficiency Teams
12 © 2012 Ariba, Inc. All rights reserved.
13. Spend Analysis Maturity
Strategic Sourcing launched November 1996
• 1997 – 2003 (Manual Classification)
AP data extracted and manipulated in Excel or Access (50% of spend)
Basic information: Supplier Name, GL, Cost Centre and Spend
• 2003 – 2008 (Spend Cube – Standard Classification Library)
Formalized categorization of spend, only at summary level (not invoice)
Required significant MS Access skills to generate reports
• 2009 – present (Ariba Spend Visibility)
Increased sophistication of reporting and ease of use
Enriched spend data, supplier parentage
Business rules to focus on “sourceable” spend vs. payments
13 © 2012 Ariba, Inc. All rights reserved.
14. BMO Spend Tree
• AP data organized into areas of spend, providing
insight into 128 categories of products and services
at the segment level
• Category (5)
Subcategory (31)
– Segment (128)
» Classification (647)
• Based on Ariba Classification Taxonomy (ACT)
which is based on the UNSPSC (United Nations
Standard Products and Services Code)
• UNSPSC has many irrelevant categories for us.
Some relevant categories are often not semantically
convenient; needed to “BMOized”
14 © 2012 Ariba, Inc. All rights reserved.
15. Value of Data Enrichment
• Invoice line-item data enriched monthly
Informed by: supplier, invoice description, GL coding, business rules, ERP
commodity code
90%+ of invoice data enriched
• Non-sourceable spend not enriched
• Supplier parentage enriched using D&B information to provide Ultimate
Global Parent
• Enrichment provides:
Spend in a category
# of suppliers in a category
# of invoices / supplier
• Employee expenses rationalized based on enrichment
15 © 2012 Ariba, Inc. All rights reserved.
16. Use of Spend Visibility Data
• Dashboards
Enterprise spend statistics
– Sourceable spend (# of suppliers, invoice spend)
– Sourceable employee spend (# of supplies, invoice spend)
Spend overview for five main categories + category breakdowns
Organizational overview of spend
Top 15 Sourceable Suppliers
Trending charts
Value: # of active and completed projects (by category, by organizational
group; project status; estimated/actual savings
• Spend Reports
Reviewed monthly by Cost Management Committee (CFOs + SVP of Strategic
Sourcing) and Spend Efficiency teams
16 © 2012 Ariba, Inc. All rights reserved.
17. Spend Visibility Challenges
• Inadequate or incomplete or inaccurate data
May provide erroneous view of suppliers or spend in a category
May be impossible for data to be meaningfully enriched
May cause inconsistent enrichment practices
May result in inappropriate conclusions
• Examples of challenging spend to enrich
Value-Added Resellers (understanding the “real” spend)
Professional Services (understanding rates and other charges)
Telecommunications (specialized solution for wireless spend)
Travel (spending categories can be mixed)
17 © 2012 Ariba, Inc. All rights reserved.
18. The Future of Spend Analysis
• Increased use of electronic invoicing
Greater transparency into spend, reducing time to access details and increasing
data accuracy
Linking POs and e-invoices
– Easier tracking of PO status
Linking contracts and e-invoices
– Reduced reconciliation efforts; more granular analysis of supplier spend
• Demand management and supplier rationalization
Identification of business area spend outliers
Identification of non-compliant spend
Identification of spend categories for demand management
Identification of categories for supplier rationalization
18 © 2012 Ariba, Inc. All rights reserved.
19. B Efficient Spend
Analytics to Drive
Sourcing Pipeline
and Savings
Eric Walsworth
Reed Elsevier
Global Procurement, Director of Programs & Tools
© 2012 Ariba, Inc. All rights reserved.
