is your e-sourcing a trick or treat? a combinenet presentation

Welcome!

Copyright © 2012. CombineNet, Inc.

Webinar Presentation

Agenda

© 2012 CombineNet, Inc.

Jennifer Sikora, VP of Marketing, CombineNet

– Brief Company Introduction

– Challenges in E-Sourcing Adoption

– Customer Case Studies

Greg Holt, Director of Product Marketing, CombineNet

– Trick or Treat? Achieving Strategic Sourcing Goals in E-Sourcing

CombineNet Company Overview

Established in 2000.

Global: Offices in Pittsburgh, PA; London, UK; Hamburg, Germany. Partners for Latin America, Middle East, APAC.

Customers: Global 2000 spanning CPG, Food & Bev, Retail, Manufacturing, Transportation, and more.

The Company The Technology Customer Value

Capture >2X spend under E-Sourcing management. Address complex spends with advanced functionality. Fast implementation and broad adoption for any type of user. Nearly 100% see full payback after 1st sourcing event.

Best of Breed Solutions that improve Strategic Sourcing – holding 21 U.S. patents. Software-as-a-Service (SaaS) delivery model for ease of adoption and scale Easy integration into your environment to complement existing applications.


Best of Breed E-Sourcing Solutions


CombineNet Spend

Analysis

CombineNet Contract

Management

CombineNet ASAP

Create RFxpress for E-RFX or E-Auction

Bid Expressive Bidding® Expressive Feedback Event Management

Award Scenario Analysis & Bid Optimization

Supporting End-to-End E-Sourcing for All Spend Categories with Advanced Technology Solutions

Some of CombineNet’s Customers

Industry Leaders in Manufacturing, Transportation, and Retail


http://www.mcbride.co.uk/

http://www.crowncork.com/

http://www.maersk.com/

Where Do Our Customers Use Us Today?

Based on FY2011 data

Sourcing Across All Spend Categories: Direct, Indirect, Transportation, Packaging, Services

- sampling - Chemicals Commodities Fats & Oils Food Ingredients Raw Materials Resins Steel

Capital Expenses Construction Mat’s Displays Fleet Vehicles Office Supplies Marketing/Media Telecom/IT Equip

Air Freight Drayage Ocean LTL Parcel Truckload Rail/Intermodal

Armored Car Svcs Facility Services Labor Legal Services Meetings Printing Treasury/Finance

Bottles/Vials Cans Cartons Corrugate Flexible Films Printed Labels Pallets

From the Routine… 51% of events have <100 items

… To the Complex 20% have >1,000 items 20% have >50 suppliers 18% have >10,000 bids


Increasing Spend Under Management: CombineNet Customer #1

European Conglomerate:

>1,000 e-sourcing events conducted annually.

Ariba user since 2007.

Adopted CombineNet in January 2011.

More than 2X Increase in Corporate Spend Managed between years 1 and 2 since implementing CombineNet ASAP.

On track for additional 2X increase in 2012, with majority supported in CombineNet.

Ariba CombineNet

0

1

2

3

4

5

6

7

8

2010 2011 2012

Customer Example #1: $ Billion in Spend Managed Annually


Increasing Spend Under Management: CombineNet Customer #2

Procurement organization tasked with capturing indirect spend

Long-term Ariba user and with SAP Sourcing

Adopted CombineNet ASAP in 2010 – Captured “Sacred-Cow” spends

– With CombineNet ASAP, able to leverage the collective spend across all stores in sourcing events

Estimated 225% Increase in Spend under E-Sourcing Management in 2 Years –

most run in CombineNet.

Ariba/SAP CombineNet

0

0.5

1

1.5

2

2.5

3

3.5

2010 2011 2012

Customer Example #2: $ Billion in Spend Managed Annually


70% of CombineNet’s customers

use us alongside

Ariba, SAP, Oracle, or other suites.

Why?


The Adoption Lifecycle – and Outcome

Excel, Word, Email

Decentralized, Desktop-Driven

Sourcing Process

Investment in Procurement Suite

+

Use of E-Sourcing Module

Up to 30% of Spend

Up to 70% of Spend

=

Adoption Issues*

33% 35%

28% 28% 29% 29% 27%

22%

12% 9% 9% 10%

0%

5%

10%

15%

20%

25%

30%

35%

40%

% of total spend % of direct materials spend

% of total non-production /

indirect materials spend

% of total services spend

Best-in-Class

Industry Average

Laggards

*Source: AberdeenGroup, May 2012

(Percentage of survey respondents, n=146)


http://www.ariba.com/

http://www.ariba.com/

The Tangled Web of Sourcing With Excel

Used as a Work-around for Sourcing Suite Shortcomings:

– Familiar & free

– Data collection flexibility

– Cost model flexibility

– Can “work my way through” analysis

But Creates Problems and Not a True Solution:

– Bid aggregation & data issues

– Analysis is clunky, time consuming, and very limited

– Supplier management & communication handled via email

– Not standardized, centralized, repeatable/scalable

– Data security & confidentiality risks

– Risks of knowledge loss 1 in 2 employees with employer <5 yrs;

1 in 4 <1 year.


