SCMA New Brunswick 2014 PwC s View on Innovations & Trends in Supply Chain Management

Transcription

1 SCMA New Brunswick 2014 s View on Innovations & Trends in Supply Chain Management October 24 th, 2014

2 David Sinclair Consulting Canada Team Profile: John Smith Professional Background David has extensive experience across financial services in North America, the UK, Europe and South Africa. Leading enterprise wide procurement transformation and cost recovery programs which addressed compliance, utilization of technology and addressing gaps within the P2P process. Previously requested by a client to be their Procurement Director Held a number of leadership positions within Procurement Transformation at Accenture and Capgemini Consulting. Led a number of S2P programs specifically within Financial Services for clients across Banking, Insurance and Capital Markets. Worked across retail, consumer products and manufacturing clients globally 2

3 Today s Agenda and Objectives 1. Overview of 2. Share our experience on relevant Supply Chain Innovations & Trends with particular focus on the following: Key trends Technology Category Management Contract Management Vendor management (SRM) 3. Q&A 3

4 Overview of 4

5 We have extensive experience and knowledge globally has over 300 dedicated team members (and over 150 others who have procurement and sourcing experience) to serve client s local and global needs Over 200 distinct sourcing engagements in the past five years Clients in 25 different industries in the past five years >$40B globally in spend sourced across 200+ major direct and indirect categories saving over $5B. Over 30,000 suppliers analyzed Low cost country sourcing experience in Asia (China, Vietnam, Thailand, Philippines, India), Mexico, Brazil, and Eastern Europe Assisted in thousands of supplier negotiations Database containing thousands of negotiable issues Continuous updating of category knowledge Transformation methodology to support the roll-out of the Global Program Change management is embedded into the day-to-day team activities Project templates & tools to improve delivery consistency and speed Americas Total Partners and Staff ~93 North America ~ 84 South America ~ 9 Europe Total Partners and Staff ~168 Africa and Middle East Total Partners and Staff ~5 Middle East ~ 5 Asia Pacific Total Partners and Staff ~54 Australia & New Zealand Total Partners and Staff ~18 5

6 Procurement excellence At we believe that Excellence in Procurement is achieved by aligning and optimising the elements of the Excellence Framework. High performing Procurement functions deploy skilled and motivated people, organised effectively to support the strategy, delivering best practice processes and supported by the right tools and infrastructure. Strategy Excellence Business Strategy Procurement Vision Procurement Strategy A clearly articulated, multi-dimensional strategy seeks strategic advantage throughout the value chain Short and long-range plans are defined Strategic and transactional activities are distinguished the former are aimed at robust category management and the latter at efficiency Strategic Sourcing Contract & Compliance Management Category Strategy Risk Management Transaction Management Demand Management Supplier Management Process Excellence Value delivery is underpinned by planned activities in strategic sourcing and demand management Contract and compliance management practices are systematic across the contract lifecycle A standardized, streamlined P2P process is enabled through technology A formal supplier management program drives improved supplier performance and value-generating opportunities Risk management is integrated into all processes Organization Data & Information Infrastructure Excellence Technology People Metrics The organization is structured to leverage scale and align with internal customer needs Master data is standardized and aligned with governance Integrated systems enable key processes Talent development is aimed at building a well-rounded, multi-skilled team Performance management includes financial and non-financial KPIs and regular performance reviews with the business to drive sustainability 6

7 Overview Supply Chain Innovation 7

8 Key Trends & Innovations in Supply Chain 1. Effective leveraging of technology and a greater understanding of where technology is placed within the overall framework 2. Category Management as an established standard practice 3. Acceptance of capability gaps and acknowledgment that their resolution does not always require in- house solutions: - Specialist category expertise - Technology support - Data related services - Specialist insight (BPO, Multi service contracts, complex agreements, customs, legal etc) 4. Greater awareness of risk and transparency across the supply chain 8

9 Trend 1 Supply Chain Enabling Technologies 9

10 Over the past five years there has been significant market consolidation within the S2P space Over the past five years consolidation within the marketplace has continued with newer providers generating significant market attention and interest Providers *IBM acquisition of Emptoris (2011) *SAP acquisition of Ariba (2012) Ariba Bravo Provider Coupa Emptoris Hubwoo Iasta Ivalua Moai Technologies Perfect Commerce Pool4Tool SciQuest SynerTrade UGS Verticalnet Ariba acquired Quadrem (2010) Ariba acquired B-Process (2011) Bravo Provider acquired Verticalnet (2008) Emptoris acquired Click Commerce (2009) Emptoris acquired Rivermine (2011) Emptoris acquired Xcitec (2011) Perfect Commerce acquires SCC (2012) Perfect Commerce acquires WebProcure (2012) SciQuest acquired AEC Soft (2010) SciQuest acquires Upside (2012) Ariba Bravo Provider Coupa Emptoris Hubwoo Iasta Ivalua Perfect Commerce Pool4Tool SciQuest SynerTrade ERP Providers SAP Oracle (PeopleSoft, JDE) MS Dynamics SAP acquired Crossgate (2011) SAP acquires Ariba (2012) SAP Oracle (PeopleSoft, JD Edwards) MS Dynamics Source: Public records 10

