Need more insights? An On-Demand Webinar on the topic “Branding Procurement” can be accessed here: http://zyc.us/2GmSwSA
Branding Procurement
As someone who has been in the supply world for more years than I would care to admit, the old Rodney Dangerfield lament about getting no respect was second only to the "we want a seat at the table" refrain.
While the profession as a whole had made some advancements beyond the days when CFOs considered our enterprise contributions to be either minimal or non-existent, it is still safe to say that we procurement professionals have not properly branded ourselves and the value we bring to our organizations.
"Some executives used to think of procurement as the place you send staff away in order to never see them again." - Leading Procurement Strategy, Carlos Mena, Remko van Hoek, Martin Christopher
In this presentation, (sponsored by Zycus), have a look at where procurement as a profession was, where are they today, and what they have to do to realize their full potential in the future.
1. Procurement Savings by
the Numbers:
Creating a Shared Savings Ledger with Finance
Access an on-demand Webinar on this topic
here : http://zyc.us/2DnEcWK
2. Source to Pay Suite: Spend Analysis | eSourcing | Contract Management | Supplier Management | Savings Management | Project Management | Request Management | Procure-to-Pay
TODAY’S PRESENTER
Kyle Appell
Director, Supply Chain – Sourcing and Procurement at Protiviti
Kyle has over 20 years of industry and consulting experience, centered in strategic
sourcing, procurement transformation, and finance.
Prior to joining Protiviti, Kyle was a Principal in the Management Consulting,
Operations, Sourcing & Procurement group at Accenture, where he spent 10 years.
Kyle has led multiple strategic sourcing, spend assessment, and procurement
improvement initiatives. His experience spans a wide range of industries, including
Public Services, Resources, Consumer Electronics, Media, Food & Beverage,
Telecommunications, Professional Services, and Manufacturing.
Kyle holds a Bachelor's degree from Bowdoin College where he majored in
mathematics and economics and received his MBA from Kellogg Graduate School of
Management. In his free time, Kyle enjoys travel, food and getting outdoors whether
hiking, skiing or golf.
3. Source to Pay Suite: Spend Analysis | eSourcing | Contract Management | Supplier Management | Savings Management | Project Management | Request Management | Procure-to-Pay
TODAY’S PRESENTER
Rob Walker
Manager, Business Systems, Source-to-Pay Global Services, Qualcomm Inc.
Rob has nearly 20 years of success in full procure to pay cycle for diverse industries of
financial, retail, and manufacturing. Well-versed in all facets of Procurement,
eProcurement Systems, Spend Analytics, Supply Chain, & Logistics.
Additional keys to success include:
Over 18 years of experience with Ariba Procurement, Oracle iProcurement and
supplier management software.
Certified Ariba Engineer, capable of technical and functional management of
Ariba software packages.
Experience with multiple ERP systems including SAP, ORACLE, JDEdwards, and
LAWSON
4. Source to Pay Suite: Spend Analysis | eSourcing | Contract Management | Supplier Management | Savings Management | Project Management | Request Management | Procure-to-Pay
TODAY’S PRESENTER
Kanishka Ghosh
Director Product Management, Zycus Inc.
Kanishka, heads the Product Management team for Zycus’ Source-to-Pay Suite.
He has been working in the enterprise product management space for more than a
decade, primarily involved in designing best-of-class applications. He has been
instrumental in successful procurement application adoption by a large number of
Global 1000 organizations.
He has authored numerous whitepapers and solution documents and has been
actively evangelizing world class procurement practices in different industry events.
Previously, he was responsible for managing a number of products in Oracle’s EBS
Advanced Procurement product family.
6. Source to Pay Suite: Spend Analysis | eSourcing | Contract Management | Supplier Management | Savings Management | Project Management | Request Management | Procure-to-Pay
DO WE HAVE A CONSENSUS?
How do we define Savings?
Is a reduction from the baseline price = Savings?
Baseline v/s Budget?
If the savings is used for additional items or other purchases, do we
still record a saving?
Access an on-demand Webinar on this topic here : http://zyc.us/2DnEcWK
7. Source to Pay Suite: Spend Analysis | eSourcing | Contract Management | Supplier Management | Savings Management | Project Management | Request Management | Procure-to-Pay
CHALLENGING THE STATUS QUO
Finance
Accounts for Savings
and Spending
Procurement
Responsible for procurement
cost-reduction strategies
8. Source to Pay Suite: Spend Analysis | eSourcing | Contract Management | Supplier Management | Savings Management | Project Management | Request Management | Procure-to-Pay
ABOUT PROTIVITI’s 2017 PROCUREMENT SURVEY
Protiviti is a global consulting firm that delivers deep expertise, objective
insights, a tailored approach, and unparalleled collaborations to help
business leaders confidently face the future.
