xps overview
TRANSCRIPT
XCHANGING
PROCUREMENTAdding value, inspiring innovation
and supporting your business success
© 2015 Xchanging plc
XCHANGING PLC
We have over 7400 employees, supporting customers all over the world.
Xchanging presentation2
TECHNOLOGYPROCESSINGPROCUREMENT
Business
Processes:
Finance &
Accounting
Procure-to-Pay
Healthcare
Services
Analytics
Customer
Administration
(CRM)
Human
Resources
Industry Unique
Services
Application
Management:
Development
& Management
Enterprise
Applications
Testing Services
Outsourced
Product
Development
Engineering Services
(CAD/CAM), PLM
Mobility &
Location
Analytics
Internet of
Everything
Insurance:
Policy & Claims
Administration
Workers’
Compensation
Broking
Administration
Services
Financial
Services:
Securities
Processing
Banking
Services
Investment &
Fund Account
Administration
Infrastructure:
Cloud
Enablement
Security
Managed
Application
Data Centre
& Infrastructure
Network &
Systems
Management
Insurance
Software:
Xuber
Supply Chain
Analytics
Software-as-a-
Service
eSourcing
Category &
Market Insights
Contract
Management
Launchpad
Savings Tracker
Spend Analytics
Supplier
Performance
Management
Sourcing
Methodology
Transforming businessprocesses to make them more time and cost efficient
Delivering enhanced processesthrough advanced, practical and user-friendly IT systems
Transforming spend management and empowering procurement through leading edge technology and expertise
Procurement
Outsourcing &
Co-Sourcing
Tail-end Spend
Management
Source-to-Pay
Source-to-
Contract
Procurement-as-
a-Service (PaaS)
Technology
solutions with
on-demand
services
Low Cost
Country
Sourcing
© 2015 Xchanging plc
GLOBAL PRESENCE
Xchanging presentation3
Adelaide
Sydney
Manila
Brisbane
Perth
Paris
Frankfurt
Amsterdam
ShivamoggaJakarta
Bangalore
Gurgaon
Madrid
Kuala Lumpur
Mexico City
Preston
Lima
Shanghai
Moscow
Dusseldorf
Barcelona
Milan
Dubai
Glasgow
London
Folkestone
Chicago
New York
Warsaw
Basildon
Countries covered by Xchanging
Xchanging presence
Singapore
Munich
Melbourne
Mumbai
Tokyo
Chennai
Chatham
Hof
Quito
Athens
Seoul
Panama
Bucharest
Bratislava
Ljubljana
Ottawa
Dublin
Brussels
Geneva
Istanbul
Sao Paulo
© 2015 Xchanging plc
XCHANGING PROCUREMENT
Xchanging presentation4
Independently recognised as a global
leader by Everest & Horses for Sources
Independently recognised as a global
leader by Everest & Horses for Sources
1,000 procurement professionals
Every year we manage over £13 billion of
spend
7 million P2P transactions p.a.
5,000 sourcing projects completed
Delivered savings of up to 30%
Key Xchanging Procurement Facts
Procurement & Technology customers
Technology customers
© 2015 Xchanging plc
PROCUREMENT IN 2015
Assist the constant evolution of procurement function while innovating and adding
value
Xchanging presentation5
TOP CPO CHALLENGES IN 2014
Staff/Talent Constrains57%
Lack of engagement with the business35%
Budget constraints31%
Lack of technology
(i.e. technology gaps)
29%
Challenges in aligning processes
and systems
26%
1. How do we re-brand procurement from ‘Cost Saver’ to ‘Strategic Partner’?
2. How do we encourage the function to adapt/move quicker?
3. How do we continue to deliver whilst delivering new innovations
Source : Sciencewarehouse, « 2014 Procurement trends industry survey reveals procurement surge »
TOP PRIORITIES OVER THE NEXT 3 YEARS
54%
46%
23%19%
43%
36%32%
29%
Savings Processes Compliance Innovation
2011 2014
© 2015 Xchanging plc
FLEXIBLE OFFERING
Providing category expertise and transformational services to deliver the best total
procurement solution for your organisation
Xchanging presentation6
SaaSSOFTWARE AS A SERVICE
PaaSPROCUREMENT AS A SERVICE
OUTSOURCING ANDCO-SOURCING
S2P|S2C|P2P|TAIL
STATE OF THE ARTTECHNOLOGY
TECHNOLOGY SOLUTIONS WITHON-DEMAND SERVICES
MANAGED SERVICESOLUTIONS
© 2015 Xchanging plcXchanging presentation7
CORE OFFERINGS
© 2015 Xchanging plc
XCHANGING PROVIDES BROAD CATEGORY EXPERTISE
TO DRIVE REALISED SAVINGS
Xchanging Presentation8
Properties and Facilities
Property Management
Facilities Services
Capital Projects
Utilities
Office Supplies
Furniture
Repair and maintenance
IT & Telecom
Hardware
Software
Services
Voice & Data
Wireless
Professional Services
Auditing
Financial
Legal
Consulting
Engineering
Transportation
FTL / LTL
Ocean freight
Rail freight
Courier & messenger
Packaging
Storage / warehouse
Travel
Air Travel
Hotels
Rental Cars
Travel card
Meetings
Car fleet
Human Resource
Recruitment
Contingent Labor
Training
Benefits
Relocation
MRO
Consumables
Electrical supplies
Industrial supplies
Equipment rental
Machine Parts
Uniforms
Safety equipment
Marketing
Commercial Printing
Advertising
Promotions
Trade shows & events
Public Relations
Market Research
Misc. Marketing
© 2015 Xchanging plc
DIRECT CATEGORY EXPERTISE
Xchanging presentation9
Goods for resale
Cable
Solar Lighting
Modems
Foil
UPVC cladding
Smoke alarms
Shelves – wooden
Grout
Sand & aggregates
Laminates
Laminated flooring
Fire & gas safety
Trim & seal
Food & Drinks
Food
Ambient Juice
Beer
Butter
Cheese
Chilled Juice
Carbonates
Dried Fruit
Frozen Potato products
Frozen Vegetables
Frozen Fish
Fresh Chicken
Fresh Bacon & Gammon
Fresh Smoked Salmon
Herbs & Spices
Mixers
Pasta
Pickles & Beetroot
Spirits
Water
Wine
Manufacturing
Abrasives
Adhesives
Air brake
Assemblies Brake drums
Batteries
Bearings
Belts
Breakers
Brewing Syrup
Building Materials
Car alarms
Capital equipment
Clamps
Electronic cable
Exhausts
Filters
Flywheel housings
Forgings
Hydraulic Tubes
Injection Molding
Injection Plastic
Metal Pressings
Pallets
Solvents
Packaging
Cartons
Corrugated Boxes
Custom Procedure Trays
Film & Foil
Flexible Wrap
Grease & Silicone paper
Glass bottles
Labels
Thermo form
Trays
Wrap
© 2015 Xchanging plc
SAAS – SOFTWARE AS A SERVICE
MM4 PRODUCTS & FEATURES
Category & Market Insights
Company Intelligence
Contract Management
Document Library
eRFIs/eRFPs
eSourcing
LaunchPad
MarketMakingTM
Sourcing Methodology
Spend Analytics
Supplier Performance
Management
Xchanging has developed the MM4 technology to provide access to a
comprehensive suite of integrated procurement applications
Xchanging presentation10
© 2015 Xchanging plc
PAAS – PROCUREMENT AS A SERVICE
MM4 PRODUCTS & MARKETMAKINGTM CAPABILITIES
MarketMakingTM
Category & Market Insights
Advisory Services
Benchmarking
RFx and Tactical Buying
PaaS combines People, Technology and Expertise as a managed service. Helping to fill the gaps in your workforce, and acting as an extension to your existing teams
– quickly, easily and affordably.
