Beyond the SKU - Driving Compliance Across Complex Categories

CC

Beyond the SKU
Driving Compliance across
Complex Categories

© 2012 Ariba, Inc. All rights reserved.

Collaborative Business Commerce-
E-Enabled Goods Versus Services
Collaborative Business Commerce as a % of Overall Spend
Business Collaboration on Goods
40.0%
Business Collaboration on Services

30.0%

20.0%

10.0%

0.0%
2005 2006 2007 2008

Source: U.S. Dept of Census, E-Stats, May 2010

2 © 2012 Ariba, Inc. All rights reserved.

An Additional Dimension in E-Enabled
Goods: Catalog Versus Complex Goods
Collaborative Business Commerce as a % of Overall Spend
Business Collaboration on Catalog-Driven Goods
40.0%
Business Collaboration on Services
Business Collaboration on Complex Goods

30.0%

20.0%

10.0%

0.0%
2005 2006 2007 2008

Source: U.S. Dept of Census, E-Stats, May 2010


Introductions

• Ken Redler
Chief Technology Officer
• Robert Calvert
B2Bi Program Manager
• Mike Meiring
P2P Supplier Enablement,
Communications, and Change
Management Coordinator


About cSubs

• Subscription and Knowledge Resource Management:
Managing the flow of information into the organization
Books, Periodicals, Newspapers, Electronic Content, Site Licenses
Purchase, Renewal, Cancellation, Transfer
Reporting, Business Intelligence, Analytics
Consolidated Billing and Payment
Spend Avoidance and Cost Control

• Clients Across Multiple Industries
Banking, Accounting, Healthcare & Pharma, Advertising & PR, Media, Manufacturing,
Higher Ed, Many in the Fortune 500


A Complex Category in Flux

• Seismic Shift from
Print to Online
• Electronic Content
Different procurement
workflow
Complex management
requirements
Category Creep
Potential legal exposure


Starting with PunchOut…
If I PunchOut through Ariba and
Purchase an Electronic Journal…

Can My Department
Share My Electronic
Journal?

Can I Clip and Redistribute?
Within the Company? To Clients?


Far Beyond the SKU
Management continues long Renewal Transfer
after the procurement process
is complete

So how
are these Do you
issues remember my
password? Non-Renewal Cancellation
often
handled now?
And by whom?


You May Have This Problem

Username and Password
“Management”


Or This Problem
Terms & Conditions


Who Manages it All?

• Sometimes
Purchasing Managers
Library Groups
IT Departments
Individual Business Units
• Often
Nobody!
– Failure to realize the growing costs of the
complexity beyond the SKU


Costs and Risks

• Duplication and Unnecessary Purchases
Often found to be over 10% of total spend
• High Administrative Costs
Hidden costs in time and personnel
Complexity often means little control or BI
Lack of formal structures, creeping scope
• Legal Exposure
Entitlements under copyright law, contracts, T&C


A Solution: Services Provided
Through Ariba Integration Model
• Familiar PunchOut and single sign-on workflow,
augmented with pre- and post-purchase
management features

PunchOut Pre-purchase
SSO interaction


Pre-purchase: Advance Polling

Advance renewal emails
Users sign in to cSubs through Ariba to indicate
their interest
Managers easily track results, simplifying the
information gathering process
Historical reports and access statistics lead to smart
spending decisions
cSubs can assist with contract negotiation prior
to purchase


Pre/Post-Purchase Management


Far Beyond the SKU with Post-
Purchase Access and Management

Administrator,
PunchOut
SSO

Administrator
Manages
Resources

Corporate Users,
PunchOut SSO

End Users
Access
Resources


Post-Purchase: Access


A Complex Service Simplified

• Complex categories like e-content can be managed
through the Ariba workflow
• Simplification, consolidation, cost savings
Better value and utilization from current spend
• Higher user compliance
Leveraging the familiar Ariba environment
• Mitigate your company’s knowledge resource
management risk


