Supplier Management 101: Drive Spend Toward Preferred Suppliers and Reduce Risk

PUBLIC
March 22, 2017
Matthew Montgomery, Eric Coker, SAP
Supplier Management 101: Drive Spend Toward
Preferred Suppliers and Reduce Risk

2PUBLIC© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ
Don’t become the next headline
Multiple global auto
manufacturers temporarily
suspended production after
Fukushima nuclear plant
radioactive leaks
2011
Major entertainment
company to pay as
much as $8M to settle
data breach case
2014
Global fast food chain’s
image as a safe food
provider shattered over
expired meat scandal
2014
“In 2020, less than 2% of organizations with $1 billion or more in revenue will have a single
solution to manage risk across all spend categories, direct and indirect.”
– Gartner 2016 Strategic Roadmap for Supply Risk Solution Deployment, May 2016

The Supplier Management Challenge and Business Impact
SAP Ariba Supplier Risk Introduction and Demo
SAP Ariba Supplier Lifecycle and Performance Introduction and Demo
Questions?
Agenda

4PUBLIC© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ 4PUBLIC© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ
Rethinking supplier management in a digital economy
With more parties involved,
managing suppliers has
become more complex and
business critical than ever.
Major trends impacting supplier management
Globalization
The problem is no longer
the absence of data. The
key is how to use data to
drive business value.
Big Data
Digital technologies are
disrupting traditional operations
and providing a rich
environment for innovation.
Innovation

Supply risk management is key issue for procurement
Source: Key Issues Study, The Hackett Group, 2016
Elevate the role of procurement to a trusted advisor
Improve agility
Reduce supply continuity risk
Deepen influence in complex indirect spend
Strengthen/protect the company’s brand
Reduce regulatory noncompliance risk
Improve supplier delivery performance 51%
51%
63%
65%
68%
74%
81%

Procurement leaders are navigating a challenging environment
Difficult to allow suppliers to
manage their information
Risk exposure during
supplier lifecycle; costly
supply chain disruptions
Out-of-date vendor master with
complex and duplicate data
Sporadic supplier due
diligence and fragmented risk
information
Decoupled from other
procurement processes and
resulting in savings leakage
Inconsistent supplier
onboarding, qualification,
segmentation processes

… access rich,
clean supplier
information
integrated to your
procurement
process
What if you could …
… manage the full
supplier lifecycle
from onboarding to
phase-out in one
place
… get a
comprehensive
360-degree view of
all your suppliers
Scale compliance and supplier lifecycle performance with one place to manage all suppliers
Move from reactionary crisis management to proactive risk management across all spend categories
… segment your
supply base by
risk level and risk
categories for
focused risk
due diligence
… establish
proactive risk due
diligence while
qualifying and
evaluating your
suppliers

Supplier management business impact
Process improvement
Supplier information and risk
management
 Operational cost take-out from
efficiency gains relating to
onboarding, manual vendor
lifecycle mgmt, IT processes
 Multiple supplier risk subscriptions
and integration effort for
measurement of data (think 3-4
subscriptions for risk)
Incremental Sourcing
Savings – Price Reduction
Supplier Consolidation, Preferred
Suppliers
 Consolidation leads to reduced
purchasing price
 Preferred suppliers tracking and
recommendations leads to higher
savings
Revenue
Revenue shortfall avoidance
 Decrease in revenue from
supply chain disruptions –
either by inventory shortfalls
or reputational damage
3.35% reduced indirect purchasing costs
for top quartile of supplier consolidation
(Hackett)40% operational savings: $1,000 cost per
supplier (average) reduced to $600 per
supplier for best-in-class (Hackett)
50%+ reduction in supplier risk
subscriptions by aggregating into one
Millions in revenue lost due to supply
chain disruptions leading to operational
downtime, inventory shortages, faulty
products, and possible reputational
damage that affects sales and
shareholder value.
Source: Hackett - “The Benefits of Supplier Consolidation Extend Far Beyond Sourcing Savings”, 2012

Supplier management and SAP Ariba solution portfolio
End-to-end business commerce
SUPPLIERS | MARKET TO SETTLE
Ariba Network
Operational
procurement
Supply
chain
Financial
supply chain
Supplier
management
Strategic
sourcing
BUYERS | SOURCE TO SETTLE
Selling Fulfillment

Supplier-managed
information
Supplier Management solution portfolio overview
Manage supplier information, lifecycle, performance and risk in one place
Common supplier record
Other
ERPs
MDG-S
Other DWs
SQL and
NoSQL DBs
SAP Business
Suite and
other ERPs
Two-
way
sync
Syncbusinessprocess
Syncbusinessprocess
SAP Ariba Supplier Lifecycle and Performance
SAP Ariba Supplier Risk
Vendor
model
Qualification
matrix
Segmentation
matrix
Spend
matrix
SAP Ariba Source-to-Settle application suite
Onboarding Qualification Segmentation
Performance
management
Development
& phase-out
News
sources
Government
sources
Ratings
sources
Financial
sources
External data sources

SAP Ariba Supplier Risk Introduction and Demo

SAP Ariba Supplier Risk
Simplify risk management across procurement processes
Resolves barriers to information
Applies to your entire supply base
Integrated into SAP Ariba sourcing & procurement
Keeps procurement compliant
Segmentation
by risk
Due
diligence
Risk
scoring
Compliance
checks
Real-time risk
dashboards
Engagement
assessments*
Issue
management*
Regulatory
and legal
compliance
Financial
Environmental
and
social
Operational
* Include planned innovations.