Xchanging presentation11
Supplier Management
Reporting & Analytics
Category Support
– Contract Management Support
– Supplier Performance Management
– Compliance Support
© 2015 Xchanging plc
PROCUREMENT OUTSOURCING
Addressing strategic sourcing as well as transactional procurement
Xchanging presentation12
Procurement
lifecycle
Spend
Analysis
Strategic
sourcing
Contract
management
Requisitioning
Purchasing /
Spot Buys
Payment
Gather spend data from accounts payable
Analyse spend
Determine compliance
Identify Sourcing projects
Identify Suppliers
Run sourcing events / RFx
Evaluate responses
Select supplier
Negotiate contract
Execute contract
Manage contract and
catalogs
Search catalog, create
shopping cart
Create requisition
Requisition workflow and
approval
Create PO / Spot BuyGoods
receipt
Supplier performance
Invoice receipt
Invoice reconciliation and workflow
Payment settled,update
accounts payable
BENEFITS
Increased scalability
and flexibility
Access to expertise
Cost and spend
reduction
Standardisation
Access to best in
class technology
Flexible financial
model
© 2015 Xchanging plc
PROCUREMENT CO-SOURCING
Xchanging presentation13
ANALYSISSTRATEGICSOURCING
TACTICAL SOURCING
CONTRACT MANAGEMENT
SAVINGSTRACKING
Clients complement their existing capability
by using Xchanging to bolster their process.CO-SOURCING MODEL
XCHANGINGCLIENT
RECONGNISED AS A
GLOBAL ‘LEADER’ AND
‘STAR PERFORMER’
BY EVEREST
OVER 1,000
SOURCE TO PAY
PROFESSIONALS
£13BN
SPEND UNDER
MANAGEMENT
CLIENT A
CLIENT B
A solution tailored to your needs!
© 2015 Xchanging plc
TAIL-END SPEND MANAGEMENT
WHAT WE DO?
Requisitioning Solutions
Spend analytics
Sourcing helpdesk
Online supplier
marketplace
Benchmarking
Category Cards
Tactical buying centre
Tail-end Spend Management can generate savings between 15% and 17%.
Source : “Betting on tail spend to save coins” Everest Group 2014
Xchanging presentation14
Xchanging presentation
80%OF SPEND
STRATEGICALLYMANAGED SPEND TAIL SPEND
STRATEGICALLY MANAGED
SPEND VS TAIL SPEND
TOTA
L SP
EN
D (
BY
SU
PP
LIER
)
NUMBER OF SUPPLIERS
20%OF SPEND
© 2015 Xchanging plc
CATEGORY AND MARKET INSIGHTS
Category & Market Insights reveals targeted information specific to your area(s) of
spend. We don’t help by providing more information; we help by providing
relevant information, at the right time.
A global subscription service available to all procurement customers seeking a
competitive edge, instantly.
Xchanging presentation15
CATEGORY & MARKET INSIGHTS PROVIDES:
CATEGORY
INSIGHTS
MARKET
ASSESSMENTS
GLOBAL CATEGORY
OVERVIEWS
COMMODITY
TRACKING
SUPPLIER
PROFILES
© 2015 Xchanging plc
LOW COST COUNTRY SOURCING – (VIDEO)
Improvement of the way businesses source products and services
– Defined strategy for sourcing
– Local resources with market and supplier knowledge
– Prioritisation of the spend suited to Low Cost Country Sourcing
– Supplier assessment & due diligence
– Potential risk reduction
Preparation & implementation of changes associated to Low Cost Country
Sourcing
Xchanging presentation16
2
1
3
4
TOP 4
LOW COST GROWTH MARKETS
BANGLADESH
VIETNAM
TURKEY
INDIA PRODUCTION COST
PRODUCTION COST
PRODUCTION COST
PRODUCTION COST 15-30%
15-20%
12-30%
15-20%
Total Cost Reduction by Product when production is
transferred from Western Europe to China
PRODUCT
TEXTILES & APPAREL
INJECTION MOLDEDPLASTICS
ELECTRONICS
HOUSEWARES / KITCHENWARE
TOTAL POTENTIALCOST REDUCTION
© 2015 Xchanging plc
A TAILOR-MADE SOLUTION FOR YOU
Our modular approach to procurement products and services offers customers a
blended choice of technology, people and expertise to suit every requirement.
Xchanging presentation17
KEY MM4 TECHNOLOGY SERVICES TEAM CUSTOMER RESOURCES
TAIL-ENDSPENDMANAGEMENT (TSM)
PROCUREMENTOUTSOURCING& CO-SOURCING (POCOS)
SOFTWAREAS A SERVICE(SAAS)
PROCUREMENTAS A SERVICE(PAAS)
TAIL ANALYTICS
QUICK QUOTE
CATEGORY CARDS
BENCHMARKING
REQUISITIONINGSYSTEM
TRIAGE & TACTICALBUYING
SUBJECT MATTEREXPERTISE
AGGREGATION
REPORTING &COMPLIANCE
SUPPLIER PORTFOLIOMANAGEMENT
TRANSACTION CHARGE + GAINSHARE
SPEND ANALYTICS
E-SOURCING TOOLS
CONTRACTMANAGEMENT
CATEGORY ANDMARKET INSIGHTS
SOURCING STRATEGY& EXECUTION
SUBJECT MATTEREXPERTISE
CATEGORY & CONTRACTMANAGEMENT
REPORTING &COMPLIANCE
SPEND ANALYTICS
E-SOURCING TOOLS
CONTRACTMANAGEMENT
CATEGORY ANDMARKET INSIGHTS
SOURCING STRATEGY& EXECUTION
SUBJECT MATTEREXPERTISE
SPEND ANALYTICS
E-SOURCING TOOLS
CONTRACTMANAGEMENT
CATEGORY ANDMARKET INSIGHTS
CATEGORY & CONTRACTMANAGEMENT
REPORTING &COMPLIANCE
RELATIONSHIPMANAGEMENT
MARKETMAKING TMMARKETMAKING TMMARKETMAKING TM
CATEGORY & CONTRACTMANAGEMENT
REPORTING &COMPLIANCE
RELATIONSHIPMANAGEMENT
SUBJECT MATTEREXPERTISE
SOURCING STRATEGY& EXECUTION
FEE + GAINSHARESUBSCRIPTION WITH
SERVICES ON DEMANDSUBSCRIPTION MODEL
SUPPLY CHAIN ANALYTICS AS A SERVICE (SCAAAS)
SPENDEFFECTIVENESS
RISK (DEPENDENCY)
TRANSPARENCY
COMPLIANCE
SOCIAL RESPONSIBILITY
INSIGHT ON DEMAND
SUBJECT MATTEREXPERTISE
CATEGORY & CONTRACTMANAGEMENT
REPORTING &COMPLIANCE
RELATIONSHIPMANAGEMENT
SUBSCRIPTION WITHSERVICES ON DEMAND
RELATIONSHIPMANAGEMENT
SAASVideo Overview
eSourcing - (Video)
© 2015 Xchanging plc
0
5
10
15
20
25
30
35
40
45
50
0 2 4 6 8 10 12 14 16 18 20 22
Sp
en
d U
nd
er
Ma
na
ge
me
nt
$ M
illio
ns
Number of Sourcing Projects Per Year
Future State
Current State
Use of the MM4 Solution results in higher Sourcing Activity (not just eSourcing),higher yields and a substantial increase in the amount of spend negotiated
online.