Introductions

• Ken Redler
• Robert Calvert
• Mike Meiring


Teller

1. “Exploit pattern recognition
2. Make the secret a lot more trouble
3. It’s hard to think critically if you’re laughing
4. Keep the trickery outside the frame
5. To fool the mind, combine at least two tricks
6. Nothing fools you better than the lie you tell yourself
7. If you are given a choice, you believe you acted freely”

…presented to a conference on neuroscience and perception,
transcript printed in Smithsonian March 2012


Exploit Pattern Recognition

Source to Invoice | Invoice to Source
Catalog/ Configurator/ eQuote Non Catalog Contract
PunchOut PunchOut
Simple l l l l
Goods
Configured l l l l l
Goods
Milestone l l l l
Service
Metered l l l l l
Service
Monthly l l l l l
Service
Open Ended l l l l
Service


Make the Secret a Lot
More Trouble

Source to Invoice | Invoice to Source

Break it down

Cloud Service Example Software and Service Example

• 20 GB • Software License
• Unlimited • Support (24 months)
• Per Use • Prepaid Training Credits (1 time)
• Professional Services (multiple rates)


It’s Hard To Think Critically
When You’re Laughing

Customer should forget you exist

Example: Disney Tram or Monorail

Simple things should be simple

Keep the Trickery Outside the
Frame

Share the complexity of supply chain at deployment;
however, not at the transaction level

• At deployment must be win:win

• At transaction must be customer first

Managing customer experience vs. process automation

Manage Organizational impacts

• Sales, Order Mgmt, AR/Collections, eBusiness

It’s a channel for doing business; not an add-on to how you do business


To Fool the Mind, Combine at
Least Two Tricks

Non Catalog shouldn’t be the default (in its current state)

Drive for additional value

• Value of Non Catalog

• Value of Configurator

• Value of Contract

• Value of Quote Integration (eQuote)

Reconcile Value vs. POR


Nothing Fools You Better
Than a Lie You Tell
Yourself
Buyers want to believe

That all suppliers can manage all goods and services they sell,
simple and complex

All Suppliers Big and Small

• Different developmental (POR) priorities

• Different organizational constraints

• Different sales priorities

Both Buyer:Supplier need to be flexible to demand vs. capability


If You Are Given a Chance

It is important that:

Sellers sell what they have Buyers recognize that all
Sellers don’t have the
Sellers challenge same flexibilities, the
themselves to grow and same speed to market,
expand their capabilities the same objectives, the
same capabilities.


Introductions

• Ken Redler
• Robert Calvert
• Mike Meiring


About UPS

• Founded in Seattle, WA in 1907
• Corporate Headquarters: Atlanta, GA
• Primary Business Units:
Small Package
Supply Chain Solutions (Logistics/Warehouse/Forwarding)
UPS Freight
• 2011 Delivery Volume: 4 Billion packages/documents
• 2011 Total Revenue: $53.1 Billion ($44 Billion
Small Package)


About UPS

• Employees: 398,300 (324,000 U.S. and 74,300 Int’l)
• Small Package Customers: 8.8 Million Daily
1.1 Million Pickup
7.7 Million Delivery
Delivered more than 26 million packages on “peak day” 2011
(Dec. 22)
• Total Facilities Worldwide: 2,879
• Total Ground Fleet (All Business Units): More Than
101,000 Units (Tractors, Package Cars, Motorcycles)
• Aircraft: 223 UPS Aircraft and 300 Chartered


Collaborative Commerce
Accomplishments with Ariba
• Collaboration infrastructure: Oracle and Ariba
Requisitioning process in the ERP
Supplier connectivity through the Ariba Network
• Catalog Orders (PO) and Local Services (Combination of PO Invoicing and
Contract Invoicing
300-400 catalog suppliers now transacting via Ariba (PO Flip, cXML and EDI)
Approximately 30,000 “non-catalog” suppliers - primarily services (Invoice against contract)
– Local services, 3rd Party Transportation for our UPS Freight and Logistics business units, advertising,
consulting, Corporate housekeeping and security services, medical services, uniform cleaning, etc.
• Approach with catalog suppliers
Exchange PO and invoice documents with the catalog suppliers
Require order acknowledgement and advance shipping notices – helps ensure price has been
acknowledged and provides order visibility
• Approach with non-catalog suppliers
Contract invoicing
Use of Attribute fields to transmit information from invoice to ERP
Some internal CIF catalogs to allow for “partial item” functionality (Medical Services, Uniform
Cleaning, etc.)


