More Related Content Similar to Breaking Barriers: Driving Continuous Improvement and Value in Your Spend Management Initiatives Similar to Breaking Barriers: Driving Continuous Improvement and Value in Your Spend Management Initiatives (20) Breaking Barriers: Driving Continuous Improvement and Value in Your Spend Management Initiatives1. Breaking Barriers:
B Driving Continuous
Improvement and
Value in Your Spend
Management
Initiative
Albemarle Corporation
BBVA Compass
SunTrust Bank
© 2012 Ariba, Inc. All rights reserved.
2. Session Abstract
Your company may have achieved some early returns in
sourcing savings or procurement compliance. But how do you
keep up the momentum going? In this session we explore some
of the hidden areas of improvement and savings that exist within
most organizations, and help create a roadmap to help you
expand the scope of spend under management and return of
your source-to-settle initiative.
2 © 2012 Ariba, Inc. All rights reserved.
3. Speaker - Albemarle Corporation
Eric Stratmann
• Director – Global MRO Purchasing
• Responsible for $375 Million Annual Spend – 50 Global Employees
• Four Years in Purchasing and Previously Director – IT and other
applications and systems roles
• Special Project Work in SAP Integration (Five acquisitions in the
last seven years)
• Lived and Worked in Multiple U.S. and European Locations
3 © 2012 Ariba, Inc. All rights reserved.
4. Speaker - BBVA Compass
Billy Lester
Billy Lester is the Ariba Operations Manager at BBVA Compass. He has over 8 years
banking and financial experience, with the last 4 years focused primarily in Procurement
and Corporate Services. Additionally, he has extensive experience with both the
implementation and daily operations of Ariba’s on-demand and enterprise products. This
experience was in part due to his employment with Regions Financial Corporation, where
he initially served as the project lead, then the systems administrator. Upon being hired at
BBVA Compass, one of Billy’s first initiatives was to define and flow the current
Procurement process cradle-to-grave. After 6 months, he was able to reengineer the
procurement process and assist in authoring the policies surrounding the new
methodology. In 2011, BBVA Compass was able to capture and process approximately
$180MM in spend, approximately $154MM more than the prior system employed. Based
on BBVA Compass’ current run rate, the company expects to meet or exceed $225MM
in spend for 2012.
4 © 2012 Ariba, Inc. All rights reserved.
5. Speaker - SunTrust Bank
Seth Brewster
Seth Brewster, Business Systems Analyst, SunTrust Bank
Seth Brewster is a Business Systems Analyst in the Financial
Services Unit of SunTrust Bank, and serves as the Ariba
administrator overseeing Ariba reporting, process design
implementation, and Ariba Subject Matter Expert in various
other administrative functions within the Ariba tool.
5 © 2012 Ariba, Inc. All rights reserved.
6. Breaking Barriers:
Driving Continuous
B Improvement and
Value in Your Spend
Management
Initiative
Eric Stratmann
Director, Global MRO Purchasing
Albemarle Corporation
© 2012 Ariba, Inc. All rights reserved.
7. About Albemarle
With sales in excess of $2.9 billion per year and plans for significant
future growth, Albemarle Corporation produces specialty chemicals
and employs over 4,000 people in 38 locations around the world.
Their three main areas of business are: Polymer Additives, Catalysts
and Fine Chemicals. In these businesses, Albemarle serves more
than 3,400 customers in over 100 countries. The customers are split
between various end markets; consumer electronics, refining,
pharmaceuticals, agriculture, petrochemicals, construction,
automotive and packaging.
7 © 2012 Ariba, Inc. All rights reserved.
8. Material Masters Historical Challenges
• Albemarle currently includes 11 plants,
~72,000 Material Masters in three languages
Initial Material Master Count 123,000 SKUs
• Bloated storeroom inventory levels
• None of the plant storerooms operating on a standard discipline
• Each site acting as an independent agent for local MRO material
master data
• Many MRO Material Master duplication issues
• No standardized process for SKU creation / extend
8 © 2012 Ariba, Inc. All rights reserved.
9. Project Objectives/Solution Overview
Multi-language
Enrich, Standardize and
database in SAP for
create a Consistent
requesting the creation /
SAP 40 character short
extension of a MRO
description, and PO
SAP R/3 SKUs
Text
Implement a Global Standardize SAP
Classification and Classification views
Nomenclature for all across all SKUs
Material Masters (including UNSPSC)
De-duplicate
SKU Material
Masters
9 © 2012 Ariba, Inc. All rights reserved.
