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Redefining Procurement Transformation in The Digital Age

with SAP Ariba

Sanjay SrivastavaIT Director

16 - 18 October, Prague, Czech RepublicInternational SAP Conference for Forest Products, Paper and Packaging

Agenda

10/18/2018 2Redefining Procurement Transformation in the Digital Age

1. Introduction - GEC and Evergreen Packaging 2. Procurement Transformation – Business Requirements and Vision3. The Solution – Components of Solution (ARIBA)4. Project Benefits5. Q&A

About GEC Packaging Technologies

10/18/2018 Redefining Procurement Transformation In The Digital Age 3

BuildingSupplies

Pulp, Paper &Packaging

Reynolds Group Holdings Carter Holt Harvey Group

Consumer ProductsPackaging

Automotive Group

RANK GROUP

GEC Packaging Technologies (GEC) is part of the Rank Group. Rank is a private group of companies

headquartered in New Zealand and wholly owned by Graeme Hart. Rank Group’s business interests

include packaging, consumer products, auto parts and building supplies. The Group generates annual

revenues of US$18 billion and employs approximately 48,000 people.

GEC was established in 2015 after the merger of Graham Packaging, Evergreen Packaging and Closure

Systems Internationals.

About Evergreen Packaging

10/18/2018 Redefining Procurement Transformation in the Digital Age 4

Evergreen Packaging is headquartered in Memphis, Tennessee, USA.

Evergreen Packaging is the largest supplier of total gable top packaging solutions in North

America and one of the largest in the world. In fact, more than 700 customers in North America

count on us for total carton packaging solutions.

Procurement TransformationBusiness Requirements and Vision

10/18/2018 5Redefining Procurement Transformation in the Digital Age

What is driving change?


Merger (GPC,EPI,CSI)

Increased Focus

on Costs

◼ New Opportunities for savings (consolidate spend by category)

◼ Pressure to increase spend visibility and management

◼ Speed to Market -

Focus on Efficiency

Demand for Rapid

Productivity

◼ Do more with less

◼ Employees requiring intuitive applications or self services

◼ Focus on automated and integrated processes

◼ Push processes out to end users or Vendor

Tactical Necessity

Focus on Operational

Procurement Alignment

◼ Maximize spend under management

◼ Manage single approved source

◼ Focus on automated and integrated processes

◼ Standardized purchase requisition approval process

◼ Allow for less time spent on transactional activity

Demand for

Simplified IT landscape, MDM & Spend Analytics

◼ Complex IT landscape

◼ Data inconsistencies

◼ Optimizing /maintaining contract terms across 3 ERPs

◼ Poor User adoption

Barrier – Multiple IT System

Disparate System and Process within GEC


• All Req created in SAP • Req created in Coupa and SAP • All Req created in Oracle

• Req approved via email; approval matrix maintained in SAP

• Req approved via email; approval matrix maintained in SAP and Coupa.

• Users must log in Oracle to approve req. Approval matrix maintained in Oracle

• Catalogue integrated with SAP from Plant Maintenance and SAP requisition.

• No integration with hosted catalogue. Approved Req is converted into PO then PO is sent to SAP for Goods Receipt.

• Catalogue integrated with Req. No Req in Vinimaya.

• Store room inventory maintained in Catalogue as a preferred Vendor

• Users must log in Coupa to create Requisition.

• Users does not provide additional credentials to access Vinimaya

• # of Users – 700• # of Locations - 9

• # of Users – 750• # of Locations -65

Systems

+Systems

+Systems

++

User Survey- What should be retained?


Functionality that users liked in the existing solutions in three companies

✓ Ability to approve req by email on any device – no need to log in ERP (EPI and GPC)

✓ Simple user interface , intuitive to search (EPI, GPC and CSI)

✓ All information at one place – store room inventory visible as catalogue (EPI)

✓ Integration with Plant Maintenance (EPI)

✓ Ability to search dynamically from multiple punch out (real time) catalogue (CSI)

✓ Ability to electronically transact (Send PO to Vendor, Receive Ack, Receive ASN and Invoice) (GPC)

✓ Storefront model (EPI and CSI)Could we accomplish all the above in a solution?

What will it take to implement a solution that allows all of the above?

Our Vision – World Class Supply ChainFuture State


System Infrastructure➢ We effectively leverage Information

systems to allow us to make informed decisions

➢ Use World class IT tools

Logistics Execution➢ We ensure efficient flow of material

through our Supply Chain by coordinating tightly with suppliers and customers

Enterprise Alignment➢ GEC decisions are driven by the

optimization of the total supply chain rather than the local optimization of individual elements

➢ Standardization of process, solution and data across business etc.

