Managing Spend for
Continuous Profitability with
mySAP SRM
13th Feb. 2007
Agenda
SAP SRM Vision and Solutions
Emerging Procurement Trend
Roadmap ahead ..
Summary
ONGC Scenario
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SAP Vision for mySAP SRM
…that delivers
SUSTAINABLE SAVINGS
mySAP SRM is a
PURCHASING PLATFORM
mySAP
SRM
SRM
ERP
…and
VALUE GENERATION
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PLM
SRM
GTS
ERP
CRM
…for world-class
SUPPLY MANAGEMENT
mySAP SRM is a Purchasing Platform
Automate and accelerate processes
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Fully integrated system for all purchasing processes
Enterprise platform for center-led purchasing
Built-in performance and knowledge management
Complete audit trails for regulatory compliance
Support for multi-channel supplier enablement
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…that delivers Sustainable Savings
Close the loop between sourcing and procurement
 Sourcing events triggered
by enterprise processes
 Role-based dashboards
for intuitive analytics
 Contract distribution to
multiple ERP systems
 Automated purchasing
and regulatory
compliance
 better insight and
discipline
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…and Value Generation
Create a foundation for long-term results
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Get suppliers involved in the design stage
Reward suppliers for innovation
Shift focus from price to performance
Assimilate all supply processes
Drive efficiency beyond boundaries
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…to World-Class Supply Management
Enlarge the scope of supply management
SRM
CRM
PLM
GTS
ERP
PLM
SRM
GTS
ERP
CRM
ERP
From human-integrators …
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… to service-oriented applications
Supply management is more than just purchasing
Requires strategic insight and category expertise
Ability to compose and extend “next practices” is key
A service-oriented architecture ensures flexibility
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mySAP SRM addresses Procurement Challenges
Procurement Challenges
mySAP SRM Solution
Managing growing no. of SKUs
Catalog Management
Managing supplier performance
Supplier Evaluation & Performance
Management (Scoring mechanism,
Supplier scorecard, benchmark)
Managing growing no. of vendors
Statutory Regulation
Contract Management and
Monitoring, Integrated process from
Sourcing to Purchasing
Inability to do global spend analysis
by supplier resulting in potential
unrealized volume discounts
Spend Analytics that reads across
Purchase Order systems
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Manage global spend by supplier
and category
mySAP SRM addresses Procurement Challenges
Procurement Challenges
mySAP SRM Solution
Inefficient & inconsistent
collaboration with suppliers
Supplier Collaboration (Web-based
interaction with suppliers )
Significant maverick buyers leading
to overpayment to suppliers
Self-Service Procurement
Manual & inefficient RFx, bidding,
and reverse auctioning
Integrated Sourcing executions
from RFx to Reverse Auctions to
Contract Management
Poor compliance with contract
pricing due to lack of access to
contracts
Contract Management and
Monitoring
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mySAP™ SRM Comprises of Three Core Elements
SCENARIOS
Strategic Purchasing & Sourcing
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Supply strategy development
Spend analysis
Supplier selection (RFx, Auction)
Contract management
Catalog management
Operational Procurement
through focused sourcing initiatives, supplier
selection and contract management.
 Self service procurement
 Services procurement
 Plan driven procurement
Expedited purchasing processes
Supplier Collaboration
Better supply strategies
through process automation and compliance
management for goods and services.
Higher supplier participation
through supplier self-service, connectivity,
collaboration and supply chain visibility.