EXECUTION VELOCITY
Xchanging presentation19
© 2015 Xchanging plc
WHAT’S OUR DIFFERENTIATOR (WHY WE EXIST)?
Xchanging presentation20
Accelerated Value
• Specific Savings Targets
• Time Critical Savings
• Stakeholder Engagement
• More Volume of Spend Management
• Internal & External Adoption
© 2015 Xchanging plc
KEY FEATURES
An eSourcing platform that supports the entire sourcing lifecycle
Xchanging presentation21
eRFP eAUCTION CONTRACT
MANAGEMENTSPEND
ANALYTICS
ADVISORY
SUPPORT
MARKETMAKING SUPPLIER
PERFORMANCE
MANAGEMENT
COMPANIES
DATABASE
REAL-TIME
MARKET INSIGHT
CATEGORY
REPORTS
© 2015 Xchanging plc
LAUNCHPAD
Key Features
Unified Integrates all procurement software applications in one
Intuitive Delivers information & options in a way that mirrors the requirements of the procurement process, and leads naturally to whichever deeper level processes are required.
Revelatory Reveals market & category insights from external feeds that are relevant and critical to each specific user.
PersonalisedTailored for each user e.g. CPO and
Category Managers KPIs
Users start and control their interactions with the various MM4 software applications,
accessed remotely from any web-enabled device.
Xchanging presentation22
© 2015 Xchanging plc
SOURCING METHODOLOGY
MM4 Sourcing Methodology :
An online tool designed and developed by procurement professionals to enable
businesses in any sector to deploy the most appropriate procurement methods.
The Methodology offers a set of robust & proven step-by-step procedures
reflecting best-in-class practice, enabling users to prioritise their work and focus
on activities that offer the greatest commercial gain, and eliminate/ mitigate
supply side risks.
Enabling best in class procurement – transforming procurement from a series of transactional costs to a strategic business asset
Xchanging presentation23
You are here Overview Detailed View Simplified Route Structured Route Strategic Route
Sourcing
Supplier Management
Purchasing & Analytics
© 2015 Xchanging plc
CONTRACT MANAGEMENT
Provides you the ability to monitor, manage and track all contract management
activities online, in one simple, user-friendly application, allowing you to:
• Gain greater visibility
• Create a central repository to share templates
• Better means of establishing regular contract review periods
• Better overview of live contract status across organisation
• Run customised searches & reports
• Set contract milestones & actions with email alerts
• Track and report on all contract milestones
Aberdeen Group has claimed that, ineffective contract management costs $153
billion a year
Xchanging presentation24
© 2015 Xchanging plc
SUPPLIER PERFORMANCE MANAGEMENT (SPM)
SPM enables you to effectively manage :
1. Supplier Performance – to monitor whether or not they have met or exceeded
their contracted commitments.
2. Supplier Relationships - to ensure collaborative working between customers and suppliers in order to achieve and maintain agreed service levels. Involving
the sharing of anything from business information to joint venture activity.
3. Risk Management – to help identify risks and put controls in place to mitigate these.
Central repository for monitoring, managing and correcting supplier performance
Xchanging presentation25
© 2015 Xchanging plc
CATEGORY & MARKET INSIGHTS (VIDEO)
Category & Market Insights
– Reveals targeted information specific to
a customer’s area(s) of spend. We don’t
help by providing more information; we
help by providing relevant information, at
the right time.
– News, trends, company dynamics,
supplier concentration, pricing histories,
currency fluctuations, weather reports –
whatever is required to provide decision-
making clarity is collated, distilled and
delivered in both specific and bespoke
Category & Market Insight bulletins.
Customised intelligence for your business
Xchanging presentation26
© 2015 Xchanging plc
PAAS OVERVIEW
Procurement as a Service is an offering that combines Xchanging’s intuitive SaaS
technology with Procurement expertise
Xchanging presentation28
XCHANGING
PROCUREMENT
SERVICES
CUSTOMER
RESOURCES
eSOURCING TOOLS
CATEGORY & MARKET INSIGHTS
CONTRACT & SUPPLIER MANAGEMENT
SPEND ANALYTICS
MARKETMAKING
SOURCING STRATEGY & EXECUTION
SUBJECT MATTER EXPERTISE
CATEGORY & CONTRACT
MANAGEMENT
REPORTING & COMPLIANCE
RELATIONSHIP MANAGEMENT
PaaS is:
An on-demand service that effectively
enables organisations to turn on and turn
off incremental strategic procurement
support.
Giving the freedom to :
- tap into specialist expertise
- manage peaks in demand arising
from new product introductions or
change programmes
All in an incredibly cost-effective
manner.
© 2015 Xchanging plc
Procurement
lifecycle
Spend
Analysis
Strategic
sourcing
Contract
management
Requisitioning
Purchasing /
Spot Buys
Payment
Gather spend data from
accounts payable
Analyze spend
Determine compliance
Identify Sourcing projects
Identify Suppliers
Run sourcing events / RFx
Evaluate responses
Select supplier
Negotiate contract
Execute contract
Manage contract and
catalogs
Search catalog, create shopping
cart
Create requisition
Requisition workflow and
approval
Create PO / Spot BuyGoods
receipt
Supplier performance
Invoice receipt
Invoice reconciliation and workflow
Payment settled,update
accounts payable
PAAS IS AN ELEMENT OF THE SOURCE TO PAY PROCESS
9 Xchanging presentation
© 2015 Xchanging plc
MARKETMAKING SUPPORT SERVICES
Procurement Specialists with an average of 12 years experience
Xchanging presentation30
CATEGORY& MARKETINSIGHTS
Provide analysis of market and industry reports and periodicals.
ADVISORYSERVICES
To manage project based sourcing and consultancy as well as end-to-end initiative management.
SUPPLIER MANAGEMENT
Every subscription of our software includes access to a dedicated support team. This team are the first point of contact for any user or supplier queries, ensuring they are fully engaged and supported throughout all projects.
RFx & TACTICAL BUYING
Provide eSourcingsupport including the preparation of RFI, RFP and eAuctions, as well as low value orders (LVO) and sourcing projects.
REPORTING & ANALYTICS
Manage spend reporting and analytics, including spend classification, opportunity analysis and savings tracking
BENCHMARKING
Provide industry spend, pricing trends and benchmarks, as well as product to product price comparisons.
CATEGORY SUPPORT
Provide:
CONTRACT MANAGEMENT SUPPORTTo ensure your contract renewals are in place.
SUPPLIER PERFORMANCE MANAGEMENTSupport to help manage your suppliers to maximize
performance
COMPLIANCE SUPPORTMaximise compliance to deliver additional savings.
