Orange County Convention Center Orlando, Florida May 15-18, 2011 Global Procurement Transformation at INVISTA Gerald Beachum INVISTA S.à r.l. Michael Cheatham Deloitte LLC ]
INVISTA S.à r.l. INVISTA: one of the world s largest integrated producers of polymers and fibers Primarily nylon, spandex and polyester applications Operates in more than 20 countries Subsidiary of Koch Industries, Inc. acquired from DuPont in 2004 & combined with KoSa History of innovation and leadership Enriching daily life: clothing, carpets, luggage, plastic bottles, automobile parts, airbags and more More than 700 unique patents & significant intellectual property Focus Creating long-term value for customers and society Using resources more efficiently Protecting the environment and the safety and health of our employees and others Minimizing waste and improving the environmental, health and safety aspects of our products and processes Hiring and retaining talented and committed employees Pursuing growth through acquisition and expansion 2
Deloitte Consulting, LLP As a full-service professional services firm and a recognized market leader, we are well positioned to assist our clients in solving complex transformation issues and deliver shareholder value. Reasons Market Leader Breadth & Depth of Service Top Talent Qualifications Deloitte is recognized by our clients and external analysts such as Kennedy Consulting Research and Gartner as a market leader in Supply Chain Transformation Our Supply Chain Transformation growth rate, practice size, market momentum, and depth & breadth of capabilities out-perform our competitors Our broad experience in Supply Chain Transformation across major industry sectors provide us with a differentiating position to deliver industry-leading solutions We offer a strong multidisciplinary approach that spans strategy & vision, organization, process, and technology Our professionals are hands-on who have served as trusted advisors to executives Our professionals understand the interdependencies that exist between the supply chain and the linkage to supporting the overall corporate strategy Thought Leadership Our commitment to our clients include access to timely, valuable thought leadership concerning the issues faced by Supply Chain executives We actively share our experience with the Supply Chain community through multiple channels (examples.regional Executive Roundtables, Webinars, Surveys, Points of View, and Conferences) 3
Learning Points Transformation Requires a Holistic Vision Transformation Requires an in Depth Understanding SAP Applications Can Be Very Effective Tools to Enable the Journey When They Relate to the Business Requirements 4
Procurement Global Vision Strategic Sourcing Implement a global sourcing capability for products, equipment and services where significant value is created through effective supplier development, aggregation and leveraged market competition through new system tools. Efficiency and Automation The efficiencies to facilitate this strategic sourcing will be gained through utilization of electronic vender collaboration, improved internal knowledge systems and automation of +80% of purchases made directly online by INVISTA consumers. Talent Success will be driven by developing the talent capable of and willing to drive the change from transactional procurement to strategic sourcing. 5
INVISTA s Procurement Transformation Focus Three Major Functional Areas: Define Sourcing Strategy Analyze Spend Identify Need Create Requisition Route Approval Qualify vendors Negotiate Contract Manage Contract Develop Preferred Supplier Relationships SOURCING VENDOR MANAGEMENT Initiate Relationship & Facilitate Communication Define Performance Expectations PROCUREMENT Create Purchase Order Coordinate Delivery Receive Goods/Services Authorize Payment & Settlement Assess Relationship Manage Performance 6
Transformation Develop Broad Understanding of the Vision Document All Processes Related to the Vision Understand the Current State Document the Gaps Define the Improved Processes Define the Paths to Achieve Improvement Strategic Sourcing Analytics Data Management Transactional Procurement Change Management Continuous Sponsorship for Improvements Talent Must Keep Pace with Processes and Tools 7
Strategic Sourcing Processes and Tools Drive for Significant Value Creation Electronic Auctions and Negotiations Strategic Project Deliverables Accurate Estimates Creditable Results Supported by Our Business Leaders Contract Management Cycle Time Reduction Tools for Enablement e- Sourcing Spend Analytics Key Performance Indicators Enterprise Portal 8
Efficient Procurement Processes & Tools Standardize Processes and Guidelines to Eliminate Waste Automation of Purchases Electronic Communication Vendor Collaboration Efficient Invoice Management Business Process Tools Automation within ERP Systems SAP Supplier Relationship Management SAP Supplier Self Service Portal SAP Master Data Management Vendor Invoice Management OpenText Technical Project Management - SAP Solution Manager for Work Stream Activity 9
Results Major Area Business Case Benefit Driver Goal 2010 Comments Savings vs. Procurement Spend 4.3% 5.3% Strategic Sourcing Auction Savings for Sourced Purchases 10-20% 15% Project = 10% 2010 Goal 20% Contracts Created ~60/month Transactional Procurement Automatic Purchase Order Items- Materials 54.3% Automatic Purchase Order Items Services 19.5% Total Automatic Procurement Purchases 80% 48% Historically 32% Continuing to Improve Historically 2.5% Continuing to Improve 173,370 Automatic PO Line Items Historically 26% - Improving Purchase Order Price Changes 44,404 23% of PO s Historically 44% - Improving Electronic & ERS 34.2% 98,105 Electronic + ERS Blocked & Parked Manual Invoices (US & CA) 19.0% Improving During 2010 Vendor Portal SAP e-sourcing Vendor Contacts ~5,600 Order Acknowledgment, Reports, Quick Bids 215 Vendors 10
Key Learning's Transformation Requires a Holistic Vision Transformation Requires an in Depth Understanding SAP Applications Can Be Very Effective Tools to Enable the Journey When They Relate to the Business Requirements 11
Thank you for participating. ] Please remember to complete and return your evaluation form following this session. For ongoing education in this area of focus, visit www.asug.com. SESSION CODE: 1203