➢ Long Term view➢ Optimization may impact other

departments➢ Global Sourcing Strategy➢ Change is “ inevitable“

➢ Proven and scalable System ➢ Optimal Solution Architecture➢ Classification for meaningful analytics➢ Consumption of information on any device➢ Global Reach (Multi-Language Support)

➢ Planning is integrated with execution (MRP)

➢ Updated Price and Source maintained in the execution System

➢ End-to-End digitization to improve status update and collaboration with suppliers

Industry Trend – IT and Procurement


1980 1990 2000 2010

R2P transactional processes supported in ERP

Self-Service procurement bolt

on to ERP

eSourcing, auction, Collaboration,

digitizationStand alone or

Integrated

End-to-End digitization with

Mobility and Cloud Offerings

Subscription based Services

Online

Collaboration

Cloud Deployment

Usability Prioritized

Embedded Analytics

Mobile

Solution Architecture should be plug and play to allow changing service provider in a subscription model applications.

Why is solution Architecture important?

➢ Ability to change service provider relatively quickly, easily and without loss of data (information)

➢ Centralized sourcing and decentralized execution.

Organizational Change

▪ Consolidated Sourcing at the Rank Group level

▪ Execution at the individual company level

▪ Change in procurement strategy

▪ Desire to automate execution when possible

Redefining Procurement Transformation In The Digital Age

Solution Options Considered


Sl. No Solution Options Comments

1 Implement Perfect Commerce Catalogue Solutions for CSI and GPC plants

• Ruled out because of search capability and end-to-end solution functionality.

• Didn't Evaluate further

2 Implement Vinimaya as Catalogue solution for EPI, and GPC plants

Evaluated Option-

• Ruled out because it requires transition to newly developed platform later.

3 Implement Coupa in CSI and EPI – just like GPC Evaluated Option-• Major Impact on EPI, major process changes for Mill, workflow

approval change, No integration with Plant Maintenance and MRO storeroom etc.

• Major change for CSI – Oracle set up changes required• Sub-optimal solution, should be ruled out

4 Implement Coupa in CSI and EPI with modification (Storefront model)

Evaluated Option-• Feasible Option• Change for EPI and CSI• Concerns over search capability• Partners with another company to provide Storefront solution• Further vetting required

5 Consider another tool (Ariba) Evaluated Option-• Feasible Option• Change for EPI , GPC and CSI• Strongest Technical Capabilities• Additional benefits in digitization (65%+ vendor on Ariba Network)

Project Goals

• Retain goodness of old solution

• Guide users to procure material from preferred vendor and minimize “Maverick” purchase

• Reduce overall MRO spend by creating a private marketplace where vendors compete for business one transaction at a time

• Provide business users visibility to both vendor catalogs and plant specific MRO storeroom items inventory to ensure MRO inventory is efficiently procured and utilized

• Use vendor catalog data to update internal storeroom pricing and show users lowest cost provider

• Provide ability to analyze data to allow procurement personnel to engage vendors with specific feedback on business impacts of current pricing


The SolutionComponents of the Solution

10/18/2018 14Redefining Procurement Transformation In The Digital Age

Components of the Solution

▪ Hosted Catalogues To Maximize Spend Under Managemento Enable Digitization Strategyo Workflow Approval Of Catalogue Change/Update

▪ End-to-End Integration (Document Exchange) To Improve Automation and Visibility o Enable Digitization Strategyo Provide Multiple Options To Supplier Base To Accomplish Digitization

▪ Integration with ERP – Enhancements To ERP Solutiono Improve ERP Transaction Processingo Minimize Duplication Of Effortso Seamless Single Pane View For Users

▪ Governance And Analytics


The SolutionHosted Catalogue


Catalogue Strategy

▪ Types of Catalogue Availableo Hosted Catalogue (CIF Catalogue)

• Customer Specific – Customizable targeted Content

• Catalogue Supplier is not required to be on the ARIBA network

• Continuous maintenance required by Supplier/Buyer

• Pricing may be out of synch with the supplier’s system

o Punch out Catalogue – Level 1 - the user connects to the supplier hosted website, no product information in ARIBA• Rich content and configuration option available on

supplier side

• Pricing is l ive and in synch with supplier’s ERP

• Supplier should be on the ARIBA network

• No maintenance required by Buyer

o Punch out Catalogue – Level 2 - the user connects to the supplier hosted website, product information is in ARIBA• Products found in Platform search

• Pricing is live and in synch with supplier’s ERP

• Supplier should be on the ARIBA network

• No maintenance required by Buyer


▪ Criteria to Opt for Punch Out Catalogue

• Catalogs contain configurable items

• Catalogs require frequent updates

• Supplier has the capability of having their own ordering website

• Supplier has ability to restrict category and present authorized pricing

• Frequently Changing Pricing

• Dedicated Category sourcing from a select supplier

▪ Criteria to use CIF Catalogue• Identified supplier and material for form, fit and

function

• Supplier doesn’t have punch out capabilities

• Customized pricing

The fundamental difference between level 1 and level 2 Ariba Punch-out catalog lies in their search capability.