© 2015 Xchanging plc
UNIQUE PAAS OPERATING MODEL
Xchanging presentation31
Subject Matter Expertise
– Available on demand
to drive best practices
and ensure optimised
results
MarketMakers identify,
qualify and train
suppliers according to
client needs 24/7 in 15
languages.
MM4 Project Managers
facilitate data collection,
documentation build and
incorporate best
practices to maximise
savings
© 2015 Xchanging plc
ON-DEMAND SERVICE
Xchanging presentation32
Analyst / 2-4 Years Experience
Strategic Sourcing Professional / 7-10 Years Experience
Senior Category Experts / 11-16 Years Experience
MarketMaking™
Project / Category Managers
SME – Subject Matter Experts
© 2015 Xchanging plc
COMPREHENSIVE LOCAL AND GLOBAL PRESENCE
Global MarketMakingTM Coverage
Xchanging presentation33
Countries covered by Global MarketMakingTM
© 2015 Xchanging plc
PROCUREMENT-AS-A-SERVICE PROCESS
Our experience team will support efforts from Category Management, Strategic
Sourcing Planning, Collecting and Analysing data, and Negotiation Execution
Xchanging presentation34
)
Planning ExecutionImplementation and
Communication
Due Diligence Sourcing Strategy
Baselining RequirementsSupplier Portfolio
Sourcing Event (RFx)
Award Scenario
Implementation Ramp-Up
Execution
Strategy
Supplier
DownselectedContract
Preparation
Full
Run-Rate
Savings Start
Date
Requirements
Document
Savings
Qualification
Document
Baseline
Document
Critical Path Stage gates
Customer/Xchanging led activity
Xchanging led activity
Customer led activity
© 2015 Xchanging plc
PAAS PROCESS – MORE THAN JUST “E-AUCTIONS”
Planning
13 Xchanging presentation
PLANNING
CATEGORY PLAN
EXECUTION
STRATEGY / SOW
JOINTLY LED ACTIVITY
CRITICAL PATH STAGE GATE
DUE DILIGENCE
SOURCING
STRATEGY
© 2015 Xchanging plc
PAAS PROCESS
Execution
14 Xchanging presentation
EXECUTION
BASELINING
REQUIREMENTS
SUPPLIER
PORTFOLIO
SOURCING EVENT
(RFX)
AWARD SCENARIO
BASELINE DOCUMENT
REQUIREMENTS DOCUMENT
SUPPLIER DOWNSELECTED
SAVINGS QUALIFICATION
DOCUMENT
CONTRACT PREPARATION
XCHANGING LED ACTIVITY
CRITICAL PATH
STAGE GATE
CRITICAL PATH
STAGE GATE
© 2015 Xchanging plc
PAAS PROCESS
Implementation
15 Xchanging presentation
IMPLEMENTATION &
COMMUNICATION
SAVINGS
START DATE
FULL
RUN-RATE
CUSTOMER LED ACTIVITY IMPLEMENTATION
RAMP-UP
© 2015 Xchanging plc
• Conduct client kickoff
meeting
• Identify and understand
data available;
Line level current
spend
Costs
Volumes
• Conduct data collection
process (if not available
internally)
Tasks• Data analysis
• Understanding sourcing
objectives
• Develop the eAuction
strategy – (eAuction,
eRFP, eRFI etc)
• Prepare bid documents
(bid sheet, eRFI, ITB
etc.)
• Build Documents and
Platform;
eRFI Questions
Invitation to Bid
Bid Sheet
T&Cs
Specifications
• Approval of all
documents prior to
publish
• Analysis of final onscreen
pricing
• instant messaging history
• bidding history
• supplier management
(contact details, pre-
qualification information
etc);
• Supplier final line item
pricing (e.g. the price per
case for each product
within each lot that makes
up their overall final lot
price from the event).
• Understand internal
data and external
market
Purpose • Identify current and
potential bidders• Determine strategy
sourcing approach
• Decide and develop
most appropriate
execution strategy
• Review participation
• Engage suppliers
• Facilitate Q&A process
• Confirm EBL is met
• Host practice event for
suppliers
• Project Kickoff Document
completed by buyer
• KO call / meeting with MM4
• Data Collection Template
approved and published (if
needed)
Outputs
• Incumbent
supplier contact
details
• Preferred supplier
list
• Supplier long list
for review
• Agreed supplier
short list
• Approved project plan
including timeline
• Sourcing strategy approval
• Incumbent informed of MM4
engagement
• eRFx Build (eRFP/eAuction)
• Bid documents
• Baseline and eRFx approval
• Publish eRFx
• Management of LIVE
negotiation• Post event report
Profile Category
Sourcing Strategy
Supplier Search
Event Creation & Publish
• Identify suppliers (long
list)
• Understand
qualification criteria
• Prepare supplier short
list
Pre eAuction
• Ensure supplier
understanding and
participation
• Project updates including
participation expected
• Ensure suppliers are
confident in process and that
their questions are
answered
eAuction Post Event
• Host Live Event
• Ensure buyers and
suppliers can view
the event (either in
person or online via
a webex depending
on category)
• Monitor bidding
activity and
communicate with
buyers / suppliers
as necessary
• Post event report
and analysis
Week
1-2
Week
5-6
Week
4-5Week
3-4Week
2-3
Week
6
DETAILED WORKFLOW
16 Xchanging presentation
© 2015 Xchanging plc
PAAS DOES NOT MEAN…
Xchanging presentation39
Software as a Service
Category EXPERTISE
Long implementation time
Procurement Outsourcing
Xchanging make the business award decisions
Xchanging manage the category (categories) after negotiation
Auditing
Electronic Invoicing
P2P PaaS is all about accelerating your results,
no waiting, no disruption - just delivery!
PAAS
CASE STUDIES
© 2015 Xchanging plc
CASE STUDY – PAAS
Xchanging presentation41
• Company : A Leading Global Manufacturing Company
• Background : The company had an eSourcing tool already deployed within the company but not used by the procurement team. The MM4 SaaS
solution was tested for few months, the eSourcing tool has been adopted by
the team, the return was of more than 50 times after 3 months.
• Challenge :
• Lack of internal resources
• No possibility to hire
• Solution :
• PaaS offering : MM4 SaaS solution with on-demand expertise
• Procurement Project management
• Experienced procurement practitioners
© 2015 Xchanging plc
ENERGY
Xchanging presentation42
CATEGORY & CONSIDERATIONS CLIENT FACTS & RESULTS
Natural Gas
o Determine contract structure : fixed vs. variable rate vs. block
plus index
o Determine contract length: one, two, three years
o Understand local utility company and the requirements for
contracting with an energy marketer
Client Industry: Correction
Facility
57 Bids, 4 Suppliers
$636M Spend, 36% Savings
Electricity
o Determine contract structure : fixed vs. variable rate vs. block
plus index
o Determine contract length: one, two, three years
o Understand local utility company and the requirements for
contracting with an energy marketer
o Understand current market conditions
Client Industry: Correction
Facility
1034 Bids, 7 Suppliers
$2.95 M Spend, 25% Savings
Propane
o Determine Contract structure: fixed vs. variable rate
o Determine contract length: one, two, three years
o Understand who owns the propane tank
o Understand current market conditions
Client Industry: Automotive
60 Bids, 6 Suppliers
$1.1 M Spend, 36% Savings
© 2015 Xchanging plc
ENTERPRISE
Xchanging presentation43
CATEGORY & CONSIDERATIONS CLIENT FACTS & RESULTS
Uniforms & Linens Services
o Determine types of uniforms and linens included in the program
o Collect specifications including material, description, colour,
size requirements, quality, quantity, etc.