Sourcing and procurement plays an increasingly
critical role in delivering strategic impacts
Frequently observe opposing assessments of
procurement's performance from finance and
procurement
We queried finance and procurement executives
about a comprehensive set of procurement practices,
priorities, capabilities, and performance areas
In total, 440 Finance and Procurement Executives
across a range of industries participated in our survey
9. Source to Pay Suite: Spend Analysis | eSourcing | Contract Management | Supplier Management | Savings Management | Project Management | Request Management | Procure-to-Pay
WHERE ARE THE RESULTS?
Savings not hitting the bottom line
Almost Half of
Finance Leaders
believe that:
20% or less of
negotiated
savings actually
drop to the bottom
line
Key Fact
48% 31%
Finance
leaders
Procurement
leaders
Percentages of leaders who believe that 20 percent or less
of savings achieved by the procurement function is
dropping to the bottom line.
10. Source to Pay Suite: Spend Analysis | eSourcing | Contract Management | Supplier Management | Savings Management | Project Management | Request Management | Procure-to-Pay
WHY THE DIFFERENCE OF OPINION?
Budgets not enforced and “savings” are spent in other areas
Realized (vs. negotiated) savings are not effectively tracked
Calculated savings were not realistic/accurate
Changes in needs or specification
Savings based on purchase price, but other costs/TCO has increased
Changes or invalid savings assumptions
Poor demand management – buying more than forecasted volumes
Poor Compliance – not using preferred suppliers or negotiated price
0% 10% 20% 30% 40%
36%
29%
28%
26%
25%
24%
16%
12%
11. Source to Pay Suite: Spend Analysis | eSourcing | Contract Management | Supplier Management | Savings Management | Project Management | Request Management | Procure-to-Pay
HOW DO YOU DEFINE SAVINGS?
Savings can be measured in multiple ways
Period 3Period 2Period 1Period 0
Annual Benefit
Measure of year over year
performance contribution
Compounded Benefit
Attributable to strategic
sourcing
Cumulative Benefits
Reduction of total
recurring annual spend
* Analysis does not factor growth or inflation
$100
(-16%)
$100
(-14%)
$300
(-30%)
$500
$600
$700
$1,000
Total
Spend
($M)
Cumulative
Benefits
Reduce total annual
spend by $500
Compound
Annual Benefits
Generated $1,200 in
savings over 3 period
Annual
Benefit
ILLUSTRATIVE
12. Source to Pay Suite: Spend Analysis | eSourcing | Contract Management | Supplier Management | Savings Management | Project Management | Request Management | Procure-to-Pay
HOW DO YOU TRACK AND REPORT SAVINGS?
Effective performance management efforts follow a three-stage savings
methodology.
Value Identified
Analyzation of historical
data to establish
baseline for estimating
potential benefit
Value Captured
Execution of confirmed
strategy to capture value
Value Realized
Implemented results
enabling benefits to be
realized
13. Source to Pay Suite: Spend Analysis | eSourcing | Contract Management | Supplier Management | Savings Management | Project Management | Request Management | Procure-to-Pay
WHAT VALUE DOES PROCUREMENT DELIVER?
Procurement is not serving as a strategic partner within the firm
Over Half of
Leaders believe
that:
58% of all
respondents view
procurement as
more tactical than
strategic
Key Fact
Percentages of leaders who consider to operate as a cost
center, profit center, or bottom line neutral within their
organization.
58%
Cost Center
16%
Profit Center
26%
Bottom Line
Neutral
14. Source to Pay Suite: Spend Analysis | eSourcing | Contract Management | Supplier Management | Savings Management | Project Management | Request Management | Procure-to-Pay
TYPICAL CLIENT PROBLEMS
Things we often hear and see that undermine the perception of
procurement
Decentralized and uncoordinated sourcing practices across multiple
business units resulting in redundant contracts with same supplier or
multiple contracts for similar items.
Spend is highly fragmented and not well understood. Procurement does not
have a clear view of what is being purchased, and who is doing the buying.
Strategic sourcing is organized around contracts as opposed to categories.
