This session will provide an overview on how Grupo Posadas, a leading Mexican hospitality company, transformed its Sourcing and Procurement model. Key Achievements: • A standardized sourcing and supplier management process. USD 27.3 million in savings in 2.5 years which accounts for 18% savings against the baseline • Improved leveraging of customer needs and buying power • Focused compliance and use of contracts. In 2012 compliance has improved to 96% • Enhanced communication of customer requirements • Standard key performance metrics

1. Transforming Strategic Sourcing and
Procurement – the New Model
MBA, B. Eng. Raul Carranza H.
Grupo Posadas
May, 2013

2. #AribaLIVE
Agenda
• Posadas Today
• Supply Chain Opportunity Assessment
• Ariba Decision and Roll Out
• Main Achievements
• Industry Benchmarks
2 © 2013 Ariba, Inc. All rights reserved.

3. #AribaLIVE
POSADAS TODAY
3 © 2013 Ariba, Inc. All rights reserved.

4. #AribaLIVE
Posadas Today

5. #AribaLIVE
LIFESTYLE
DELUXE
LUXURY UPPER MIDDLE ECONOMY
VACATION
CLUB
Source: Grupo Posadas
Brand Architecture

6. #AribaLIVE
Posadas Today
• 5 Hotel brands and 1 Vacation Club: Aqua, Fiesta Americana, Fiesta
Americana Grand, Fiesta Inn y Hoteles One, Fiesta Americana
Vacation. Club
• GRUPO POSADAS operates 105 hotels and more than
18,000 rooms.
• Presence in all major urban and coastal locations in Mexico

7. #AribaLIVE
Overlook
1 Intercontinental Hotels Group 34,197
2 Accor Hotels 32,665
3 Marriott International 20,090
4 Meliá Hotels International 19,093
5 Riu Hotels & Resort 18,424
6 Grupo Posadas 17,622
7 Hilton Worldwide Corporation 16,836
8 Starwood Hotels & Resorts 16,629
9 Wyndham Worldwide Corporation 16,046
10 Barceló Hotels & Resorts 13,079
Latinoamérica
México
(42%)
1 Intercontinental Hotels Group 19,332
2 Grupo Posadas 17,622
3 Riu Hotels & Resort 9,213
4 City Express 7,590
5 AM Resorts 7,248
Sudamérica (28%)
1 Accor Hotels 29,222
2 Intercontinental Hotels Group 8,689
3 Starwood Hotels & Resorts 7,685
4 Choice Hotels 7,095
5 Golden Tulip Hospitality Group 5,922
Centroamérica y Caribe (30%)
1 Meliá Hotels International 13,917
2 Marriott International 10,612
3 Riu Hotels & Resort 9,211
4 Barceló Hotels & Resorts 7,983
5 Hilton Worldwide Corporation 7,819
Fuente: Estudio de Cadenas. 2012
Total de habitaciones: 436,954
Total de habitaciones: 182,269
Total de habitaciones: 131,004
Total de habitaciones: 123,681

8. #AribaLIVE
8,867
6,983
6,428
5,006
4,641
4,513
3,264
3,102
2,893
2,724
2,515
2,422
2,269
2,260
Source: Estudio de Cadenas 2012 (Información a octubre 2012).
Hotel Chains: Room number
(European plan)

9. #AribaLIVE
ASSESSMENT

10. #AribaLIVE
Opportunity
• In 2009, Grupo Posadas identified the opportunity to
strengthten its Purchasing Department to achieve savings,
improve the control and spend visibility to increase the
customer level service.
• In November 2009, a consulting Company made a diagnostic
regarding the purchasing capabilities and potential savings
in Posadas.
• To capitalize on the benefits identified in the diagnostic. Grupo
Posadas undertook the Transforming Sourcing &
Procurement Project.

11. #AribaLIVE
Assessment
• The assessment was based on a High Performance Purchasing Model with the
following findings: Human and Physical Capability constraints, lack of centralized
negotiations, lack of the requiered technology to add value.
• Particularly:
There is not a spend analysis. Therefore priorities are not well defined
Several suppliers as well as several prices to buy the same SKU
There is no purchasing power aggregation
Limited capability to understand the suppliers cost structure and their competitive
situation, Lack of a systematic supplier cost analysis
TCO is not considered. Partial analysis
The main stakeholders are not considered in the decision making process
Limited number of alternatives. New suppliers search is triggered by an
increase in credit limits
Lack of standardization in processes, policies and procedures
Savings are not documented and are not recognized for Finance and Operations
There aren’t contracts or written agreements with suppliers.
Information Systems are not used to communicate and guarantee centralized
negotiations. Low compliance

12. #AribaLIVE
Assessment
Posadas’ situation was:
FTE involved in
the process
Current Process
Cost
Activities Annual Cost Suppliers
Current FTE’s
million million
Sourcing Strategy Sourcing and Category
Management
Requisition to Pay Supplier Relationship
management
People and Organization Technology
Grupo Posadas vs Benchmark – Souncing & Procurement World Class Capabilities