Client Industry: Restaurant
Management
420 Bids, 20 Suppliers
$1 M Spend, 48% Savings
Office Furniture
o Determine whether to include manufacturers, distributors, or
both in bid
o Determine types of furniture and current requirements
o Collect detailed information on specifications and requirements
including delivery and installation
Client Industry: Financial
Services
102 Bids, 5 Suppliers
$5 M Spend, 11% Savings
Printed Materials
o Collect specifications including ink, number of colours, paper,
sides, dimensions, folding specs, average order quantity, etc.
o Drawings or samples will need to be collected
Client Industry: Automotive
Components Manufacturing
728 Bids, 14 Suppliers
$0.5 M Spend, 42% Savings
Office Supplies
o Collect manufacturer and part number for core products
o Discuss the option of bidding out alternatives and like-for-like
lots to analyse the price differentials
o Determine regional/national supply base and preferences
Client Industry: Oil & Energy
41 Bids, 5 Suppliers
$2 M Spend, 25% Savings
© 2015 Xchanging plc
PACKAGING SUPPLIES
Xchanging presentation44
CATEGORY & CONSIDERATIONS CLIENT FACTS & RESULTS
Corrugated
o Determine specifications including box style (RSC/Die Cut),
Dimensions, Coating, Colours, Panels, Material Type, Joint, etc.
o Determine locations to identify local/regional supplier base
Client Industry: Aerospace
207 Bids, 24 Suppliers
$11 M Spend, 21% Savings
Packaging General
o Break down the spend by the type of packaging supplies
including stretch/shrink wrap, tape, cartons, poly bags, paper
bags, labels, strapping, tubes, etc.
o Rationalize SKU’s, determine purchasing strategy
Client Industry: Grocery
Retail Chain
201 Bids, 20 Suppliers
$2.5 M Spend, 12% Savings
Pallets, Skids
o Collect detailed specifications and drawings including size,
heat treat, condition, wood type, pallet entry, etc.
o Ensure drawings/specs are up to date- site visits may be
necessary
o Determine locations to identify local/regional supplier base
Client Industry: Flexible
Packaging Manufacturing
339 Bids, 34 Suppliers
$6 M Spend, 26% Savings
Plastic Packaging
o Collect manufacturer and part number for core products
o Discuss the option of bidding out alternatives and like-for-like
lots to analyse the price differentials
o Determine regional/national supply base and preferences
Client Industry: Building
Materials Manufacturing
398 Bids, 11 Suppliers
$75 M Spend, 4% Savings
© 2015 Xchanging plc
FACILITIES MANAGEMENT
Xchanging presentation45
CATEGORY & CONSIDERATIONS CLIENT FACTS & RESULTS
HVAC Services
o Determine number of locations and type of equipment to be
maintained/serviced
o Break down periodic maintenance vs. repairs/service calls and
labor, vs. material costs
Client Industry: Flexible
Packaging Manufacturing
170 Bids, 23 Suppliers
$1 M Spend, 21% Savings
Security Services
o Determine number of locations and type of service required at
each location
o Determine equipment required for guards
o Determine structure of current program (bill rate/ mark-up )
and quality/service requirements
Client Industry: Restaurant
Management
220 Bids, 28 Suppliers
$4 M Spend, 28% Savings
Cleaning & Janitorial Services
o Collect detailed cleaning specifications for each site, square
footage, surface types, expected cleaning schedule & shifts,
and expected work for each area
o Determine local/national supply base and preferences
Client Industry: Flexible
Packaging Manufacturing
69 Bids, 11 Suppliers
$1 M Spend, 28% Savings
Waste Management/Recycling
o Determine waste type (dry, wet, hazardous, recyclables),
service frequency, equipment rental/ownership
o Number of locations, tonnage requirements, cost per ton, fuel
surcharges, equipment requirements
Client Industry: Flexible
Packaging Manufacturing
127 Bids, 19 Suppliers
$1.5 M Spend, 14% Savings
© 2015 Xchanging plc
IT, TELECOM
Xchanging presentation46
CATEGORY & CONSIDERATIONS CLIENT FACTS & RESULTS
IT Hardware & Peripherals
o Collect base specifications and requirements for laptops,
desktops, monitors, & peripherals
o Set standard specifications, warranty, requirements
Client Industry: Financial
Services
44 Bids, 3 Suppliers
$6.5 M Spend, 21% Savings
Telecom (Wireless, Voice, Data)
o Determine type of program for wireless, voice, and data
services
o Determine number of users (service/data/air card) and
coverage requirements
o Determine historical and future hardware requirements
Client Industry: Heavy
Equipment Manufacturing
53 Bids, 3 Suppliers
$1 M Spend, 35% Savings
MFPD’s
o Determine if purchased/leased equipment
o Collect information on services included in current agreement
o Determine equipment segment, output, paper capacity,
manufacturer, model, PPM, warm up time, etc.
o Determine cost per click for B&W vs. colour printouts – capture
minimums included
Client Industry: Automotive
Components Manufacturing
80 Bids, 6 Suppliers
$1.5 M Spend, 26% Savings
© 2015 Xchanging plc
HR SERVICES
Xchanging presentation47
CATEGORY & CONSIDERATIONS CLIENT FACTS & RESULTS
Relocation Services
o Collect detailed information on current program including
Quality/Service requirements and TCO (Management fees,
Cancellation Fees, Temp Living, Pass-through Costs, Commission
Share, HHG Rates, etc.)
Client Industry: Mall
Management Services
280 Bids, 22 Suppliers
$4.5 M Spend, 42% Savings
Temporary Labor Services
o Determine types of temporary labour utilised – Clerical/ Admin,
IT, HR, Light Industrial, Acct/Finance, etc.
o Determine skill levels and locations included in program
o Determine structure of current program (bill rate/ mark-up )
and quality/service requirements
Client Industry: Prepared
Food Manufacturing
46 Bids, 16 Suppliers
$11 M Spend, 12% Savings
Recruitment Fees
o Determine types of direct hire positions including job titles and
job descriptions
o Determine number of placements, average salary, and current
fee/percentage
Client Industry: Flexible
Packaging Manufacturing
1156 Bids, 29 Suppliers
$1 M Spend, 66% Savings
© 2015 Xchanging plc
LOGISTICS
Xchanging presentation48
CATEGORY & CONSIDERATIONS CLIENT FACTS & RESULTS
Ground Freight (LTL/FTL )
o Determine FTL vs. LTL spend breakdown
o Discuss type of product being shipped and special
requirements – height, refrigeration, etc.
o Determine shipping lanes including shipper address, number of
pieces, weight, consignee address
Client Industry: Medical
Engineering Manufacturing
513 Bids, 21 Suppliers
$0.7 M Spend, 60% Savings
Fleet Management
o Discuss current fleet and contract agreement including length
of leasing agreement or purchase
o Determine desired make, model, version, over/under mileage
rate, service/ maintenance per month, lease fee per month,
etc.