11 Key Technology Insights Solutions Spend Analysis RFx/Sourcing Key points for consideration How well does the solution support data categorization, cleansing, reporting (spend, compliance) How well does each solution track and supports multiple sourcing initiatives RFx and eauction capabilities are similar across most providers - products differentiate by how well they can optimize and automate sourcing decision making Contract Management Buying Authoring, revising, and storing contract documents and the ability to capture robust meta-data for later search and retrieval is a critical capability requirement Integration to sourcing, procurement and SRM tools should be reviewed How well does each product supports : Self service requisitioning Collaborative requisitioning PO processing Change management or status tracking 11

12 Key Technology Insights Solutions Payment Supplier Management (SRM) Reporting & dashboard Data Management Key points for consideration How well do each product support invoicing and payment How well do each solution integrate into legacy backend ERP systems Key considerations include tools to manage supplier performance and supplier self service tools. This includes access to supplier tools to monitor payments, and manage profile details such as address, contact or banking information. Also included is supplier KPIs so suppliers could monitor their own performance Tools available to monitor performance of the procurement process (business metrics) including: Reports Ad-hoc query tools Dashboards for management reporting. Integration with backend ERP system(s) is a key requirement Supplier catalog tools for authoring and maintenance - including approval workflow are required 12

13 Trend 2 Category Management 13

14 What is Category Management? Category Management is a proven best practice that provides a structured framework of activities designed to deliver superior value. The framework is designed to drive capability and accelerate user buy-in by combining best practices in strategic sourcing and demand management supported by process & technology improvements and change management Category Management delivers maximum value as it provides a structured decision making, coupled with outside the box thinking to optimize value structures categories at an enterprise level that mirror the supply market to consolidate opportunities and sourcing activities delivers value along the end-to-end process including supporting processes, demand forecasting, inventory management & logistics identifies opportunities for improvement in price, quality, specification, process, demand management & total cost management 14

15 Category Management key trends Category Management Structuring of categories into portfolios at an enterprise level to consolidate opportunities Cross-functional Category teams 3-5 year category plans for major spend categories Key Insights Allows management of categories in logical groupings to develop expertise and a common interface Allows consolidation and leverage of spend Strong organizational buy-in as a business-driven approach Effective utilization of organizational wide resources Builds closer relations with business & align expectations understanding business goals and priorities Long-term view on requirements Developed in conjunction with the business supported by key enablers - People, Process, & Technology Integration within the end-to-end processes Business process and workflow are key for sustaining benefits Implementing supporting technology delivers efficiencies and sustainable savings Linking all aspects - performance, planning demand, P2P process, supplier performance, inventory & logistics 15

16 Future Trends Category Management trends Performance Improvement Requirements Purchasing and Supplier Importance Organization and Human Resources Information Systems Development Performance Measurement Continuous improvement in cycle time, costs, quality and delivery performance Reduction of time during product and process development will become increasingly important A growing reliance on external suppliers for product and process technology will continue Executive perception of supplier and purchasing importance will continue to increase Increased separation of strategic and tactical job responsibilities driving new skill requirements Increased reliance on cross-functional sourcing teams The use of supply chain planning and execution software will increase dramatically Internet-based systems will become the platform for sourcing and supply chain management Continued increase in the measurement of purchasing and supply chain performance An increase in the development of formalized systems for measuring supplier performance Supply Base Management Purchasing Responsibilities and Activities Increased purchase volume consolidation Longer-term contracting will continue to grow Increased efforts to develop supplier performance capabilities Purchasing and Supply Chain will increasingly become a global activity There will be a continued increase in externally focused and higher-level planning activities Outsourcing of non-core competencies and capabilities will occur globally 16

17 Trend 3 Contract Management 17

18 Definition of a Contract Definition of a Contract A contract is a written or oral legally-binding agreement between the parties identified in the agreement to fulfill the terms and conditions outlined in the agreement. A prerequisite requirement for the enforcement of a contract, amongst other things, is the condition that the parties to the contract accept the terms of the claimed contract. Historically, this was most commonly achieved through signature or performance, but in many jurisdictions - especially with the advance of electronic commerce - the forms of acceptance have expanded to include various forms of electronic signature. A verbal contract is valid when the following conditions are met: The goods are made specifically for the buyer; There is proof to show the parties behaved as if a contract existed The parties have always done business on a verbal basis A purchase order becomes a contract when it is accepted by the supplier. 18