Complexities of Goods (Catalogs)

• Configuration – SKU-driven catalogs cannot accommodate
• Challenges
Additional information required beyond the SKU Item Number
Tiered Pricing
Minimum/Maximum Quantities
• Examples:
Business cards (contact information)
Promotional Marketing Products (imprinting information)
Awards (inscription details)
Some industrial products (minimum order quantity requirements)


Complexities of Services

• Wide Variety of Service Areas
Janitorial, landscaping, vehicle towing, pest control, vehicle
repairs, snow removal, fire equipment inspection
• Many Pricing Models
Hourly rates, mileage rates, flat rates, etc.
• More Complex Services Require Additional Information
Use of Internal CIF Catalogs to Accommodate Requirements
Examples: Medical Services, Tires, Uniform/Industrial Cleaning


Primary Goals for Services –
Contract Invoicing
• Eliminate Paper Invoices
• Systemically Validate Contract Rates
LPO process required manual process for rate validation
• Improve Payment Cycle Time
Average 22 days to create/approve/match/pay LPOs to Invoices
Average eight days to approve contract invoices
Quicker cycle time promotes acceptance of Early Payment Offers
• Sunset Internal Local P.O. Application (Customized Oracle)
• Reduce Transactional Costs
• Generate Additional Savings via Early Payment Offers


The Way We Were – LPO/Paper Invoice

UPS Employee Orders UPS Employee UPS Employee Creates
Service via Receives Paper P.O. in ERP System
Phone/Email/Etc. Invoice from Supplier (After Invoice)

Invoice Key Entry by Invoice is Matched to
Outsourcer Local PO and Paid


Way We Are Now – Contract Invoice

UPS Employee Orders Supplier Creates UPS Employee
Service via Invoice in Ariba Approves Invoice in
Phone/Email/Etc. Against Contract Ariba. Invoice is Paid

• Approved Invoices Pend for Terms
• Early Payment Offers Made via the Network


Challenges

• Sheer Volume of Suppliers and Contracts
Approximately 30,000 suppliers could ultimately be targeted for
Contract Invoicing
Approximately 20,000 contracts to manage
• Decentralized Purchasing Culture
Service suppliers owned and managed by local UPS business managers
Supplier compliance has been a challenge as a result
• Some Stakeholders Insist on Issuing a Purchase Order
• Sharing Data Between Ariba and Oracle
Flex field requirements
• Invoice Routing
Use of specific email in Sold To field
Associating an email address to a building code


Keys to Success

• Communicate…Communicate…Communicate
• Train…Train…Train
• Stakeholder Representatives on the Project Team
Automotive
Facility Management
• Ensure Adequate Knowledge and Resources
Ariba Support
Other Third-Party Support


Thank you!


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Recommended Approach for Enabling Spend

Off-Contract Goods & Simple Goods & Services w/ Recurring/ 3rd Party/Emergency
Process Category: SKU-Based Goods
Services Complex Agreements Goods & Services

Buying Requisition via Non- PO Release Against
Requisition via Catalog Invoice Against Contract
Process Catalog Contract

Three bids and a buy
Pricing Compliance Catalog Contract Contract
Audit
 Goods or Services
Goods or Services Receipt
Fulfillment Goods Receipt No Receipt
Receipt
 No Receipt

Invoice PO & Goods or  PO, Contract & Receipt
PO & Goods Receipt Contract
Reconciliation Services Receipt  PO & Contract

 Off-Contract Spend  IT Hardware  IT Consulting  Direct Mail
Spend Commodity
Examples:
(Spot Buys or One-  Office Supplies  Creative Agency  Market Research
Time Purchases)  Promo Items  Temp Labor  Facilities Management

Implementation
Low Low-to-Medium Medium Medium
Effort


Beyond the SKU - Driving Compliance Across Complex Categories

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