10. Project Details
SAP Ariba Material Master
Albemarle
Data Cleansing Search / Create
English Sites – 50,130
AV01 = Avonmouth, UK • Supplier / Manufacturer and Part Shopping Cart
Number Extraction
UKB494 = Bayport, TX • Normalize Manufacturer Name across SAP
organization SRM
MAG1 = Magnolia, AR
MA01 = Magnolia, AR
Phase 1 • Use the Manufacturer information in the
Material Master as designed for SAP
Ariba Online
OR01 = Orangeburg, SC Catalog
PA01 = Pasadena, TX • Rationalization
PD01 = Baton Rouge, • Identified 6.88% potential duplicate
SKUs across sites
LA
SH10 = South Haven, Phase 2 • Approximate savings of 4.5% of total
inventory value
MI
TY01 = Tyrone, PA
• Value Extraction
• This involves formatting the data so the
German Sites – 9,811 attributes applicable to fit, form and
BG = Bergheim, Phase 3 function are standardized throughout
the data set
SAP R/3
Germany
• Standardization
Dutch Sites – 11,448 • Standardized Terminology and
Technical Properties Multi-language database
AS57 – Amsterdam,
Holland Phase 4 • SAP 40 Character Description build
• PO Text Description Build
MRO material master
10 © 2012 Ariba, Inc. All rights reserved.
11. Selecting the Right Provider
• Provider needs to have proven expertise and experience in Master
Data Consolidation
• Knowledge of ERP’s, SAP for Albemarle
Albemarle
• Global companies need a Global Provider – Ariba
Selected Multi Language
• Subject Matter Expertise – Human Touch, not only Technology
• Adopt and utilize leading best practices, best-in-class processes
• Develop a solution that is interwoven with longer-term strategic vision and
best practice procurement
11 © 2012 Ariba, Inc. All rights reserved.
12. Project Results
• Implemented a Global Classification (UNSPSC) and Nomenclature
(ECCMA eOTD)
• Created Standardized and Consistent SAP 40 character short
description, and PO Text
• Visibility and duplicate identification across 11 sites and three
languages through Ariba Catalogs
• Multi-language database for MRO material master creation
and updates
• Processes established for on-going SKU creation and Maintenance
12 © 2012 Ariba, Inc. All rights reserved.
13. ROI
• >80% of materials mapped to UNSPSC – providing proper
spend visibility
• >20% of materials identified without stock movement
• Each Item of Supply has a proper description associated with:
A unique classification – to improve spend visibility
A unique identification – to improve procurement and
materials management
• Increased searching, finding, and comparing of items across
the organization
13 © 2012 Ariba, Inc. All rights reserved.
14. Breaking Barriers:
B Driving Continuous
Improvement and
Value in Your Spend
Management
Initiative
Billy Lester
Ariba Operations Manager
BBVA Compass
© 2012 Ariba, Inc. All rights reserved.
15. Agenda
• About BBVA Compass
• Ariba and BBVA Compass
• Initial Strategies and Business Requirements
• The Challenges of Change
• Reevaluating Ourselves
• Initial Metrics versus Current Metrics
• Lessons Learned
15 © 2012 Ariba, Inc. All rights reserved.
16. About BBVA Compass
• BBVA Compass is a subsidiary of Compass
Bancshares Inc, a wholly owned subsidiary of BBVA
• Ranks among top 20 commercial banks based on
deposit market share
• Operates 716 branches in Alabama, Arizona,
California, Colorado, Florida, New Mexico and Texas
• Ariba client since August 2009
16 © 2012 Ariba, Inc. All rights reserved.
17. Ariba and BBVA Compass
• Ariba Procure-to-Pay Professional (P2P)
• Ariba Supplier Information and Performance
Management (SiPM)
• Ariba Spend Visibility Professional
• Ariba Contract Management Basic
17 © 2012 Ariba, Inc. All rights reserved.
18. Initial Strategies and Business
Requirements
• Centralization of Procurement and Invoice processes
• Capture 60% of all sourceable payables through Ariba
• Initial training effort
Approximately 12,000 employees generalized use
30 employees group-specific use
• Mass supplier notifications
18 © 2012 Ariba, Inc. All rights reserved.
19. The Challenges of Change
• Bad data collection
• No true processes defined prior to implementation
(Procurement)
• Political agendas
Resource Ownership
Supplier Ownership
• Unrealistic expectations
• Poor communication and training
• Lack of IT backend support
• Lack of executive support
19 © 2012 Ariba, Inc. All rights reserved.
20. Reevaluating Ourselves
• Ownership and philosophy change
• Redefining the processes
• Structured communication and training
• Developed policies and guidelines
• Develop realistic expectations within smaller and more
specific timeframes
• IT backend support
• Gaining executive support
20 © 2012 Ariba, Inc. All rights reserved.