Solution Architecture – Catalogue


Oracle

SAP

SAP

Supplier Catalogue

SAP

SAP

SAP

OCI Call cXML Call

Shopping Cart to ERP

Shopping Cart to ERP

• Catalogues are shared across multiple companies.• Combination of CIF and Punch Out Catalogues are deployed.• User access to catalogue and view is managed in the ERP. OCI Call/cXML passes the credentials .• MRO Store room inventory is uploaded as catalogue.• Custom Landing page in the ERP minimizes data entry. Also, it makes determination between requisition and store room

reservation.• Solution supports consolidated global sourcing and localized execution.

The SolutionDocument Exchange – End-to-End Integration


Why Implement Ariba Document Exchange?


Accurate Pricing and Product

Data in Catalog

Manage Maverick spend

Approved Order is submitted to Supplier by PO with required information

Supplier will be able to process order without

manual intervention

Supplier can confirm ship

date, update PO for improved

planning

Supplier submits invoice with no

mismatch

Solution Architecture – Document Exchange


SAP

SAP

SAP

EDI 810 Suppliers

cXML Suppliers

Ariba NetworkPO Flip Suppliers

Ariba NetworkLight Enablement Suppliers

MultipleSAP PO

Future

Deployed

Deployed Deployed

SAP

SAP

Oracle

Rank Group ERP System Supplier BaseSAP PO Broker ARIBA Network

Supplier Integration Options❖ Fully Integrated❖ PO Flip❖ Light Enablement

❖ Geographical Invoice Rule❖ 9 Documents Mapped❖ PO and Invoice is mandatory

❖ Master Data in ERP enables integration

❖ No harmonization of Vendor Master required

Standard ARIBA adapter connects to ARIBA Network

Outbound Transactions

✓ Purchase Order (PO) and PO Change✓ Cancel PO✓ Goods Receipt✓ Invoice Status Update✓ Remittance

Inbound Transactions

✓ Order Confirmation✓ Advance Ship Notice✓ Invoice

Fully Integrated Suppliers – Integration Points


HostedCatalogue

ShoppingCart

Purchase Order

PO Ack. ASN GR Invoice Invoice Status

Payment Status

ERP PurchaseRequisition

Purchase Order

PO Conf. Inbound Delivery

Goods Receipt

(against PO)

Parked Invoice

Posted Invoice

Payment

AR

IBA

SAP/

Ora

cle

Procurement Payable

➢ ARIBA offers end-to-end digitization and tight integration with SAP resulting in few errors and almost no double handling of transactions.

➢ Suppliers can integrate and exchange any of nine documents – PO and Invoice is mandatory

➢ Non-Catalogue Suppliers could integrate only for document exchange.

Ariba PO Flip – Self Enablement

▪ PO-Flip is a simple process enabled by Ariba Network that allows a supplier to easily convert a Purchase Order into an Invoice, and transmit that Invoice to GEC through Ariba Portal. o Ariba Account is required for Supplier

o A Supplier may be set up to receive PO notifications in their e-mail on the Ariba network, but POs are also in the Inbox on the Ariba Network.

o There are multiple ways to flip the PO on the Ariba network.

o Supplier can print a copy of the invoice from the Ariba Network. A PDF copy of the invoice is sent to GEC as a link.

o GEC receives invoice IDOC in ECC and link to the PDF invoice.

o GEC downloads the PDF invoice and moves it to archive server for audit purposes.


Ariba Light Enablement

▪ Ariba Light Enablement is essentially an interactive email-based solution (i.e. it sends an e-mail with a link to the hosted solution) o Supplier needs to set up Ariba Light account on invitation

o Pre-configured buttons on the PO email and on portal for suppliers to confirm an order and “flip” it to an invoice

o A supplier will receive a PDF copy of the invoice once it is submitted for legal requirements.

o A supplier can attach documents or own system generated invoice.

o GEC receives invoice IDOC in ECC and link to the PDF invoice.

o GEC downloads the PDF invoice and moves it to archive server for audit purposes.

o There are no fees for suppliers. They can choose if, and when, they want value-added, fee-based services.

o There is no limit to the number of documents exchanged.

o Ariba Light Enablement could also handle No-PO invoice.

o Light Enablement invoice rule could be separate from the full integration invoice rules.


Our Procure To Pay Digitization Strategy and Journey Summary


PaperIncoming

PDF Invoice

CustomProgram

OCR and Workflow

EDI or other system to system

integration

ARIBA Light

Enablement

ARIBA PO Flip/Portal

ARIBA Full Integration

• Least Preferred Options

• Scanned and OCR

Full transaction set EDI or XML. System to System Integration.