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Supplier registration
Design collaboration
Order collaboration
Collaborative replenishment
Supplier connectivity
Implement Better Supply Strategies
STRATEGIC PURCHASING & SOURCING
Establish focused sourcing initiatives
Typical characteristics
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High executive visibility
Involves multiple stakeholders
Approach varies by category
Knowledge of markets is key
Multiple, parallel initiatives
 Primary metric is cost savings
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mySAP SRM for Strategic Purchasing & Sourcing
Improve spend visibility
and supply strategy
Reduce errors and compress
sourcing cycle times
Supply Strategy Development
 Demand aggregation & planning
 Portfolio analysis
 Purchasing strategy planning
 Category management
 Program management
 Purchasing controlling
Supplier Selection
 Supplier qualification
 Request for quotation
 Reverse auctions
 Sourcing event analysis
Spend Analysis
 Global spend
 Content consolidation
Manage contract compliance
Contract Management
 Contract development
 Document management
 Contract distribution
 Contract execution
 Contract monitoring
Catalog Management
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Closed-Loop Process for ‘Strategic Procurement & Sourcing’
Sourcing activities are part of an overall process
4. Negotiate
3. Qualify
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Supplier identification
Supplier registration
Request for Information
Supplier pre-selection
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Request for quotation
Reverse auctioning
Terms and conditions
Engineering specifications
Discussion & Collaboration
5. Award
2. Strategize
 Demand aggregation
& planning
 Bid comparisons
 Weighting and scoring
 Winner award
 Portfolio analysis
 Purchasing strategy
planning
1. Analyze
 Supplier Performance Mgmt
 Global spend analysis
 Content consolidation
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6. Contract
 Contract development
 Contract distribution
 Execution and monitoring
Expedite Purchasing Processes
OPERATIONAL PROCUREMENT
Purchasing platform for ALL spend categories
Typical characteristics
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High administrative workload
Complex approval rules
Many unplanned expenditures
Low contract compliance
 Large safety stocks
 Supplier disconnect
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mySAP SRM: Solving Your Procurement Needs
Simplify process flows
Self Service
Procurement
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Adaptive requisitioning
Order management
Confirmation
Invoice processing
Automate PO generation
for mission-critical buying
Establish cost limits for
service agreements
Plan Driven Procurement
Services Procurement
 Source of supply determination
 Plant maintenance integration
 Project system integration
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Service specification & requisitioning
Order management
Confirmation
Invoice processing
Self-Service Procurement
Self-service procurement empowers company employees to create and manage their
own requisitions, allowing purchasers to focus on strategic sourcing.
• Employee
• Accounting
• Employee
• Admin
• Employee
• Central Receiver
• Manager
• Purchaser
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• Purchaser
Plan-Driven Procurement
Integrates operational procurement with existing supply chain
management, plant maintenance, and project solutions for
compliance enforcement, process efficiency, and supplier
selection efficiency.
Materials
management
systems
Maintenance
and project
systems
Purchasing
systems
Planning
systems
Demand
and requisition
SAP and non-SAP systems
Consolidate demands
Order
Contracts
Spend, Scorecard,
and Supplier Info.
Winning Bids
Assign source of supply
Assign
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Service Procurement
Services processes are more complex and less standardized compared to products.
Services procurement requires increased flexibility, greater collaboration, and judicious
cost management.
Buyer
Supplier
Monitor
Request for Service Requisition
Invoice
Approve
Assign
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Confirm
Order
Invoice
Confirmation
Order
Enable Supplier Participation
SUPPLIER COLLABORATION
Multi-channel approach for supplier collaboration
Typical characteristics
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Low process transparency
Long order cycle times
Unsynchronized design cycles
Last-minute changes
 Poor visibility on inventory
 Frequent supply shortfalls
 Limited insight into performance
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Supplier Collaboration with mySAP SRM
Extend process control to your suppliers…
Design
Collaboration
 New product design
 Collaborative project
management
Order
Collaboration
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Account information
Bidding event notification
Order management
Invoice processing
Dispute resolution
Reduce administrative overhead
for supplier communication
Supplier
Registration
 Supplier self-registration
 Supplier qualification
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Supplier
Connectivity
 Integration broker
 Supplier network
Collaborative
Replenishment
 Stock requirement visibility
 Supplier managed inventory
 Advance shipping notification
Supplier Enablement
BUYER
SAP NetWeaver™
Web
browser
Collab. Design
SAP
XI
Supplier
connectivity
Order Collab.