Client Industry: Grocery
Retail Chain
165 Bids, 9 Suppliers
$5 M Spend, 22% Savings
Ocean Freight (FCL)
o Discuss type of product being shipped, tariff codes, additional
fees, etc.
o Determine loading point, port of loading, port of delivery,
container size & type, number of trips, management/ ownership
Client Industry:
Microelectronics
Manufacturing
181 Bids, 12 Suppliers
$8 M Spend, 20% Savings
© 2015 Xchanging plc
WHAT IS TAIL-END SPEND?
Tail-end spend usual characteristics:
- Unaddressed spend
- Fragmented spend
- Misclassified spend
- Maverick spend
- Large number of suppliers
- Low volume, low value items
- Large number of small transactions
Traditional spend management covers only 83% of an organisation’s spend.Source : CAPS Research – Cross-industry report on standard benchmarks (2012)
Xchanging presentation50
Xchanging presentation
80%OF SPEND
STRATEGICALLYMANAGED SPEND TAIL SPEND
STRATEGICALLY MANAGED
SPEND VS TAIL SPEND
TOTA
L SP
EN
D (
BY
SU
PP
LIER
)
NUMBER OF SUPPLIERS
20%OF SPEND
© 2015 Xchanging plc
TAIL END SPEND COMPLEXITY
Contributing factors to Tail-End spend complexity
51
Supplier
Requisition
Category
Non strategic
suppliers
Purchase below a
threshold level
Suppliers not used
over 6-9 month
timeframe Not strategic sub-
category
Low P.O.
penetration
Non standardised
specifications
Non catalogued
No item reference and low
value
No preferred vendor
© 2015 Xchanging plc
TAIL SPEND CHALLENGES
Tail Spend Management52
WORK DIFFERENTLY
Poor data Change resistance
Inadequate workflow
and requisition controls
Lack of resources
(People & Technology)
75% of companies say they have little to no visibility or
insight into their indirect expenditure
– High volume and short turn around time for a strategic
procurement methodology
© 2015 Xchanging plc
HOW WE DRIVE TACTICAL BUYING SAVINGS
Our methodology drives :
Tail Spend Management53
Process
• Simplification
• Manage End-users’ expectations
• End-user visibility
Reporting
• Clear SLAs and KPIs
• Dashboards
• Track compliance %
Budget optimisation
Supplier proliferation
control
Spend channelling
Process & reporting
Re-allocate
• Some of Tail spend to Strategic
suppliers
Catalogue creation
• Opportunities identification
through analytics
E-Catalogue use
• Channel spend towards existing
Catalogues
“Where to buy” guide by category
One-time vendors
• Check T&Cs
• Risk management
Panel
• Supplier consolidation
• Adherence to PSL
• Use of purchasing cards
• Lock out vendors/categories
• Visibility on transactions
Recurring spend reduction
• Supplier consolidation
• Tactical negotiations
• Opportunities identification
One-off tail spend reduction
• Challenge demand (buy less)
• Maverick spend reduction
• Purchasing card support
© 2015 Xchanging plc
WHY IS IT IMPORTANT
Tail Spend Management can generate savings between 15% and 17%.Source : “Betting on tail spend to save coins” Everest Group 2014
Tail Spend Management54
1
Reassignment of the resources on core procurement
2
Risk reduction
TOP 3 BENEFITS OF
TAIL SPEND MANAGEMENT
3
Savings
OBJECTIVES
Focus the category managers on strategic spend
Reduce admin tasks in the BUs
Improve the spend under management
Consolidate and centralise of procurement
Improve data quality and visibility
Continuous sourcing
Spend redirection to Preferred Supplier List
Reduce spend volume
© 2015 Xchanging plc
WHAT WE DO?
Tail Spend Management55
UNDERSTAND THE SPEND
• Maverick spend
• Non-compliance
• Direction to strategic
agreements
MARKET PLACE
• E-catalogues
• Negotiated prices
• Supplier list
• Benchmarking
• Quick Quotes
TACTICAL BUYING
CENTER
• Multi-customers teams
• Category expertise
• Local expertise
• Language cover
• SSC
AUTOMATISATION
• Workflow
• Integration with customer’s
tools
• Status tracking
• Performance tracking
HELPDESK
• Portal
• Helpdesk
• Change management
• Training
INGREDIENTS FOR
SUCCESS
© 2015 Xchanging plc
TAIL TO PAY MODEL – S2P & P2P
Tail Spend Management56
Customer
Responsibility
Xchanging
Responsibility
Joint
Responsibility
Change
ManagementEscalation
Policies &
Procedures
Program
Compliance
Stakeholder
EngagementFee Invoicing
Go
ve
rna
nc
e
Communication
to community
Xchanging
(optional)
Responsibility
Sourcing to Quote
Demand
Validation
Demand
requisition +
/approvals
Sourcing
Tactical
Buying
Quick Quote/
eSourcing
Bid Query &
Selection
Supplier Issue
management
Benchmarking
Compliance
check
Help Desk
Support to
requestors
Demand Mgt.
Triage/
Allocation
Ticketing
Need
identification
Procure to Pay
Procure /
Transactional
PO issuance
Payment
Receipt and
Scanning
Inter-Company
Invoices/Credits
Deliver
Shipment
Return to
Vendor /
Credit
Coordinate
Delivery
Exceptions/
Escalations
PO
Approval(s)
Generate PO
Vendor Master
Data
Maintenance
Invoice
approval
Invoice
Processing &
Payments
Financial
Integrity and
Reconciliation
Suppliers
Contract
Administration
Support Services
Tail Spend
Analysis
Market
Analysis
Price
Benchmark
Support and
Analytics
Sourcing
Performance
Reporting
Subject Matter
Expertise
Supplier
management
Supplier
Enablement
and T&Cs
Catalog
Enablement &
Management
Panel
consolidation
/ Aggregation
Category /
Supplier cards
Supplier
Directory
Savings and
performance
validation
© 2015 Xchanging plc
HOW IT WORKS
Service performance is measured on the transaction process turn-around time and
the % of savings against spend managed
Tail Spend Management57
Helpdesk
Spend < Level 1 Spend level 1 – level 2 Spend level 2 – level 3
Cu
sto
me
r p
roc
ure
me
nt
tea
m g
ov
ern
an
ce
Su
pp
liers Q
uo
te
Technology : requisition portal, ticketing, workflow, dashboards…
Support services : Benchmarks, Category cards, eCatalogs, Analytics…
Sourcing Request
Compliance
Sourcing Methodology
Generate a quote
Economical benefits
Savings only incidental
Time : ½ day
Benchmark
Sourcing Methodology
• Seek quote
• Benchmark pricing
• Negotiate with incumbent
• Seek alternate supplier if
necessary
Economical benefits
Program agreed savings
Time : 2-4 days
Tactical sourcing
Sourcing Methodology
• Go to market with existing
specs and strategy
• Seek 2 quotes
• Recommend
Economical benefits
Program agreed savings
Time : 4-8 days
© 2015 Xchanging plc
XCHANGING MM4 TECHNOLOGY
Volume of the tail spend need adequate solutions
Tail Spend Management58
Tail Spend Management
Spend Analysis
E-Catalogs
Benchmarking
E-sourcing
Quick quotes
Unique Invoice
Requisition management
© 2015 Xchanging plc
IMPLEMENTATION PLAN
Xchanging implementation plan enables a Go Live in 8 weeks for 1 country
deployment
Xchanging presentation59
WORK STREAMS DUE-DILIGENCE PREPARATION TRANSITION DELIVERY RAMP-UP