How SAP Ariba Supplier Risk works
Incidents
Legal and regulatory
compliance
Financial Operational
Environmental
and social
Impact*
Exposure
Assessments
Adjudication*
Remediation*
Supplier risk
scoring model
Integrated Open Configurable
Business
continuity
Business
reputation
Supplier engagements*
Inherent Relationship
Performance Supplier ratings
* Include planned innovations.

 Segmentation of suppliers based on risk exposure grouped by risk categories
for focused due diligence
 Consolidation of fragmented supplier risk information from internal systems,
relationship/procurement profiles on Ariba Network, and external signals.
 Data syndication from 500,000+ sources including news sites, government
data, disaster system, public and private data sources, and more
 Unified corporate information enrichment, compliance checks and
reporting, country-specific risk profiles, supplier parentage and linkages,
natural disaster information
 Over 130 risk incidents tracked and delivered as risk alerts to users
 Integration with supplier lifecycle process – for example, new supplier
request automatically generates a risk exposure profile, including compliance
checks, which can serve as guidance for qualification
 Comprehensive supplier 360-degree reporting with one view across full
supplier profile, ongoing activities, and risk profile
 Supported by a scalable and rapid supplier onboarding through a unified
supplier model that integrates to the ERP system
 Planned capabilities including intelligent inherent risk identification, guided risk
assessments, collaborative supplier response, and action tracking
Solution highlights

The SAP Ariba Supplier Risk difference
 Ability to scale rapidly
with the world’s largest
supplier network
 Timely risk insights and
collaboration between
internal stakeholders
and suppliers
Scalable and
collaborative
 Integration with ERP
vendor master and
procurement
applications
 Supplier risk across
source to settle process
Deep and
broad
 Contextualized risk with
transaction and network
data
 Personalized risk views
and alerts relevant to
your business and role
Automated and
personalized

Demo
SAP Ariba Supplier Risk Demo

SAP Ariba Supplier Lifecycle and Performance Introduction and Demo

SAP Ariba Supplier Lifecycle and Performance
Drive spend toward preferred suppliers. Scale compliance to entire supply base.
Supplier 360°
2-way sync
with ERP
Self-service
network supplier
profile
Matrix-based
management
Supplier
360 degree
Unified vendor master in the cloud
Bidirectional sync with ERP
Comprehensive supplier 360-degree view
Scalable supplier management matrices
Integrated with procurement applications
Vendor master
in the cloud
Integrated with
procurement apps

The SAP Ariba Supplier Lifecycle and Performance difference
High-fidelity vendor
data model in the cloud
Flexible matrix for
qualification/segmentation
Supplier 360-degree
comprehensive view
 Bidirectional synchronization
between SAP Ariba solutions
and SAP systems
 Extensible supplier data model
 Near real-time updates for
supplier creation, changes, and
inactivation between systems
 Flexible matrix architecture for
supplier management based on
category, location, and business
unit
 Preferred supplier management
 Hierarchical questionnaires and
logic to aggregate from different
levels
 Combining supplier
information, qualification,
segmentation, and
performance data
 Centralized and
comprehensive view of
suppliers across SAP Ariba
applications

Your next steps
 Let us help you build a business
case
 Set up a flight plan to adopt SAP
Ariba Supplier Lifecycle and
Performance solution
 Share business impact and best
practices with other teams
 Declare additional strategic value
your procurement org can bring to
your company
 Define goals, catalog your
needs
 Have your team attend an
SAP Ariba Supplier Lifecycle
and Performance demo
Create a vision
in your team
Get buy-in from
your leadership
Share
your success

Demo
SAP Ariba Supplier Lifecycle and Performance Demo

CUSTOMER QUOTE
SAP Ariba Supplier Management
Ongoing, scalable risk management across all suppliers
Industry: Financial services
Why we’re happy
Wide acceptance of SAP Ariba
solutions from both our teams and our
suppliers
Replaced manual processes with
automated, data-driven vendor
management tools
Tremendous future value in meeting
financial services industry risk
management mandates
“We’ve experienced tremendous growth to become one of the top 25 US
banks with $38B assets and over 400 branches. Our growth means we
need to get to the next level with our tools. We replaced Google Alerts and
Excel vendor performance monitoring with SAP Ariba supplier
management solutions. In the next 5 years our goal is to drive OCC
mandates on our vendor database and lifecycle management. That’s
where we see the huge value for us with SAP Ariba.”
Rob Conti
Vice President, Strategic Sourcing & Purchasing, First Niagara Bank
Slide
Share
Video

Customer success
$1 billion global spend routed through SAP Ariba solutions.
Enhanced collaboration between company functions such as
quality and supply chain.
15,000 global suppliers managed through SAP Ariba solutions.
Increased savings from standardization and better-quality
information.
$20 million bottom-line improvement by driving value using SAP
Ariba solutions. Provided global procurement team with
comprehensive control over supplier management.
US$1.6 billion consumer
product packaging company
World’s 11th largest retailer
US$1.4 billion professional
services company

Thank you.
Contact information:
Matt Montgomery
Senior Solution Consultant
+1 859.221.4035
matthew.Montgomery@sap.com
Eric Coker
Director of Operations, NVO
+1 678.336.2763
eric.coker@sap.com

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