SUPPLIERS
High-volume
PLM
Supplier
portal
SRM
Low-volume
EXPAND your value proposition by linking ANY kind of suppliers
with THREE appropriate and cost-effective channels.
ERP
Fulfillment
SCM
Collab. Replen.
CRM
system
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Browser
SAP Supplier
Network
XML
Closing the Loop Between Value Discovery and
Realization
VALUE
DISCOVERY
VALUE
REALIZATION
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Agenda
SAP SRM Vision and Solutions
Emerging Procurement Trend
Roadmap ahead ..
Summary
ONGC Scenario
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Emerging Trends in Purchasing ….
Trends Driving Changes
Expanding Scope of Supply Management
Increased amount of spend managed and influenced
Supplier Relationships will Deepen
Capturing Innovation from supplier base, Performance base agreements
The CPO will Become a Strategic Partner to the Board
Promoting creative, cross-functional and risk management skills
Technology will be Central to Change
Fully integrated networks of suppliers available to customers
How important a role do procurement executives currently play in establishing your company’s overall strategic
objectives?
40
Vital role
Very important
38
28
6
TODAY
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IN 10 YEARS
Critical Success Factors of Today’s Purchasing Organizations
Globalization and Growth
 Simplified and Standardized Global Purchasing Processes
 Tightly Integrated Suppliers
£€¥
$
Increase Savings
 Spend Analysis and Effective e-Negotiations
 Collaboration amongst Key Stakeholders
Empower Strategy and Compliance
 Measure Savings and Performance
 Ensure Contract and Regulatory Compliance
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How mySAP SRM supports Purchasing
Requisitioning
Order Management
Supplier Enablement
Globalization &
Growth
Simplify procurement
£€¥
$
Standardize
global processes
Data Improvement
Category Management
Improve spend
visibility
Transforming Objectives
into Executable Initiatives
Automate supplier
transactions
Supplier Negotiation
Increase
Savings
Purchasing Planning
Effective
negotiation
Purchasing Controlling Regulatory Compliance
Empower Strategy
& Compliance
Instill method
into strategy
development
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Measure savings
and performance
Ensure regulatory
compliance
Agenda
SAP SRM Vision and Solutions
Emerging Procurement Trend
Roadmap ahead ..
Summary
ONGC Scenario
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Major Investments to Capture Market Growth
 300% Research and Development Growth
 Frictionless Acquisition addresses:
 “On Demand” Market and Delivers immediate Savings to Customers
 Demonstrates SAP’s Commitment to Growth in the SRM Market
 SAP and Partners delivered Proof-of-Value Trials:
 42 M € Savings on 156 M € Spend
 Actively recruiting ISV’s to enhance SRM Solution Capabilities
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SRM 5.0
FOCUS FOR SRM 5.0:
Improve Strategic Sourcing
 Enhanced Sourcing Execution
 Category Management
 Introduce Sourcing On Demand Offering (Frictionless acquisition)
 Global contract compliance monitoring
 Enhanced contract execution
 Cross System Invoice management
 Supplier Enablement Services with SAP Supplier Network
 Support of ESA Services
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SRM 6.0 is Focused on Business Optimisation . . . .
Category-Based
Strategic
Sourcing
Supplier
Management
Scaleable Platform
Contract
with Business
Management
User Interface &
Analytics
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Flexible Sourcing
Strategy
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Intelligent Category and
Spend Management
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Contract Types and
Authoring
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Streamlined Operational
Procurement
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Fact Based Supplier
Evaluation &
Management
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Scaleable Purchasing
Platform with Analytics
for the Business User
Operational
Procurement
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The New Face of mySAP SRM
Streamlined User Interaction
 Navigation
 Personalization
 Work Center Concept
Single-Click to Launch Actions
 E.g. Process an order, change a query
Ability to Define Regularly Used Queries and Reports
 Define attributes
 Store query
 Personalize
More Intuitive, Personalizable, and Efficient
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Category Management Objective and Value Drivers
£€¥
$
How does Category Management create
value for the company?
