effective collaboration in the new normal

© 2010. Ariba, Inc. All rights reserved.

Effective Collaboration in the New Normal

Panel Members:BBVA Compass – Amanda FrithSonoco Products – Jennifer RobertsReed Elsevier – Scott Meiser

2 © 2010. Ariba, Inc. All rights reserved.2

Agenda

• Opening Comments• BBVA Compass – Amanda Frith• Sonoco Products – Jennifer Roberts• Reed-Elsevier – Scott Meiser• Panel Discussion• Wrap up


Managing Supplier Information and PerformanceAmanda Frith – VP of Supply Chain ManagementBBVA Compass

4 © 2010. Ariba, Inc. All rights reserved.

Company Overview

• BBVA♦ Madrid, Spain♦ Francisco González (Executive

chairman), José Ignacio Goirigolzarri (President and COO)

♦ $785 Billion in Assets♦ 7,600 Branches♦ 30 Countries♦ 105,000 Employees♦ www.bbva.com

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• BBVA Compass♦ Founded 1964 as Central Bank

by Harry Brock♦ Jose Maria Garcia Meyer,

Chairman & US Country Manager

♦ Manolo Sanchez, President♦ HQ Birmingham, AL♦ 14,000 Employees♦ 741 Branches♦ 15th Largest U.S. Bank♦ www.bbvacompass.com


Challenges• Procurement Consolidation and

Centralization♦ Technology♦ Business

• No Standardization of Required Supplier Information♦ Data only gathered at time of bid.♦ No central repository for existing or

potential supplier data• Transformation and Reporting

Requirements♦ BBVA Global Supplier Certification

Standards♦ Access to supplier data for

Corporate Purchasing

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• No Enterprise-Wide Supplier Performance Management Program♦ Manual Process ♦ Only Technology Suppliers♦ Limited Supplier Risk Management

• Lack of a Complete Critical Supplier List♦ Define “Critical”♦ Large number of suppliers

fragmented among business units♦ Identify Critical Suppliers and

monitor performance• Audit Findings

♦ April 30, 2010 Deadline


Solution

• Ariba Supplier Performance Management♦ Electronic Registration and Certification Process♦ Electronic Supplier Performance Management Process

• Implementation♦ Three Months♦ Two Employees♦ Identified and Completed Scorecards on top 35 suppliers

in two weeks

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Results

• Supplier Certification♦ Centralized repository of supplier information♦ Formal approval process for suppliers♦ Better supplier risk management♦ Compliance with BBVA Group Certification Policy

• Supplier Performance Management♦ Automated and scalable process♦ Electronic surveys♦ Centralized repository♦ Identification of “at risk” suppliers♦ Standardized key performance indicators

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Key Takeaways

• Identify Your Organization's Goals ♦ Risk management♦ Communication of strategic objectives♦ Better decision making♦ Supplier alignment

• Define Process♦ Create Consistent Metrics (KPIs) and Measurements ♦ Define roles and responsibilities♦ Create and communicate a review schedule♦ Hold business liaisons and suppliers accountable

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Managing Supplier Relationships

Jennifer Roberts – Director, Supplier SystemsSonoco Products


Sonoco Overview

• Founded 1899 in Hartsville, S.C.

• Diversified provider of consumer and industrial packaging and services

• $4.1 billion in sales• 300 plants in 35 countries,

17,500 employees• Products sold in 85 countries


Sonoco OverviewConsumer Packaging

Flexible PackagingRigid Paper

Ends and ClosuresRigid Plastic

Packaging ServicesService CentersPoint-of-Purchase

Global Tubes and Cores Protective PackagingIndustrial Products


Challenges in Managing Suppliers

• How many suppliers should you manage?• What percentage of spend should you manage?• Does it make sense to scorecard all suppliers?• Managing and Measuring Service Suppliers


Results in Managing Suppliers

• Developed process for determining if a supplier should be managed

• Determined if supplier was a scorecard or business review supplier

• Determined if supplier was global or needed to be managed regionally

• Developed process for rolling out globally and determining supplier involvement


Key Takeaways: Managing Suppliers

• Not all suppliers need to be ‘scorecarded’• More important to manage supplier reviews than worry

about getting a supplier score• Review suppliers in program annually


Managing Supplier Performance and Risk

Scott Meiser, Director of Sourcing and Performance ManagementReed Elsevier


Who is Reed Elsevier?• A world-leading publisher and information provider targeting the science and

medical, legal and risk management, and business to business sectors♦ Parent company to:

– Lexis Nexis– Elsevier– Choicepoint– Reed Business Publications– Reed Exhibitions

♦ 2009 Revenues: £6,071m/€6,800m ($8.9B)• Our Procurement Profile:

♦ $3.2 billion in spending across 100,000 suppliers♦ Distinct business units with varying levels of Procurement acumen

• Procurement Objectives:♦ Deliver Cost Savings while

– Creating a centralized and globalized procurement organization– Implementing Fiduciary Controls & Risk Mitigation where none existed– And enhancing the Employee Experience


What is Supplier Management to Reed Elsevier?

• What Supplier Management is not:♦ “Stand alone” process♦ Static/disjointed scorecards♦ Supplier performance reviews

(unidirectional v. 360o)

• What Supplier Management is:♦ Open dialog ♦ Embedded throughout

Procurement lifecycle♦ 360o relationship review♦ Creating incremental value through

win-win initiatives


Risk Management Framework• Frequency of Occurrence

♦ During Sourcing♦ During Supplier Management, and♦ On an on-going basis

• Categories of Risk♦ Legal♦ Financial♦ Data Security♦ Business Continuity♦ Social Responsibility/Risk

• Variety of Tools♦ Standard Ariba Content♦ News Feeds♦ Scorecards/Surveys♦ Audits


Highlight: Standard Ariba Content• Problem: Absent standards, risk categories are evaluated inconsistently from project

to project♦ Prioritization of criteria differs (criteria are either excluded or weighted differently)♦ Evaluations differ (e.g. what is a “bad” revenue number?)

• Problem: Sourcing Experts are expected to be experts in “everything” (financial statement evaluations, IT security risks, business continuity, etc.)

• Solution:♦ Standard content in every eRFx for NDA, Code of Conduct, and Financial and Social Responsibility Risks♦ Simply worded questions for Sourcing Expert results in standard, auto-scored and auto-weighted content♦ Consistent content in eRFx and Supplier Management survey – always evaluating the same♦ Direction to Expert to target grade if “failed”


Highlight: Standard Ariba Content

…But we tell suppliers what we’re

looking at…

…we have no intention of sharing and

protect BOTH parties…

…And we’re even clear that it is NOT an elimination

criteria BUT NOT PROVIDING IT CAN BE…

• Example: Travel industry segment♦ Nearly every short-listed company “failed” the financial risk segment♦ NOT indicative of poorly run companies but of poor market conditions♦ Engaged in meaningful dialog♦ Agreed to closely review financial data on an on-going basis

“Failed” doesn’t sound “Collaborative”…


Highlight: Standard Ariba Content

We also have a more-collaborative view of Auctions…


Highlight: News Feeds

• On-going monitoring of negative news for Preferred Suppliers♦ Lexis Nexis Publisher feeds updated hourly♦ Global news sources♦ Not all news is actionable but provides a starting point for Supplier Relationship Manager♦ Available via e-mail, SharePoint and RSS Feed into Ariba♦ NOT restricted to Procurement users

“…If we could only schedule bankruptcy around Sourcing and Quarterly Reviews…”

• Example:♦ Entity temporarily blocked from doing

business in EU country by regulators♦ Supplier notified customers on Monday♦ But Reed Elsevier knew on prior Friday due

to news feeds


Highlight: Performance Feedback FROM Suppliers

• Standard section in every Supplier Performance Management survey♦ May not always be positive♦ However, identifies relationship improvement opportunities

Are we a good customer?


Where are we and what’s next?• Where are we?

♦ Standard content is live in the eRFx process♦ News feeds are live and continue to be refined♦ SPM pilot conducted in 2009

• What’s next?♦ Institutionalize risk framework (on-going)♦ Continued enhancement of risk framework (e.g., anti-corruption) (on-going)♦ Steady state Supplier Performance Management (2010)♦ Supplier Information Management

– Recognizing RFx and Survey responses as supplier knowledge and storing and maintaining via Ariba SIM (TBD – pilot in 2010)

– With an eye on centralization on Supplier information (e.g., including AP data) and standardized workflow sometime in the future (TBD)


Discussion