20. Reed Elsevier (“RE”)
Leading provider of professional information solutions including
Health, Science, Legal, Risk, Business Content, and Tradeshows
Customers use our products to enable better decisions, evaluate
risk, forge business relationships and gain business insight
20 © 2012 Ariba, Inc. All rights reserved
21. • Science & Technology
£2.1bn*
• Health Sciences
• Legal & Professional £1.6bn*
• Risk Solutions £0.9bn*
• Data Services
£0.7bn*
• Online marketing solutions
• Magazine brands and websites
• Trade exhibitions and conferences £0.7bn*
* Annual revenues FY 2011
21 © 2012 Ariba, Inc. All rights reserved
22. Ariba Solutions Deployed
• Sourcing Pro
Use Discovery to find new suppliers and for quick bids
• Contracts Pro
Expanding use of DocuSign eSignatures
• Supplier Information and Performance Mgmt (SIPM)
• Spend Vis Transitioned from another
With Diversity Enrichment analytics platform
22 © 2012 Ariba, Inc. All rights reserved
23. We Have Typical Spend Vis Challenges
Multiple Payment and Account Coding ~20 ERP/Legacy AP, Wire & Corp Card systems
Systems covering 50 Division/Country combinations
Large Supplier Count with Duplicate 110K+ ERP Suppliers ~20% fewer Global Parents
Names within & across Systems
Multiple Languages 9 Languages
Organization Structure impacted by
Evolving Organization Structures
Realignments and M&A/Divestments
Adoption & Feedback Challenges Range of Technical/Analytical Skills
Supplier data between analytics and other tools not
360ᵒSupplier View Challenges
fully synchronized (yet)
As spend analytics matures, expectations increase
Evolving Stakeholder Demands
(this is a good thing!)
23 © 2012 Ariba, Inc. All rights reserved
24. Observations and Lessons Learned
• Spend Vis Model Design
Steps taken to mitigate anticipated challenges
• Driving Value Beyond Sourcing
Migration to support broader range of initiatives
• Looking Forward
Driving continuous improvement
24 © 2012 Ariba, Inc. All rights reserved
25. Spend Vis Model Design
• Leverage integrated spend and supplier enrichment
• Pre-transform data prior to up-loading to minimize complexity & QA
• Use flexible organization reference table
• Leverage existing in-house taxonomy
• Create supplier segmentations (e.g. Critical/Strategic/Preferred and Employee)
• Concatenate sub-details to increase visibility (e.g. Accounting Codes)
• Repurpose “Parts” table to capture additional Corp Card details
• Capture data to identify potential payment process improvements
(e.g. Invoice workflow dates and payment method)
25 © 2012 Ariba, Inc. All rights reserved
26. Driving Value Beyond Sourcing
• Dashboards and Reporting: Focus on “simple” to drive adoption
• Leveraging spend with Market Intelligence to gain insights
• Identifying suppliers that should be shifted to P-Cards
• Balance of Trade: Working w/sales to understand customer/supplier relationships
• M&A/Divestment Support: Gained/Lost Spend Leverage Analysis
• Compliance & Demand Mgmt: Spend Vis data key to governance program
• Currency Exposure: Use original invoice currency to identify risks/opportunities
• Supporting other Corporate Initiatives
26 © 2012 Ariba, Inc. All rights reserved
27. Looking Forward
• Interlink enriched supplier spend data with supplier SIM profiles
• Improve understanding of Payment Systems
• Expand Market Intelligence enrichment to improve Category
and Risk Mgmt
• Find ways to better analyze reseller and suppliers with
pass-through spend
• Refine classification model via stakeholder relationships
(especially in smaller non-English speaking regions and with smaller suppliers)
27 © 2012 Ariba, Inc. All rights reserved
28. Thank You
Eric Walsworth
Director of Procurement Programs & Tools
eric.walsworth@reedelsevier.com
28 © 2012 Ariba, Inc. All rights reserved
29. B Efficient Spend
Analytics to Drive
Sourcing Pipeline
and Savings
Supplier and Spend Management – Moving
Beyond the Numbers
Jim Lawton, President, D&B Supply
Management Solutions
© 2012 Ariba, Inc. All rights reserved.
30. About D&B
• D&B (NYSE:DNB) is the world's leading source of
commercial information on businesses, enabling
companies to Decide with Confidence® for over
170 years.
• The D&B database has information on 206+ million
businesses in over 190 countries.
• More than100,000 companies rely on D&B to help
build strong business relationships with their
customers, suppliers and partners.
• Supply management-specific data expertise
gives the insights companies need for supply
chain optimization.