21. Initial Metrics Versus Current Metrics
• 2010 Metrics
64 suppliers enabled (22 electronically)
Total system spend $8.6MM (PO-Invoice Only)
No ACC setup, No Contract Workspaces Authored
2,000 – 3,000 users initially login
• 2011 Metrics
849 suppliers enabled (325 electronically)
Total system spend $186MM (PO and Non-PO Invoices)
5 suppliers utilize ACC, 83 Workspaces Authored
4,500 users login each month (rotating)
21 © 2012 Ariba, Inc. All rights reserved.
22. Lessons Learned
• Structure lines of communication
• Early involvement from executive management
• Better understanding of the current environment
What is being asked and what will be allowed?
Who are the stakeholders and what is their impact?
Who are the proponents and opponents?
• More scope definition and limiting scope creep
• Develop realistic and measurable goals
22 © 2012 Ariba, Inc. All rights reserved.
23. Breaking Barriers:
B Driving Continuous
Improvement and
Value in Your Spend
Management
Initiative
Seth Brewster
Business Systems Analyst
SunTrust Bank
© 2012 Ariba, Inc. All rights reserved.
24. Agenda
• SunTrust at a Glance
• Ariba Solutions Deployed
• SunTrust Spend Overview
• Metrics
• Challenges to Optimizing Spend
24 © 2012 Ariba, Inc. All rights reserved.
25. SunTrust at a Glance
• The most direct corporate ancestor, the Trust Company of Georgia, was founded
in 1891, and merged with SunBanks, Inc of Florida in 1985 to form SunTrust
Banks, Inc.
• Having total assets of $172.6 billion, it is one of the nation's largest and
strongest financial holding companies.
• Employs approximately 30,000 teammates
Diversified Business and Corporate & Wealth &
Product Mix Retail & Household
Investment Investment
Commercial Lending
Banking Management
• SunTrust • National • National • National
Footprint
• Full line of • Residential • Full array of private
• 1,658 Branches investment mortgages, com wealth management
banking mercial lending and institutional
• 2,889 ATMs
products and solutions including
• Mortgage
• 800+ services personal and institutional
servicing
Relationship investment management
portfolio of
Managers
$163B
25 © 2012 Ariba, Inc. All rights reserved.
26. Ariba Solutions Deployed
• Supplier Management • Procurement
Performance Surveys Catalog & Non-Catalog Purchase Orders: Punch-out,
Scorecards supplier hosted, custom workflow, etc (approx. 200,000/yr.
Repository for all macro data on SRM managed suppliers and 5,000 users/mo.
Functionality Not Used: For supplier “collaboration” with
•
Sourcing specific modules for service categories (i.e. Temp Labor,
Project Management: Reporting, timeline, Save Tracking, Print, etc)
Project Artifact, etc.
Standardization in Process and Templates: Sourcing
• Accounts Payable
Library Invoice Processing: Invoices matched to PO and/or
Contract
Performance of RFI, RFP, and Auctions
Invoice Workflow: Exception handling, approvals, receipt
Document Archival verification
Functionality Not Used: Tasks, Workflow Payment Terms: Prompt payment and Dynamic
• Contract Management Discounts
Contract Administration: Storage, Archival, and Retrieval • Ariba Network
Establishes linkage between Master and eBilling: 94% volume of invoices are eBilled and about
Sub-Agreements (approx. 11,000 agreements) 50% of spend is eBilled
Contract Compliance: Invoice to Contract Match Electronic issuance of POs, Contracts, etc.
Reporting: Expiring Contracts, Contracts by Supplier, Electronic Supplier Connectivity: EDI, cxml, csv uploads
LOB, etc. Catalog Maintenance: Supplier managed
Functionality Not Used: Contract Templates, Clause
Library, Contract Authoring and Workflow through
Process, eSignature
26 © 2012 Ariba, Inc. All rights reserved.
27. SunTrust 2011 Spend Overview
• Total procurable spend: $2.1B
• Total addressable spend in scope: $1.7B
• Total % of spend under management: 84.5%
% Enabled Spend Invoiced via Ariba vs. Directly in AP System: Monthly Ariba invoice
amount processed as a percentage of total Directly in AP System invoice amount
processed
27 © 2012 Ariba, Inc. All rights reserved.
28. Spend Profile for a Financial
Services Organization
• $2.1 Billion
of procurable spend
with over 13,000 suppliers
• 80% of spend concentrated
with 400 suppliers
• Critical suppliers account
for approximately
40% of total spend
Traditional “Purchase Order” transactions accommodates only
10% to 20% of our spend
28 © 2012 Ariba, Inc. All rights reserved.