19 Contract Management Process Deliver Evolve Finalize Contract Contract Deployment Contract Administration Contract Compliance & Analytics Contract Closeout Contract Management Technology Performance Measurement and Controls Finalize and execute contract as per negotiation direction Upload contract in central repository Set up contract rates & terms in transactional system Communicate to stakeholders Conduct performance review s and manage contract changes Manage renewals or terminations Monitor compliance with contract terms and conditions Identify contract leakage and take corrective action Close out contract in central repository & update transactional systems Communicate closeout to stakeholders 19

20 Importance of Contract Management Managing relationships (helps to build strategic relationships) Early identification of issues Ensuring regulatory requirements are met Ensuring payments are only made for services or materials received Achieving ongoing value for money Contract Management & Compliance Ensuring accountability and transparency Balance business value and risks Monitoring performance against timetable, KPIs and budget Manage service level and ensure availability Realize cost reductions and continuous improvement 20

21 Contract Value Not all contracts are equal.. Support Business requirements or specifications which do not change for goods / services. Example: Maintenance Services contracts Limited Contract Management Required Strategic Strategic High complex contracts, high financial and business risk impact with typically high contract value. Example: Outsourcing Extensive Contract Management Required Key Operational Support Tactical Tactical Repetitive use of goods / services or standard equipment with typically low contract duration and value. Example: Consumables Very Limited Contract Management Required Organizational Risk Key Operational Business critical goods / services with moderately high contract value. Example: Key Sales Product Considerable Contract Management Required 21

22 Trend 4 Strategic Vendor Management 22

23 Seven Trends in Vendor Management 1.) Segmentation of the supply base to identify the truly strategic 2.) Adopt progressive measures in contract management 3.) Consistent and formal governance structure 4.) Balanced performance management (scorecards) 5.) Investment in demand forecasting 6.) Collaborate on initiatives 7.) Management of risk and improve compliance practices 23

24 Progressive Trends by Early Adopters 1.) Investing in benefits realization tracking - value tracking process composed of performance metrics, model processes, and governance mechanism 2.) Adopting Best Value Procurement to manage Total Costs - weighted evaluation to identify most suitable proponent to improve cycle time and shape service projects 3.) Applying Lean Thinking to identify Value Chain efficiencies - working with select suppliers (strategic and critical) to apply Lean techniques to identify efficiencies upstream that translate into tangible benefits 24

25 Vendor Relationship Management Defined What is a Vendor Relationship Management (SRM)? Vendor Relationship Management is a discipline that enables organizations to control costs, drive service excellence and mitigate risks to gain increased value from their Vendors throughout the contract / sourcing lifecycle. Vendor Relationship Management Covers Segmenting the supply base into tiers to determine the level of engagement and oversight with the Vendor (based on spend, relationship complexity, risk, etc.) Sustaining the benefits accrued through the sourcing process Creating the appropriate level of governance to provide oversight of the programs Development of KPIs to measure the effectiveness of the relationship Developing goals and objectives with select Vendors to enhance value for both organizations Developing a formal review process (quarterly, semi-annually) with each Vendor dependent on its strategic tier Assigning the appropriate level of resources to effectively manage the relationship Developing roles and responsibilities and clear accountabilities in the relationship with both the business and Vendor 25

26 What Experts Say About SRM Leaders in Vendor relationship management (SRM) are reaping all sorts of benefits. Over 80 per cent of SRM leaders reported cost reduction benefits. Risk reduction is the second most common benefit, with 70 per cent of SRM leaders citing this, followed by cost avoidance (66 per cent), supply chain efficiency (64 per cent) and innovation (58 per cent). Effective Vendor management can lead to a variety of benefits, including increased collaboration, savings for the buyer, and alternative sources of revenue for Vendors in the long term, a new report notes Business demands today are requiring organizations to place more emphasis on improving Vendor relationships, sparking increased interest for promoting areas such as Vendor information management, compliance, risk and performance... Many procurement and sourcing activities will be outsourced Firms shares risks and rewards Greater risks in commercial relationships with critical Vendors Buyers and sellers will increasingly rely upon digital trading networks It will be all about leveraging Vendor resources & integrating Vendor functions The fastest growing elements of procurement s role are innovation and Vendor relationship management... 26

27 Thank you Creating a distinctive client experience Our clients have said that they want to work with people who invest in building strong relationships and who share and collaborate with them. They also want to work with people who can see issues from their perspective and who focus on adding value. The foundation of our client service approach (the Experience ) rests upon a consistent demonstration of these behaviors within our organization. We strive to engage, motivate, and inspire our people to deliver a distinctive client experience. We believe that if we get it right with our own people, we will get it right with you. This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers LLP, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it PricewaterhouseCoopers LLP. All rights reserved. PricewaterhouseCoopers refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership, or, as the context requires, the PricewaterhouseCoopers global network or other member utilities of the network, each of which is a separate legal entity.

28 Contact Information David Sinclair Director T York Street, Toronto ON M5j OB2 david.sinclair@ca.pwc.com 28