As a result, more emphasis is narrowly placed on a few, albeit, large
suppliers as opposed to overall category strategies
Too much emphasis is placed on driving lowest price which erodes
relationships with suppliers
Sourcing ends with the execution of agreements. Little or no focus is on
category management or supplier performance. As result, the anticipated
benefits never materialize
15. Source to Pay Suite: Spend Analysis | eSourcing | Contract Management | Supplier Management | Savings Management | Project Management | Request Management | Procure-to-Pay
PROCUREMENT DELIVERS REAL RESULTS
By directing efforts toward cost reductions and maintaining leading
procurement practices, companies can significantly impact profitability
A company with $1B in revenue would add
$28M to its bottom line by decreasing
external spend by 5% as compared to only $3
million from increasing revenues by 5%.
Leading procurement companies have 1.7
times the savings and operating growth
compared to all other companies.
Well orchestrated procurement also deliver stronger contracts, better supplier relationships,
higher quality products & services, more agile supply chain operations, increased
sustainability, etc.
16. Source to Pay Suite: Spend Analysis | eSourcing | Contract Management | Supplier Management | Savings Management | Project Management | Request Management | Procure-to-Pay
WHAT MAKES PROCUREMENT SUCCESSFUL?
One in five respondents describe their sourcing process as “very
effective”. However, this group shared a number of commonalities:
Key characteristics of
procurement that drive
financial results:
1. Utilize spend data within
budgeting and planning
functions
2. Use third-party systems
to conduct spend analysis
3. Have centralized finance
and procurement teams
4. Track and communicate
savings generated by
procurement
5. Include cash flow and
working capital as key
elements of procurement
savings goals
Key Facts
88%
Use spend analysis in their
budgeting and planning
68%
Conduct spend analysis
that is ‘robust and routine’
59%
Use tools from third party to
conduct their spend analysis
Spend Analysis
78%
Report savings generated by
procurement are tracked and
well understood
91%
Indicate that finance &
procurement are aligned on
cost-saving initiatives
Savings Methodology & Tracking
82%
Have both centralized
finance and procurement
functions
71%
Describe the relationship among
finance and procurement as
“collaborative decision-making”
Organizational Design & Relationship
17. Source to Pay Suite: Spend Analysis | eSourcing | Contract Management | Supplier Management | Savings Management | Project Management | Request Management | Procure-to-Pay
LEADING FIRMS DELIVER END-TO-END VALUE
Well organized procurement activities are proven to deliver and sustain
higher savings
Over time, value from Sourcing activities erodes as resources are typically redeployed to support
more traditional commercial sourcing efforts, leaving significant value opportunities unrealized.
Start Sourcing
Initiatives
Today In 2-3 Years
Sustainability of Benefits plus
Additional Cost Reduction &
Value Improvements from
Category Management
BusinessValue
Tactical
Procurement
Strategic
Sourcing
Category
Management
Level of Organizational Sophistication
Procurement Evolution Benefits of Category Management
BusinessValue
• Optimized Supply Base
• Robust Agreements
• Cost Reduction from
Sourcing initiatives
• Risk Mitigation
• Early Planning and Collaboration
• Supplier Performance Mgmt.
• Continuous Improvements Efforts
• Total Cost Reductions
• Long Term Planning
• Focus on Operational & Process Levers
18. Source to Pay Suite: Spend Analysis | eSourcing | Contract Management | Supplier Management | Savings Management | Project Management | Request Management | Procure-to-Pay
PROCUREMENT SAVINGS BY NUMBERS AT QUALCOMM
Rob Walker
Manager, Business Systems, Source-to-
Pay Global Services, Qualcomm Inc.
Kanishka Ghosh
Director Product Management,
Zycus Inc.
In Conversation With:
Kyle Appell
Director, Protiviti
To ask a question to the panel make use of the chat button
Please note the questions will be answered at the end of
session
Access an on-demand Webinar on this topic here :
http://zyc.us/2DnEcWK
19. Need more insights?
An On-Demand Webinar on the topic "Procurement Savings by the Numbers"
can be accessed here: http://zyc.us/2DnEcWK
Follow us on social media for more updates!
Twitter | LinkedIn | Google+ | Xing | SlideShare
20. +1 866 563 9219
info@zycus.com
www.zycus.com
Thank You
Notes de l'éditeur
PoP – 7th year
~ 725 respondents – all geographies from revenue segments ranging from less than 500 mn to greater than 5 bn.