29. Challenges to Optimizing Spend
Impacts to Strategies and
Obstacles
Optimization Tactics
Sends an “it’s optional” message Have leadership involved early in
to internal stakeholders that optimization discussions with
manage local processes and/or internal stakeholder leads
Unclear Leadership Messages categories To ensure success, you must get
Ariba is just a tool and you will not top down support CFO down and
achieve maximum value without make sure it spreads through
leadership support the organization
Needed to bridge the gap between
Consider full-time Process lead /
Limited / No In-House Ariba the Ariba System & its capabilities
small team to take “ownership” of
“expert(s)” and implementing that into our
system and processes
environment.
29 © 2012 Ariba, Inc. All rights reserved.
30. Challenges to Optimizing Spend
Impacts to Strategies and
Obstacles
Optimization Tactics
Make sure you do a thorough
Benefit to you is that once you scrub of data
have it cleaned up you have a Eliminate duplicate suppliers,
Supplier Data Clean Up Is
clear picture of complete holistic consolidate like suppliers
Not Easy
spend of a supplier instead of
having it piecemeal Create strict and formalized
supplier enablement process
If this is a larger effort, you can
bring in contractors for a brief time
One centralized location for all to do the initial load
Loading Legacy Contracts and
contract documents allows for
Every New Contract has a Need to make sure all contracts
easy location of contracts for your
Workspace are collected, filed and uploaded
company
into system regardless of
expiration date
30 © 2012 Ariba, Inc. All rights reserved.
31. Challenges to Optimizing Spend
Impacts to Strategies and
Obstacles
Optimization Tactics
Companies have no direction and Set achievable spend optimization
randomly enable spend target
No Commodity Onboarding Plan This inhibits focus on getting the Create commodity onboarding plan
highest impact for stakeholders with milestones that is results
and doesn’t work toward oriented
measurable goal Review and evaluate plan often
Cross-functional team dedicated to
Need clear processes for Contract
streamlining processes involving
Business Process Creation and Compliance, Sourcing Projects,
Ariba on an ongoing process for
Optimization Contract Workspaces,
the first few years after
Requisitions, Exceptions, etc
implementation.
31 © 2012 Ariba, Inc. All rights reserved.
32. Q&A
Contact info:
John Lark jlark@ariba.com
32 © 2012 Ariba, Inc. All rights reserved.
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33 © 2012 Ariba, Inc. All rights reserved.
Editor's Notes BBVA financial services group; $740 B total assets; 7,400 branches; 107,000 employees; (footprint 30 countries)Major Business Units: Corporate Banking, Retail Banking, Wealth Management3 largest areas of operation: Alabama (3), Texas (4), and Arizona (5) Procure-to-Pay Professional implementation mid-late 2010 (August)Spend Visibility and SiPM implementation mid-late 2009 (August)Contract Management Basic implementation (replace ECMS) late 2010 (December) All processes were owned by the LOBs and invoices paid through AP60% of all AP spend was identified as sourceable based on categorization of suppliers (not products)Training and communication involved earlyDetermined all information would be provided by external systems4. Top suppliers identified based on spend and transaction count Bad data collectionLOBs submitted invoices to AP, LOBs signed additional contracts, AP created new suppliers based on invoicesExternal data sources stored incorrect informationProcurement splintered (Functional and IT)Sourcing ineffective based on limited criteriaPurchases made based on LOB’s recommendationsTraining and communication fell short based on initial reach but no follow-upsNot enough resources to handle basic requirements (lack of motivation and cooperation)Majority of supplier relationships existed directly with the LOBs rather than Procurement (name dropping)Cannot control 60% of spend when relationships are owned by the LOBNo guidance regarding approval hierarchies; information provided was outdated and incorrectSuppliers may choose not to use the system due to fees, additional steps, or fear of traceable spendTraining and communication fell short based on initial reach but no follow-upsPackage was limited to a small portion of Ariba’s abilitiesCommunications were disregarded based in the manner in which they were deliveredNo true champion for product; historically shown to be a money pit with limited potential from a system perspective Ownership of the system changed hands along with a new philosophyIdentified the actual processes (all of the truths and issues) developed several iterations to a future stateAdding structure to a chaotic environmentTraining handled solely by the Ariba Operations GroupCommunication plans developed and sent on a schedule as well as remindersPolicies were never considered prior to the system’s implementation; new policies were developed and aimed at wrangling the outlyersDeveloped internal operating guide with job descriptions and rolesEstablished basic SLAs for standardizing supplier enablement (basis for productive employees)More practical outlookWhat can we do with what we have?Ensure the IT group understands the role of support; creating interface functions; white lists for external access; additional user restrictions or external mapping requirementsMoving the boulder – if you follow a process and make minor exceptions; fully document the process; the system will build itself and at some point people will take notice Focus on contracts next initiative Better communication:formula of communication lines # of lines for n people = n(n-1)/2Ex. 4 people equal 6 lines of communication 10 people equal 45 lines of communication You can see how this type of implementation can get out of control quickly