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Oracle Sourcing
Spotlight on FinancialsDec 10th 2003
Andrew Douglas
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In the last 10 weeks….
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British Energy saved £800k
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BNFL saved £1m
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Whitbread saved £1.3m
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NTL saved £1.5m
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Marsh saved £4.5m
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By using Oracle Sourcing!
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What functionality does Oracle Sourcing give customers?
- Buyers Auctions
- Electronic Tenders ( RFX )
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Customers use Auctions / RFX’s as a key element of -
Renewing existing contractsOffering new consolidated spend opportunitiesNegotiating significant spot purchasesReceiving pricing for a frequently tendered commodity / service
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What commodities & services do Organisations auction?
……… here are 3 examples
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Major UK Retailer
Most significant auction to date was for Air Freight services to Manchester from Hong Kong, Bangladesh, Malaysia and China.I year contract, 7 suppliers participatedAuction lasted 51 hours to accommodate time zonesAuction value £2mSavings exceeded £500k
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Major European Rail Company
Auction for Desktop,Laptop and Server PC’s3 year contract Followed full OJEC processStrong collaboration between Buyer and IT Services Manager 3 major suppliers participatedAuction Value £1.17mOver 20% saving achieved against previous prices
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Major UK Travel Company
First auction held to purchase the creative element of their in flight magazine ie. design, journalistic content etc. (not printing)5 creative agencies participatedAuction value £506,000 (based on previous tender 3 years ago for over £1m worth of work)Auction result £431k
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There are 2 ways Customers can deploy their Oracle Sourcing licenses-
- Integrated within their EBS /i-Procurement application
- Virtual license model
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Sourcing
Contracts
Procurement Process Automation
RFxAuction
Offers
QuotesBidsCounters
Contract
PurchaseOrder
Receipt
Payment /Reconciliation
Integrated EBS Sourcing model –streamlines the acquisition process
Demands
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The ‘Virtual’ model – Key Customer steps
1. Customer buys Oracle Sourcing license – either perpetual or term - and gets delivered CD’s which they ‘file away’
2. Customer selects an Oracle Marketplace to act as a ‘virtual’host ( BT, LTSB, UK Procure ) and pays them annual hosting fee
3. Oracle protects marketplace annual transaction value 4. Customer can buy optional training & support from
marketplace5. Customer runs their auctions / RFX’s on their selected
marketplace
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How do you get started?
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First event support
If a Customer buys the Oracle license without a huge pre sales effort we will use our experienced pre sales team to run their first event for them
This covers initial opportunity evaluation, buyer & supplier training, milestone planning, full project management and auction day support
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The Costs and ROI
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The Costs and ROICOSTSTypical 3 year Virtual model total cost is circa £110kThis covers –
– Perpetual Oracle license– 3 years exchange hosting– Software maintenance & support
ROIAll of our customers to date have recovered their full 3 year cost within the first 2 hours of their first auction
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Who uses it?
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Some Oracle Sourcing Customers in the UKDirect
WhitbreadThomson Travel ( TUI )Legal & GeneralNTLLittlewoodsJarvisSITADairy CrestAchillesNetwork Rail
Exchange CustomersXeroxLTSBVeluxAquila‘3’ZurichEnvironment AgencyImperial CollegeBritish EnergyWelsh Health SuppliesCSC
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Finally a FAQ –
Is it going to mess up my Buyer / Supplier relationship?
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I ADAPT
Independent Assessment into the Development of Auctions as a Purchasing Tool
Purpose –– To assess how auctions have affected the buyer / supplier relationship– To understand the benefits of auctions to both buyers and suppliers– To identify the key success enablers / inhibitors– To identify the range of goods and services being auctioned
Research Team – CIPS, UWE, Oracle, BT
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Changes in Supplier Performance recorded after using an auction as
Changes in Supplier performance after using an auction as part of the tender process
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In Summary
Used correctly Auctions can be a very low risk / high return approach to selected commodity & service purchasesYou need sound purchasing processes to maximise your successYou need an internal championYou will typically return your complete investment within 12 weeks
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Questions
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Do you have a best in class Procure to Pay Process ?
Here is our 13 ‘discovery’ questions and some typical answers
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Are you ‘best in class’? Do you -
Have visibility / control of all influentiable spend before it take place– Limited control with many areas not visible until after
invoice receipt.
Have accurate management information in real time, at the desktop & customised by user type.– Semi accurate information produced after a number of
days / weeks of effort that is based on historical data
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Are you ‘best in class’? Do you -
Have a Purchasing organisation that uses all available skills and significantly contributes to the organisation– Purchasing Organisation does not fully support the
management of all commodities / geographic areas
Have a clear Procurement based strategic plan– There is no strategic plan
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Are you ‘best in class’? Do you -
Provide all internal customers with a purchasing service that meets their business needs– Many internal customers by-pass the system
Provide all users with a quick and easy to use requisitioning process that enhances the use of preferred suppliers / agreements– Users by pass the system to achieve this
Have the ability to measure supplier performance –both quantitative and qualititative – You have a reactive process at present
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Are you ‘best in class’? Do you -
Have a fully auditable, flexible and efficient approval process– Paper driven where used
Have clear savings targets– No formal target setting
Have a full set of KPI’s used to evaluate performance to plan– No KPI’s established
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Are you ‘best in class’? Do you -
Operate a single purchasing system– Multiple systems in operation
Receive all Invoices with a quoted PO so they can be be matched with minimal effort– Approx. 50% of invoices have no PO on receipt. Untimely
matching process
Take prompt payment discounts where appropriate– Very limited take up at present
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If you recognise some of our typical responses then please come and talk to us –
We think we can help!
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Questions