The E-Sourcing “House of Horrors”

Despite having Center-Led sourcing processes and Centers of Excellence, technology utilization remains low.

Investments are not well suited to support your sourcing challenges and strategy.

Technology limitations force users to make one of two choices:

1. Put constraints on their sourcing project or strategy, OR…

2. Go back to use of spreadsheets, word documents, email, etc.


But Wait! There is another way out….

© 2012 CombineNet, Inc.

The CombineNet Solution

CombineNet ASAP® for Strategic E-Sourcing

SaaS-based Best-of-Breed product used by sourcing teams and their suppliers. Speeds, simplifies, and centralizes the creation and management of sourcing events of any size, scale, or complexity. For any spend category (direct materials, indirect materials, transportation, services). Complements and enhances existing solutions and processes.

Key Differentiators:

Flexibility and Usability. Optimization Engine and Scenario Builder enables rapid and advanced ‘what-if’ analysis. 21 U.S. Patents. Expressive Bidding® and Expressive Feedback support an expressive, collaborative marketplace between buyers and suppliers. Fast Implementation – 1 ½ day training, quick-start wizards, template uploads, event editing, and more enable fast, smooth adoption and immediate ROI.


Trick or Treat?: Achieving Your Strategic Sourcing Goals


Establishing Goals for E-Sourcing

Let’s get back to basics: What do you want to accomplish?

Top Goals for E-Sourcing


More Spend Under Central E-Sourcing Management

Managing Costs in Volatile Markets

Increasing Efficiency and Productivity

Meeting the Needs of Spend Owners and Stakeholders

Improving Supplier Relationships and Innovation

Missed Goal Ratings

Spreadsheet Zombies: An unfortunate and unhealthy side-effect of spending too much time staring at spreadsheets in the course of manipulating, cleansing and analyzing data

Pitchfork-wielding Mobs: Unsatisfied (sometimes angry and unruly) spend owners and stakeholders that are ready to set fire to the sourcing team’s laboratory

Rotten Pumpkin: The feeling you get when you put a lot of time and effort into a project, only to see your work go to waste


More Spend Under Central Management

Centralize more spends through aggregation of similar spends across business units and locations for enhanced efficiency, leverage, and visibility into costs.

Requirements

Ability to run larger events, with more items across more

locations and suppliers

E-Sourcing Shortcomings

Severe data and event size limitations

100s of Items x Dozens of Locations

= 1,000s of individual Items x Dozens of Suppliers

= 10,000s of Bids

Hard Limits on # of Items, Bids, & Suppliers creates limited options on how to execute


E-Sourcing Options-Central Management

Option #1 Lot groups of items based on

similar characteristics or geography

Option #2 Resort to Excel spreadsheets

to collect and analyze bids

Option #3 Return to status quo of

regional or item-based e-sourcing events

CombineNet Option Conduct large-scale,

consolidated e-sourcing events

-Hedged bids on lots -Less competition

-No efficiency gains -Weeks worth of

Spreadsheet work

-Not leveraging spend -No efficiency gains

-Leverage consolidated spend across suppliers -Increased competition


Managing Costs in Volatile Markets

Commodity prices, raw materials, and fuel costs are driving rising prices across all goods and services, requiring sourcing teams to look for additional areas to reduce corporate spending

Requirements

Ability to identify savings on the right cost components


Poor support for detailed cost breakdowns and total landed

costs

Raw materials + Processing cost

+ Packaging + Freight/Delivery

= Total Landed Cost

Limited ability for collecting and analyzing cost component breakdown and complex cost models


E-Sourcing Options-Managing Cost Volatility

Option #1 Continue to work with All-in

pricing from suppliers

Option #2 Collect and evaluate cost

components in spreadsheets

CombineNet Option Collect and drive competition on detailed cost components,

and analyze complex cost models for savings

opportunities

-Lack of should-cost visibility

-Missed savings opportunities

-No efficiency gains -Weeks worth of

Spreadsheet work

-Understand suppliers’ total cost model

-Identify areas for cost reductions


Increasing Efficiency and Productivity

Automate and improve the management of the e-sourcing cycle: event creation > supplier management > bid collection > bid analysis

Requirements

Easy to use solution that reduces effort and drives

adoption


Inflexibility and lack of Excel-based event creation

As the Sourcing Team increases its influence over more spend, workload increases, as does the need for efficiency

Painstaking RFP creation leads users to default to existing spreadsheet-based bid sheets


E-Sourcing Options-Increasing Efficiency

Option #1 Discard spreadsheets and rebuild RFPs from scratch

Option #2 Reuse spreadsheets attached

to e-sourcing solution

CombineNet Option Quickly convert existing spreadsheets into fully functional online RFPs

-No efficiency gains -Unhappy team-

members

-Limited efficiency gains

-No visibility -Weeks worth of

Spreadsheet work

-Improve efficiency throughout the cycle

-Add advanced functionality


Meeting Spend Owner and Stakeholder Needs

Supporting the diverse and often competing needs of spend owners and internal stakeholders for whom you are managing sourcing events