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Sharing knowledge and best practices
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Enabling collaboration amongst stakeholders
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Monitoring performance,
Identifying opportunities and shifting priorities as
required
 Proactively responding to market trends
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Driving process standardization
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Reducing cycle-time
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Category Management in mySAP SRM
Mission Statement:
transforming corporate objectives into actionable initiatives
OBJECTIVES
OBJECTIVES
STRATEGY
STRATEGY
PROGRAMS
SUPPLIER
PERFORMANCE
L.C.C.S.
SAVINGS
SOURCING
INITIATIVES
ANALYZE &
PLAN
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EXECUTE
MONITOR
OUTSOURCING
………..
Agenda
SAP SRM Vision and Solutions
Emerging Procurement Trend
Roadmap ahead ..
Summary
ONGC Scenario
 SAP AG 2007, mySAP SRM for Essar / 34
Conclusion: mySAP SRM is Better Supply Management
IMPROVED SUPPLY STRATEGY
 Supply base rationalization
 Global spend analysis
 Reduced risk of supply
COMPRESSED CYCLE TIMES
 Immediate online approvals
 Purchasing process automation
 Quicker supplier responses
REDUCED OPERATING COSTS
 Better spend controls
 Improved contract compliance
 Lower connectivity costs
LOWER UNIT PRICES
 Improved quality of goods
 Lower inventory-carrying costs
 More competitive pricing
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Benefits At Each Stage
Process
Automation
Process
Simplification
Sea Containers:
25% average cost
savings against
existing contracts
Contract
Management
Ericsson: 80%
reduction in
purchasing cycle
time
Colgate-Palmolive: Improved
contract compliance from
75% to 95%
Strategic
Sourcing
Innovation
Empowerment
Pemex Gas: 70%
reduction in
suppliers‘ sales
cycle
Mahindra:
manufacturing cycle
compressed form
4 weeks to 1 week
Supplier
Management
Steelcase:
2-month
reduction in
sourcing cycle
“Quite simply, mySAP
SRM offers us a better
way of collaborating
with our suppliers.”
Mahindra
BHP Billiton: Manage
more than 70% of all
external spend
Pemex Gas: 6%
drop in average 1year contract prices
Mahindra: 3day reduction
in inventory
cycle time
Steelcase: $5
million savings
in 1st year of
online bidding
“… we improved the quality and
speed of information flow,
collaboration and our basis for
decision making..”
Ericsson
Ericsson: 75%
reduced
handling costs
Pemex Gas: 72%
reduction in
decision process for
order placement
“We (now) have far better visibility
and control over our purchasing
process.”
Colgate-Palmolive
Sea Containers: 3month reduction in
procurement cycle
time
Operational
Procurement
Business
Optimization
“By strengthening supplier
relationships, we negotiated deals
that delivered greater value and
drove down contract prices.”
Sea Containers
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“Executing our new strategies could
only happen through SAP . . . it’s an
enabler of integrated processes
Pemex Gas
Customers Quotes on SRM
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700+ Organizations Run SRM
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Customers
Over 80+ Live Customers in Asia includes
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Agenda
SAP SRM Vision and Solutions
Emerging Procurement Trend
Roadmap ahead ..
Summary
ONGC Scenario
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ONGC Scenario
Create Bid
Invitation
Publish Bid
Invitation
Bid
Invitation
Display
Domestic
Bid
Submission
Foreign
Vendor Bid
Bid
Return
Bid Resubmission
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Technical
Bid
Rejection
Adjust Price
Bid
Price Bid
Opening
Bid
Comparison
Report
Thank You!
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Raj Kumar Singh
Solution Architect
raj.singh@sap.com
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