30 © 2012 Ariba, Inc. All rights reserved.
31. The New Normal in Supply Management:
Expect the Unexpected
• Walking the fine line between
uncertainty and opportunity
• Like we’ve never seen before:
Natural disasters, political
unrest, economic conditions
Increasing need to:
– Drive cost effectiveness
– Meet shareholder expectations
for growth
– Combat competitive pressure
• Challenge - crafting supply
management strategies to survive
and thrive at the same time
31 © 2012 Ariba, Inc. All rights reserved.
32. To Deal with Constant Change You Need
Deeper Insight into Your Supply Chain
• Spend Efficiency
Supplier rationalization/Spend analysis
Lost cost country sourcing
Just in time inventory
• Accurate Reporting
Internal C-level views
Industry standards
Regulatory compliance
• Proactive Risk Mitigation
Supplier improvement programs
Accurate forecasts
Alternate sources of supply
32 © 2012 Ariba, Inc. All rights reserved.
33. Getting Clarity Starts with Asking
the Right Questions
• How can I get more detailed
information on suppliers?
• How much am I spending
with suppliers at a corporate
family level?
• How diverse is my supply base?
And how can I locate more
diverse suppliers?
• Where are the greatest risks in my
supply chain?
33 © 2012 Ariba, Inc. All rights reserved.
34. The First Step Is to Answer:
“Who Are My Suppliers?”
The Advantage
• Supply chain visibility with a
consolidated, standardized view
of suppliers
• Deeper supplier
insights, U.S. or
foreign, public or
private, small or large, to
enable data discovery
The Results
• Manage suppliers in established and
emerging markets with more confidence
• Quickly find and qualify new
suppliers globally
• Leverage the learnings most important
to you
34 © 2012 Ariba, Inc. All rights reserved.
35. Then, Identify Opportunities for Cost
Savings and Risk Mitigation…
The Advantage
• Gain broader awareness of suppliers
with expanded corporate family views
• Identify hidden paths for cost savings
and risk exposure management
The Results
• Strategically leverage full purchasing
clout during negotiations
• Find sourcing opportunities within
existing relationships globally
• Mitigate amplified risk exposure across
a supplier family
35 © 2012 Ariba, Inc. All rights reserved.
36. …and Capitalize on Supplier Diversity
to Create Competitive Advantage
The Advantage
• Benchmark supply base diversity levels
and how they meet diversity goals
• Create more competitive and dynamic
supply options
• Seek out and encourage innovation
The Results
• Comply with corporate, federal, state
and Tier 2 reporting requirements
• Strengthen customer loyalty and
enhance brand image
• Drive faster innovation cycles
• Realize stronger share price
36 © 2012 Ariba, Inc. All rights reserved.
37. Stay Ahead of the Curve By Knowing How
Your Suppliers May Behave Tomorrow
The Advantage
• Get a sense of potential supply
interruption before it can impact the:
Bottom line: through stock outs
Top line: through idling the
manufacturing line
Brand: through damage to quality
and product availability
The Results
• Source from financially stable suppliers
• Get advance notice to reduce risk and
protect supply chain continuity
• Deliver consistent, objective treatment
of suppliers
37 © 2012 Ariba, Inc. All rights reserved.
38. Sustain Your Success Down the
Road with These Tips
• Establish a single source of truth of
supplier information for a 360-view
• Apply context to supplier data
- Make it actionable
• Start analysis with the categories your
company cares about most
• Instill a cross-functional process including
Procurement, Finance, Operations
• Approve and manage suppliers with tools
and relevant data points connected to
your processes
• Identify your company’s challenges and
create a mitigation plan to address them
38 © 2012 Ariba, Inc. All rights reserved.
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39 © 2012 Ariba, Inc. All rights reserved.