Requirements Ability to evaluate award

strategies that reflect stakeholder preferences and

goals

E-Sourcing Shortcomings Lacking ability to analyze and understand the cost impact of

stakeholder preferences

“Not my spend” “I have specific requirements for the suppliers that keep my business running”

“One-size-fits-most” bid analysis and award strategies severely limit stakeholder alignment


E-Sourcing Options-Stakeholder Alignment

Option #1 Push a “One-size-fits-most”

award strategy

Option #2 Resort to Excel spreadsheets

analyze bids collected in e-sourcing

Option #3 Conduct limited-scale e-

sourcing events

CombineNet Option Support stakeholder

preferences with detailed “What if?” analysis

-Unhappy stakeholders -Loss of stakeholder

confidence

-Less efficiency gains -Weeks worth of

Spreadsheet work

-Not leveraging spend -No efficiency gains

-Gain confidence of stakeholders

-Improve stakeholder buy-in to award


Improving Supplier Relationships and Innovation

Driving Competition while Inviting Collaboration from Suppliers: Reduce costs, encourage creativity, embrace innovation

Requirements Provide suppliers the ability

to put their best foot forward and respond more

strategically

E-Sourcing Shortcomings Limited bid collection

flexibility and Price-focused award analysis

Focus on total value-add -Better pricing if you’ll accept this alternative item -If you give me this, then I’ll give you that

Price-driven RFPs leave little room for supplier-driven innovation or efficiencies


E-Sourcing Options-Supplier Innovation

Option #1 Bypass e-sourcing when price

is not the deciding factor

Option #2 Collect and analyze non-price

factors in spreadsheets

CombineNet Option Encourage supplier

competitiveness and strategic innovation

-No expansion of e-sourcing beyond the

routine

-Less efficiency gains -Weeks worth of

Spreadsheet work

-Improve supplier relationships

-Identify areas of supplier innovation

Option #3 Shoehorn the project into a

Price-focused format

-Unhappy stakeholders -Unhappy suppliers



Case Examples

Case Study: The Schindler Group

Initial Project: Fleet Vehicles, one of their most complex spend areas.

Collected price and non-price factors, including fuel economies, end-of-contract damage costs, financing charges.

Results:

– 10% + cost savings

– $4 M in OEM rebates

– 5% reduction in lease prices

Now adopting for a range of spend categories.

“This is a mature spend category for Schindler, one that we’ve strategically sourced for 10 years. Yet with CombineNet, we were able to achieve excellent cost savings.” – Douglas Else-Jack, VP of Purchasing Excellence and Indirects, The Schindler Group

17,000 vehicles

7 vehicle types per region

24 countries and leadership teams

CO2 emissions

Key Sourcing Stats

27 cost elements

Quarterly price changes

2 million price points

Schindler mobility solutions move one billion people every day.


Case Study: SAB Miller

“With more data under one tender event, there was the need to support the process with a strong e-sourcing solution. We chose CombineNet based on its intuitive handling of large data sets, the flexibility in defining tender variables, and the strong analytical engine to assess and visualize different implementation scenarios.”

Flavio Gall, Global Category Director for Freight and Fleet, Trinity Procurement

World’s 2nd Largest Brewing Company - Consolidated European Freight

EU road freight typically sourced by country because of size and analysis limitations of existing technology

Consolidating all EU lanes created more competitive environment for carriers, and reduced workload of sourcing team

Inter-country volume consolidation provided more opportunity for carriers to leverage their assets for reduced pricing

Expressive Feedback drove competition within carrier base during bidding

Optimized Scenario Analysis enabled fast bid analysis and stakeholder alignment across EU business units

2,500 lanes.

Mostly Full Truckload (FTL)

Inbound/Outbound between breweries, warehouses, customers

8% + savings.

Retained 80% of incumbent carriers

Single sourcing event for all of Europe

Key Stats


Case Study: Procter & Gamble

P&G Brands touch the lives of 4 Billion Consumers. 23 “Billion-Dollar” Brands.

Began use on most complex sourcing activities in 2003

Other sourcing suites already in place

Gradually expanded to additional advanced sourcing activities

Now adopting across the organization for all e-RFX needs

Results:

– Time savings of 15-20% per sourcing event – 1 day/week/user

– Hundreds of $millions in savings across categories

“CombineNet has been a valued source of technological innovation for many years." – Rick Hughes, Chief Purchasing Officer, Procter & Gamble

Raw Materials

Industrial Parts

Marketing/ Advertising

Legal

Sourcing Stats: Categories Sourced

Packaging

Chemicals

Transportation (all modes)

Services


What Next?

Learn more about adding Advanced Sourcing capabilities to your E-Sourcing bag of tricks

– White Paper: “Adding Advanced Sourcing to SAP, Ariba, Oracle, and Other Procurement Suites”


http://www.combinenet.com/resource-center/whitepapers/add-advanced-sourcing.php

http://www.combinenet.com/resource-center/whitepapers/add-advanced-sourcing.php

Thank You. Questions & Discussion


www.combinenet.com [email protected] Phone: 412-471-8200

mailto:[email protected]



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