Full transaction set via portal. No System to System Integration.

PO, Order conformation (OC) and Invoice only via email

Supplier pays transaction fee

Registration Required. Supplier fees at

threshold

No Ariba Network Fees for Supplier. Supplier

does not need registration on AN.

Non-Ariba based Digitization Ariba based Digitization

• No PO invoices

• Directly goes to OCR

• Inter/Intra company invoices and settlement using custom program

• Open Text VIM with OCR manages any exception

• Non-SAP Purchasing system (Wood Procurement)

• 3PL Freight Tendering and Invoice Payment

• High Volume/Value vendor

Standardized Workflow To Process Exception


CommentTrigger workflows Post invoices

InvoiceRecognition

Collaboration & Monitoring

InvoiceCompletion

InvoiceVerification

ICC (OCR) for

SAP InvoiceManagement ERP (FI/AP)

Payment

SAP Vendor Invoice Management by Open Text (VIM)

Prüfung und

Vervollständigung

UMWANDLUNG

VERIFY ANDCOMPLETE

EXCEPTIONHANDLING

APPROVE

Automated reconciliation and posting

TRANSFORM PAY

OCR

Validation

Inbox(incoming mail / fax)

PREPARE

SAP Document Access by OpenText

Or IXOS

Scanning

Archiving

Ariba or EDI invoice with exception are ingested in the VIM workflow.VIM is installed inside ECC. Provides seamless user experience.

Source: Adopted from SAP/OpenText presentation

The SolutionERP Integration and Enhancements


Key Enhancements To The SAP ECC

✓ Configured SAP requisition and Plant Maintenance work order to directly access the private market place with single pane view of preferred supplier’s offerings and storeroom availability.

✓ Developed landing screen in SAP to facilitate fast data entry and make decision between requisition or allocation (cost center reservation) when shopping cart returns to ERP

✓ Automated daily storeroom inventory upload by plant as catalogue update in the Ariba hosted catalogue realm.

✓ Additional data capture e.g. UNSPC, Manufacturer part number, Manufacturer name, Vendor Part number etc. for pattern and category analysis.

o Distinction between Portal and Non-Portal transactions

✓ Automated pricing updates for storeroom materialso Utilizing periodically downloaded vendor catalog data

✓ Dashboard screen to manage storeroom sourcing updates including:o All price updateso Visibility to current lowest cost vendor by SAP material #o Potential dollar value impacts of pricing and vendor changeso Storeroom items with no match in vendor catalogso Ability to select items for vendor change and trigger mass update of SAP Source Lists


The SolutionGovernance and Analytics


Governance and Analytics

• Portal vs. Non-Portalo Show management which items are being procured via the portal and identify frequent

buys outside the portal that could possibly be added

o Show management which personnel are using the portal

• Procurement Dashboard - Storeroomo Allow storeroom managers to quickly identify new lowest-cost vendors and estimated

annual impact of vendor switcho Automate steps to update Source Lists in SAP when decision to switch vendors is made

• Vendor Analyticso Allow procurement teams to evaluate dollar-value impact of pricing changes by vendoro Procurement will be able to use these detailed analyses to show vendors where they are,

or are not, providing the lowest cost on specific items and the potential impact to their business of both cases

▪ Comprehensive Spend Analyticso Category Analysiso Data Harmonization


Project Benefits


What value does the Ariba solution bring?

➢ Supply Chain Digitization: Ability to communicate with any vendor (Direct or Indirect) electronically – Send PO, Receive PO Acknowledgment, Receive ASN and Receive PO

➢ Largest Vendor Network: Ariba is the best of breed solution and has the largest number of vendor on its network

➢ Accounts Payable Automation : End-End digitization will minimize accounts’ payable data entry and Vendor enquiry.

➢ Global Reach with Multi-lingual capability: Ariba can provide Global Vendor reach in multiple language.

➢ Spend Analytics and Governance : Ariba has functionality to guide users to select approved products


Other “Soft” Benefits

• Significant time savings for Maintenance and Procurement personnel:

▪ Eliminates time consuming quoting process

▪ Reduces requisition errors, which will allow automation of conversion of approved requisitions to purchase orders

▪ Automation of requisition to PO for portal items reduces procurement cycle

▪ Eases the process of searching storeroom items in comparison to ECC

• Searching storeroom items in the portal is simpler and faster than doing so directly in SAP

• Use of vendor catalog information to “enrich” existing SAP master data

▪ Capture manufacturer name and part number; Vendor part number

• Ability to view storeroom inventory across plants (though users can only request local items)

▪ Could lead to shared inventory for critical, hard-to-procure items