Pre- Contract Month T-1 Month 1 Month 1-3
PEO
PLE 1 Team ramp-up
2 Workspace
CO
MM
S 3Change Management
4 Governance
PR
OC
ESS &
TO
OLS
5 Spend Analytics
6 TSM Workflow
7 Marketplace
8Savings Tracking & Reporting
SER
VIC
ES 9 Sourcing
10 Tactical buying
Location understanding, Engagement, Set-up
Introduction, On-boarding, Resource deployment
Stakeholder mapping, Program & comms preparation, Execution
Governance, Review boards and Objectives identification and alignment. Process review according to Governance
Data gathering and analysis, Data sources identification and creation of feeds
Sub-Category analysis, Content population, system set-up, Content enrichment
Process understanding, design & alignment, system set-up
Analysis, Engagement, Tools set-up, Strategy development, Execution
Identification, Process alignment, KPIs validation, Reporting definition, Information management
Contractual dates
© 2015 Xchanging plc
TAIL-SPEND MANAGEMENT – SAVINGS PERFORMANCE
Xchanging Presentation60
Properties and Facilities
Savings range : 9-22%
Property Management
Facilities Services
Capital Projects
Utilities
Office Supplies
Furniture
Repair and maintenance
IT & Telecom
Savings range : 7-14%
Hardware
Software
Services
Voice & Data
Wireless
Professional Services
Savings range : 10-23%
Auditing
Financial
Legal
Consulting
Engineering
Transportation
Savings range : 7-14%
FTL / LTL
Ocean freight
Rail freight
Courier & messenger
Packaging
Storage / warehouse
Travel
Savings range : 9-25%
Air Travel
Hotels
Rental Cars
Travel card
Meetings
Car fleet
Human Resource
Savings range : 4-22%
Recruitment
Contingent Labor
Training
Benefits
Relocation
MRO
Savings range : 5-23%
Consumables
Electrical supplies
Industrial supplies
Equipment rental
Machine Parts
Uniforms
Safety equipment
Marketing
Savings range : 10-21%
Commercial Printing
Advertising
Promotions
Trade shows & events
Public Relations
Market Research
Misc. Marketing
© 2015 Xchanging plc
4 PILLARS OF XCHANGING PROCUREMENT OFFERING
Xchanging presentation61
TECHNOLOGY PEOPLE PROXIMITY KPIs
Benchmarks
Spend Analytics
MM4
Category Cards
Market Place
Benchmarks
Spend Analytics
MM4
Category Cards
Integration with
customer
environment
Cultural fit and
local language
Local team and
local market
knowledge
Stakeholder
engagement
Savings
Turn around
time
Compliance
and reporting
© 2015 Xchanging plc
8 QUESTIONS TO ASK TO A TSM PROSPECT
Tail Spend Management62
State
Governance
Objective
1. % of spend under 100k€?
2. % of spend not managed by procurement teams?
3. # of invoices paid without validation of the requisition or PO?
4. Cost of supplier panel management in the ERP?
1. Authority to change the supplier (without stakeholder approval) for non-
core procurement
2. Who would be the Tail Spend Sponsor (CxO vs CFO, BU Director)
1. Procurement team control and savings target?
2. Number of man/day reallocated to the core business
© 2015 Xchanging plc
XCHANGING TSM KEY FIGURES
Xchanging Presentation63
2+ Billion €of Tail managed
globally
More than
200 000 events
200
More than 200
tactical buyers
Presence in
40+ countries
© 2015 Xchanging plc
CASE STUDY – FMCG TAIL-END SPEND MANAGEMENT
Xchanging Presentation64
• Company : a large FMCG company
• Spend: over $ 2,3 b of tail end spend (≈ 250k transactions, amounts < 100 k$) mainly bought by non purchasing people, in 42 countries in Western Europe,
Central & Eastern Europe & Turkey and Latin America
• Objectives:
• Consolidate and centralise tail end spend purchasing
• Apply purchasing best practices
• Reduce the number of suppliers in the tail end
• Channel spend to Preferred Supplier List
• Generate savings (self financing project)
• Constraints:
• No possibility to hire purchasing people
• Solution has to be self financed within the transactions
• Solution:
• Mixed team of onsite/offsite purchasing managers, tactical buyers and triage staff
• Category cards including process and preferred suppliers
• SAP-based technology for shopping carts creation, collection of quotes and award
© 2015 Xchanging plc
CASE STUDY – IT TAIL-END SPEND MANAGEMENT
Xchanging Presentation65
• Company : a large multinational Telecoms operator
• Spend: over € 1.5 b of IT spend including € 150 m of tail end spend (large number of transactions, small amounts) mainly bought by non purchasing
people, in 13 European countries
• Objectives:
• Consolidate and centralise tail end spend purchasing
• Apply purchasing best practices
• Reduce the number of suppliers in the tail end
• Channel spend to Preferred Supplier List
• Generate savings (self financing project)
• Constraints:
• No possibility to hire purchasing people
• Solution has to be self financed within the transactions
• Solution:
• Partnership between Xchanging (for sourcing services) and a reseller (for single invoicing & supplier financing, 3rd party supplier contracting, warranty and return management)
© 2015 Xchanging plc
PROCUREMENT OUTSOURCING
Xchanging presentation67
STAFF / TALENT CONSTRAINTS 57%
LACK OF ENGAGEMENT
WITH THE BUSINESS35%
BUDGET CONSTRAINTS 31%
LACK OF TECHNOLOGY
(I.E. TECHNOLOGY GAPS)29%
CHALLENGES IN ALIGNING
PROCESSES AND SYSTEMS26%
THE CPOs TOP CHALLENGES THIS YEAR
TOP 2ONE:LOSS OF CONTROLABOUT PROCUREMENT
OUTSOURCING
TWO:LOSS OF KNOW HOW
MISCONCEPTIONS
OF COMPANIES HAVE
CHOSEN TO OUTSOURCE
EITHER SOME OR ALL OF
THEIR SOURCING AND
PROCUREMENT
EXPECTED GROWTH IN
GLOBAL PROCUREMENT
OUTSOURCING MARKET
BY 2018
OF THOSE THAT ALREADY
USE PROCUREMENT
OUTSOURCING PLAN TO
INCREASE ITS USE`
23% 90%22.5%
How can they overcome almost all of those?
OUTSOURCE!
© 2015 Xchanging plc
BENEFITS
Xchanging presentation68
ACCESS TO
EXPERTISE
ACCESS
TO BETTER
TECHNOLOGY
COST & SPEND
REDUCTION
STANDARDISATION
INCREASED
SCALABILITY /
FLEXIBILITY
1
3
54
2
BENEFITS OF
PROCUREMENT
OUTSOURCING:
© 2015 Xchanging plc
HOW WE MEET YOUR REQUIREMENT
Xchanging will support it’s customer in maximising value for money
Xchanging presentation69
Xchanging response to the challengesCustomer’s Challenges
Xchanging has a pool of 200 sourcing experts and 200 support staff to deliver
the projects. Looking for capacity
Our Strategic Sourcing team is composed of experts with 3 to 10 years of
purchasing experience.Expert advice
Through Xchanging document sign-off process and reporting, the customer
will have a full transparency and measurable efficiency of XchangingDemonstrable value for
money
During the transition, trainings and meetings will be organised to define and
agree on the best way of working together and the best purchasing
practice.