Editor's Notes BMO Financial Group named one of the World’s 50 Safest Banks: April 2012 by Global Finance http://www.gfmag.com/tools/best-banks/11661-worlds-50-safest-banks-april-2012.html#ixzz1oMpqiNjE The World Economic Forum has ranked Canada’s banking system as the most sound in the world, four years in a row.(World Economic Forum, Global Competitiveness Report, 2008, 2009, 2010 & 2011)By 2017, Toronto will surpass London to become the world's financial centre, according to Moody's Analytics. Canada currently employs 320,000 in its banking sector, while London employs 400,000. BMO operates internationally in major financial markets in Canada, the US and 23 other jurisdictionsBMO Strategic AgendaOur Vision: To be the bank that defines great customer experience.Our StrategyDirect our full energy to the pursuit of our vision.Leadin N. America and maintain a strong and growing presence in select global markets where our customers do business.Leverage the strength and visibility of the BMO brand across every business and customer segment.Compete on value and lasting relationships. We are a relationship bank. Make money make sense: Give our customers confidence by helping them control their spending, grow their savings, borrow smartly and invest wisely.Ensure our strength in risk management is recognized as a defining characteristic of the bank.Our Priorities Drive quality earnings growth across all N. American personal and commercial banking businesses by focusing on industry-leading customer experience and enhancing operating and sales force productivity. Accelerate the growth of our wealth management businesses by helping our broad range of clients meet all their wealth management needs and by continuing to invest in our N. American and global operations. Build deeper client relationships in our capital markets businesses to deliver growth in net income and strong ROE, while maintaining an appropriate risk/return profile. Develop our business in select global markets to grow with our clients, expand our capabilities and reach new customers. Sustain a culture that focuses on customers, high performance and our people. Coding based on Op procerss rather than what was bought – Temp labor, Counting, Contractors, etc.. anther bad exampleToday’s focus on some of the ways we’ve address these challenges and driven beyond savings through better leveraged Pre-transform data prior to up-loading to minimize complexity & QA Use flexible organization reference tableCan realign Business Units as needed to account for organization changesInclude Finance Contacts provide users with a business contactIncorporate both Legal and Operational Org data into ModelLeverage existing in-house taxonomyCross walking custom taxonomy to UNSPSC/Ariba ACT taxonomy created flexibilityTag taxonomy with Addressability: e.g. Addressable, Not Addressable, Out-of-ScopeCreate supplier segmentations (e.g. Critical/Strategic/Preferred and Employee)Concatenate sub-details to increase visibility (e.g. Accounting Codes)Repurpose “Parts” table to capture additional Corp Card detailsCapture information to identify potential payment process improvements (e.g. Invoice workflow dates and payment method) Importance of finding advocates in business & regions to QA data and establishing simple user feedback processesDashboards & ReportingPower in getting “on the same page”Focus on “simple” to drive adoptionLeveraging spend with Market Intelligence to gain insights Parent Child Relationships (e.g. Unleveraged spend & Intercompany allocations)Diversity ReportingUsing both Enriched & Original data (e.g. locations, bankruptcy) to gain risk insightsIdentifying suppliers that should be shifted to P-CardsBalance of Trade: Working with sales to understand customer/supplier relationshipsM&A/Divestment Support: Gained/Lost Spend Leverage AnalysisCompliance & Demand Management: Spend Vis data key to governance programCurrency Exposure: Use original invoice currency to identify risks / opportunitiesSupporting other Corporate InitiativesSocial Responsibility (e.g. Environmental Impact: Carbon Footprint)Tax optimization Interlink enriched supplier spend data with supplier SIM profilesGoal is to have sustainable way to conduct 360 degree supplier reportsPotentially expand enrichment to sales data to better assess Supplier/Customer relationshipsImprove understanding of Payment SystemsSegment GL codes as Capital vs. Expense to better identify spend patternsRefine Account Coding usage with Finance (e.g. Temps, Independent Contractors vs. Consulting)Continue working with AP & T&E systems to improve identification of EmployeesExpand Market Intelligence enrichment to improve Category & Risk Mgmte.g. Tag suppliers with D&B DUNS and LN Dossier Numbers enabling broader enrichmentContinue identifying un-enriched suppliers that need to be grouped under Global ParentsFind ways to better analyze reseller and suppliers with pass-through spendContinue refining classification model through stakeholder relationships (especially in smaller non-English speaking regions and with smaller suppliers) Need to add Speaker’s Notes for Jim’s welcome.
