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ABB Case Study

High Tech SummitSan Jose, CA

October 25th, 2007

Herbert BrecheisVice President

SCM Processes & Tools

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Facts about ABB

Headquarters: Zurich, Switzerland

About 111,000 employees in around 100 countries

Orders in 2006: $28.4 billion

Revenues in 2006: $24.4 billion

Listed on Stockholm, Swiss & New York exchanges; traded on virt-x

A leading power and automation technology company with strong market positions in its core businesses

Core business organized into 5 divisions; Power Products, Power Systems, Automation Products, Process Automation, and Robotics

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What we offer

Robots, peripheral devices and modular manufacturing solutions for industry

Process Automation

Sales: $5.4 billion

Control systems and application-specific automation solutions for process industries

Substations, FACTS, HVDC, HVDC Light, power plant & network automation

Power Systems

Sales: $4.5 billion

Robotics

Sales: $1.3 billion

Transformers, high- and medium-voltage switchgear, breakers,automation relays

Power Products

Sales: $7.4 billion

Automation Products

Sales: $6.8 billion

Low-voltage products, drives, motors, power electronics, and instrumentation

Market-leading positions in most key product areas Integrated solutions for grid reliability, productivity and energy efficiency Robust global value chain to serve established and emerging markets Extensive global network of value-added channel partners

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Completion of spend transparency: >95% of all external spend visible ‘on-line’

Enhance ABB external supply base leverage

Ensure achievement of aggressive cost savings

Grow external LCC sourcing, balancing service and quality

Improve supplier quality to reduce COPQ

Drive SCM transformation of processes, competencies and capabilities, develop to ‘next level’ industry-best for excellence in procurement

Continue deployment of user-friendly tools and processes

2007 SCM Objectives

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Spend Transparency(eSMART)

SCM applications support Sourcing and ProcurementeProcurement (Catalog Buyer)

SegmentCommodities

IdentifyLeverage

Analyze SupplyMarket

Build Strategy

2

3

45

6

7

1

ERP

TargetSupply Base

SourcingDirect /Indirect

NegotiateContract

ImplementContract

ManageContent

Supplier Collaboration (ASCC)

eSourcing(eRFx)

ContractManagement

Procurement

InPortfolio Approval

ManageInvoice

PurchaseRequisitioning ApprovalGoods Receipt

POManagement

AP

8Master Data Management

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SCM Business Process Map (SCM CORE)

Macro Process(BPD)

Manage User &Organisation

ManageMaterial Master

(MDM-02)

Manage User &

Authorization(UO-01)

ManageGlobal Codes

(MDM-01)

Manage Documents(MDM-07)

ManageCatalogs(MDM-04)

MaintainOrganisational

Structure(UO-02)

CreateContract(CM-02)

ManageContracts

InitiateContract(CM-01)

DistributeContract(CM-03)

UtilizeContract(CM-04)

ContractApproval(AP-01)

PurchaseRequisition

Approval(AP-02)

Purchase OrderApproval(AP-03)

RejectionDelegation Escalation

(AP-04)

ManageRequisition

Create PRautomatically

(PR-01)

ManageApproval

Create PRmanually(PR-02)

ManageRfx & Auction

Execute Rfx(RFX-02)

Execute Auction(RFX-03)

Create Rfx(RFX-01)

Budget Control(PR-03)

ManageMaterial

Master Data

ManageService Master

(MDM-03)

Awarding(RFX-04)

Manage InfoRecord

T & C(MDM-06)

ManageSupplier

Master Data

ManageSupplier Master

(MDM-05)

ManageSource List(MDM-08)

ManageQuota

Arrangement(MDM-09)

ManageSupplier

qualification(MDM-10)

ManageInvoice

ReceiveGood/Service

CreateService Entry

(GS-02)

Reverse Receipt(GS-04)

ApproveGR/SE(GS-03)

CreateGood Receipt

(GS-01)

Match by PO & Invoice

2-way(MI-02)

Match by PO & GR &

Invoice3-way(MI-03)

Match byInvoice1-way(MI-01)

Manage Reminder

CreateReminder for

PO Confirmation(RM-01)

CreateReminder

for Shipment Advice

(RM-02)

Financial Instruments

Performance guaranty

(FI-01)

Hedging foreign currency

(FI-02)

Down payment(FI-03)

ManagePO

CreatePurchase Order

(PO-01)

TransferDocumentsto Supplier

(PO-03)

ManagePO Confirmation& Status Updates

(PO-04)

SCMAnalytics

eSmartintegration

(AL-02)

Ad-HocReporting

(AL-03)

Reporting(AL-04)

CreateReminder for

Delivery(RM-03)

SupplierPerformanceMeasurement

(AL-01)

CreditAssessment

(FI-04)

CreateBlanket Order

(PO-02)

Foreign Trade(AL-05)

Forms(AL-06)

Payment Plan(MI-04)

BatchManagement

(GS-05)

Process Cluster

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Business Process Map

Business Requirements

Repository- 672

requirements

Business Requirements defined on micro level

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Suppliers

CollaborationGlobal

SupplierERP

GlobalSupplier

ERP

Group SCMEAI

ABB Buyers

ABB Sales

Link exists

Link has to be built

Warehouse Management

ABBSales Unit

Customer Facing Applications

Ware house

ABBERP

ABBERP

LocalSupplier

ERP

LocalEAI 1 ... n

e.g.localA/P

ABBERP

SCM Tool

eProcure-ment

Freight Calculator

SCM Tools Architecture

BI

KnowledgeManagement

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eSMART (BI) is providing spend transparency

Who purchases (Business Unit) ?Who purchases (Business Unit) ?

From whom (supplier) ?From whom (supplier) ?

What is bought (commodity) ?What is bought (commodity) ?

How much ?How much ?

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1. Drag and Drop the Dimension fields in the „Rows“, „Columns“ or the in

the „Page“ Area 2. Drag and Drop the Value fields in

the “Data Items” Area

eSMART – Excel Pivot interface

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eSMART– features and next steps

Present features: Spend Transparency Cost Saving Reporting Data feed to SCM Dashboard

Next steps: Improved data gathering from ERP systems:

Rejections and OTD, to calculate supplier quality Payments without ERP PO, to capture total spend of ABB Power User capabilities to create own reports, on the fly

Cost Saving Planning (Score Card)

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Spend transparency has significantly improved

33%

57%

85%

90%

0%

20%

40%

60%

80%

100%

Dec 2004 Dec 2005 Dec 2006 Sep 2007

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ASCC (Collaboration) – features and benefits

Collaboration

Forecast ReportPerformance Reports

Transactionsvia Web or B2B

OrdersOrder ChangeOrder ConfirmationShipment Advise Invoice

Information

Non ERP contentPDM Integrations

Process Cost Savingsthrough Elimination & Automationof manual process steps

Reduced Cycle Times

Improved Supplier Performance

Material Cost Savingsthroughimproved Ease of Doing Business for Suppliers with ABB

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ASCC Utilization 2007

Total amount of registered suppliers: 2292

Reports Usage meaning all requests for reports.

Transactions meaning the Web and B2B transactions (as order, order confirmation, Shipment advice and invoicing) per line item.

2007 2007 2007 2007 2007 2007April May June July August September

Report Usage 33823 34811 37594 42759 42931 42974Transaction 94350 73648 86677 82454 104054 101259

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Reports Usage

Transaction volume (Line items)

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ABB Revenue and EBIT margin 1988 – H1/2007

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Your questions please

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