13. #AribaLIVE
DECISION

14. #AribaLIVE
Decision
 Maximize savings though a standard and formal process that incorporates
rigorous analytics, tools and techniques to reduce total cost of purchased
goods and services.
 Establishing the baseline and developing the team, processes, structure and
implementation plan to drive the program and sustain results
Eq. Menor
Eq. Mayor
Eq. lavandería Fumigación
Plomería
Tratamiento de aguas
Decoración
Eq. telefónico
Eliminación de
desperdicios
Jardineria
Aire acondicionado
Servicio de limpiezaElectromecánica
Correos y mensajeria
Pastelería y panadería
Pescados y mariscos
Reparacion de edificio
Gastos de viajes
Honorarios
profesionales
Papelería de Oficina
Suministros Limpieza
Seguridad
Articulos
Telefonia
Vinos y Licores
Lavado de blancos
Frutas y verduras
Publicidad
Electricidad
Obra Civil
-1
10
21
-1 5 11
Facilidad de implementación
Ahorropotencial
Increase control and improve visibility of global, cross-business-unit spend
Purchasing Model
Strategic Sourcing
• With a promising Business Case, the Transforming Sourcing and Procurement
Project started supported by a state-of-the-art software platform (Ariba) with the
following goals:

15. #AribaLIVE
• The adopted model would be supported by a technological platform. The solution to
our Sourcing and Procurement model is.
SPEND ANALYSIS
STRATEGIC
SOURCING
CONTRACTS
CONTRACT
COMPLIANCE
PROCUREMENT
EVALUATION &
SUPPLIER
DEVELOPMENT
POLICIES
TECHNOLOGICAL PLATFORM
PROCESSES
STRUCTURE
Spend Vis
Sourcing Pro
Contracts
Contract Compliance
P2O
SIPM
Decision

16. #AribaLIVE
OUTCOME

17. #AribaLIVE
• The Busines Case was evaluated in October 2012. NPV of $ 26.6 million USD, $ 5.1
million USD more than the NPV estimated in 2009
Cash Flow
$21.5
NPV
$26.6
NPV
1.46
Pay back time
1.01
Pay back time
260%
IRR
458%
IRR
(0.7)
3.9
(0.0) (0.8)
1.0 3.2
(10.0)
(5.0)
0.0
5.0
10.0
15.0
20.0
25.0
30.0
CAPEX 2010 2011 2012 2013 2014
Cash flow Estimado Cash flow Revisado
VPN 2012 VPN Original
$ 5.1
VPN
adicional
ORIGINAL 2012
Outcome
Original NPV2012 NPV
Additional
NPV
Estimated Cash Flow Revised Cash Flow

18. #AribaLIVE
Outcome
FTE involved in
the process
Current FTE’s
Current Process
Cost Activities Annual Cost Suppliers
Savings
Million
Million
Million

19. #AribaLIVE
Outcome
• Savings
• 27.3 USD millions in savings in a 2.5 year period
• 18% in average savings in all the spend categories
• Comprehensive Spend Analysis through “Spend Visibility” module
• Savings recognized by Finance and Operations
• Enhanced Spend Control and Visibility
• All Sourcing projects have been developed through Ariba, using:
Task Manager
Electronic Events such as RFI or RFP
Standardize and control contract development
• Global Trading with support for multiple languages and currencies
• Improved project management and compliance with advanced, automated
workflow and approval-routing
• Transparency in the RFxs, negotiations and deliverables
• 95% in compliance
• Advanced Approval flow for all Purchase Orders
• Information System is used to communicate and guarantee centralized
negotiations
• Contract library
• Supplier scorecard
• Surveys

20. #AribaLIVE
Outcome
20
Scope
• Discovery of new qualified suppliers through integrated Ariba Discovery to
improve bid competitiveness
• Corporate Supply Base Rationalization Program. 56% reduction in the
supplier base
• Wider selection of suppliers is considered for RFx’s
• Standardized practices, formats and deliverables
• Transaction history recorded automatically in the purchase requisition

21. #AribaLIVE
• There is a significant improvement in the Posadas Purchasing best pracices, which
enebles us to excel in the cycle: find the money, get the money and sustain the money.
• Well-defined processes, having the right people and a robust platform are considered
the key succes factors for Posadas’ Sourcing and Procurement Initiative
Grupo Posadas vs. Benchmark –
Sourcing & Procurement World Class Capabilities
24%
58%
80%
Progress
¿What is
missing?
November 2009 Assessment
November 2011 Assessment
Ideal State. Defined in the Implementation
Survey of 14 interviews and 65 on line interviews in 2012
51%
62%
50%
54%
48%
40%
28% 29% 30%
23%
13%
23%
52%
66%
70% 58%
52%
53%
89% 87%
80%
73%
87%
63%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Estrategia de Compras Abastecimiento y Gestión
de Categorías
Requisición a recibo Gestión de la relación con
proveedores
Gente y Organización Tecnología
51%
Benchmark
Sourcing Strategy Sourcing and Category
Management
Requisition to Pay Supplier Relationship
management
People and Organization Technology

22. Thank you
Raúl Carranza Hernández:
Strategic Sourcing Director
raul.carranza@posadas.com
52 (55) 5326 6756

23. Questions?
23

24. #AribaLIVE
Please Complete Session Survey
Go to Surveys
© 2013 Ariba, Inc. All rights reserved.24
Select Session
Click
Choose one
Rate Session
Thank you for joining us