Ability to transform ways of working
Xchanging Customer will benefit from a single point of contact for the
requests and the follow up. Getting to understanding the
cultural environment
Xchanging has the capability to undertake strategic assessment to identify
opportunities as well as aggregate with our 30 customersInnovation, continuum
improvement
© 2015 Xchanging plc
METHODOLOGY
The model provides a methodological approach to sourcing, generating high
visibility & full control by our client
Xchanging presentation70
Sourcing processBenchmark and Data Collection
Identify opportunitySupplier negotiation/
Implementation
Xchanging process :
Strategic Sourcing
Lead & manage
procurement projects
Make
recommendations to project / steering
team / group and, Executive Team
Operational Sourcing
Agree cost baselines
Strategic Sourcing
Create plans
Operational Sourcing
Analyse current spend dynamics & potential
ways to drive down future costs
Strategic Sourcing
Procurement interface
Finalise and agree scope
Supplier briefings and
Q and A sessions
Review supplier proposals and agree
the most economically
advantageous supplier
Operational Sourcing
Select a range of suitable suppliers
Both
To prepare RFP documents
Strategic Sourcing
Develop a negotiation
strategy and lead/support
commercial negotiations
Lead/support transition plan for
services
Lead/support contract negotiation
and contract drafting.
Objective & Team alignment :
Contract Management
Strategic Sourcing
Lead/Support
centralisation of the contracts
Leverage existing contracts
Compliance management
Strategic Sourcing
Follow-up and track
savings
Monitor and manage
supplier performance
© 2015 Xchanging plc
CO-SOURCING DELIVERY MODEL
Xchanging presentation71
Customer
XchangingAccount manager
Project manager
Category experts
Category sponsor
Operational stakeholder
Finance manager
Legal resource
Finance
Category expertiseeSourcing
Implementation Compliance
Spend analysis
Customer
On-site:
Off-site:
The successful delivery of Co-Sourcing programmes requires skilled on-the-ground
resources, who can leverage their own off-site back office
© 2015 Xchanging plc
FIVE KEY SUCCESS FACTORS
Xchanging presentation to ACCA72
• Drive speed, efficiency and compliance
• Empowerment and accountabilityClear approval / sign-off authorities
• Make sure that everybody is pushing in the same direction
• Continuous improvement and innovationAlignment of interests
• Risk mitigation and upfront resource identification
• Crisp reporting and effective issues resolution
Rigorous governance and
transition planning
• Ensure positive momentum within the organization
• Steer compliance with the program
Strong Management Buy-In
at executive and middle levels
• Contributes to building trust
• Increases performance
• Flexibility, agility
Transparency
PROCUREMENT
OUTSOURCING &
CO-SOURCING
CASE STUDIES
© 2015 Xchanging plc
LEADING GLOBAL DEFENCE COMPANY
Xchanging presentation74
Poor spend visibility and data transparency
Inconsistent procurement functions and processes
Inconsistent supplier performance metrics and reviews
Erratic compliance to purchasing policy and preferred suppliers
Regionalised purchasing behavior diluting buying leverage
Challenges
Background This customer is a Fortune Global 500 and FTSE 100 company, is a defence, aerospace and security company with more
than 90,000 employees worldwide. The Group delivers a full range of products and services for air, land and naval forces,
as well as advanced electronics, security, information technology solutions and support services. They are the 2nd largest
global defence company with customers in over 100 countries generating an annual revenue of excess of GBP 19 billion.
Xchanging has independent contracts with the customer the US,
UK and Australia
Xchanging proposed a gain-share commercial model approach
enabling the customer to– focus their efforts on expenditure directly related to their core customer base
– increased confidence that their indirect spend is being
strategically managed
– benefit from a reduction in associated costs
– realise on-going sustainable savings, beyond those achieved in the initial
supplier negotiations
Xchanging also:– manage the implementation of new supply agreements
– manage and reports on spend and compliance
– works with sponsors and stakeholders to drive behavioral and cultural
change necessary
Solution
Total spend managed across US, UK and
Australia exceeds GBP 500 million
Expanded use of existing technology/
infrastructure and improved efficiencies
through the introduction of on-line web-
enabled tools
Aligned the sourcing process to fully understand
business requirements, create deeper category
expertise, and prioritise initiatives
Strategic category insight in developing
negotiation and sourcing approaches
Standardisation of specification, process and
supply consistently applied across all business
areas and locations while allowing for unique
local business-driven requirements
Improved savings tracking and visibility by
transparent calculations and reporting
Increased the percentage of indirect spend
under formal commodity management
Benefits
© 2015 Xchanging plc
MULTINATIONAL FOOD MANUFACTURER
Xchanging presentation75
Need to create momentum around uncontrolled spend
Absence of an effective procurement team for indirect categories
due to which the indirect savings target was not achieved
Business organised in silos with poor communication between
the countries
For every merger and acquisition, baseline had to be constantly
readjusted, in order to ensure that both parties were able to recognise
the mutual benefits of the business case
Challenges
Background This customer is one of the world’s pre-eminent branded snacks manufacturer. It holds strong number two position in its
core markets of the United Kingdom, the Netherlands, France, Belgium and Ireland. They also have a rapidly growing
international business unit serving consumers from North America to the Middle East, Africa, and Australia.
Initial Gainshare approach allowed client to avoid up front charges
and subsidise investment
Category expertise and language capabilities (French, Spanish
& Dutch)
Implemented Xchanging’s robust and proven Sourcing Xcellence
methodology for end-to-end Source-to-Pay process.
Flexible commercial mode -transfer from gain share to fee-based
commercial model to ensure better long term strategy roll-over
Solution
Preferred supplier compliance improved form
30% to 90%
Year on Year achievement of the service and
savings targets
Savings generated in the range of 20 – 25% as
validated by customer which impacted their
bottom line
Improved compliance to group policies and
activity tracking
Strong improvement of supplier management
and risk management for key commodities
Program allowed to break the company silos by
creating cross countries category communities
(Facilities Management & Marketing)
Benefits
© 2015 Xchanging plc
GLOBAL LEADER IN BEAUTY & HEALTHCARE PRODUCTS
Xchanging presentation76
Central functions like procurement have very limited mandate to
force compliance
Minimal historical experience of strategic outsourcing
Finding real experts for a wide range of disparate categories was
not easy
Measuring the benefits was proving to be difficult. The customer did
not have right expertise to handle transactions, it was a challenge
to ensure negotiated savings turned into bottom-line benefits
Challenges
Background This customer is the world's largest cosmetics and beauty company;
and is present in more than 120 countries worldwide.
Xchanging proposed a “co-sourcing” solution, that would combine
elements of consulting and outsourcing, with a strong emphasis on risk
and gain sharing
Xchanging would take line management responsibility. But there would
be no transfer of staff; instead, Xchanging team would work alongside
existing procurement staff
Xchanging would be engaged on a relatively long-term basis (3 years)
Solution
During the initial phase, savings in excess of GBP
3.5 million have been delivered over three
months, with a strong savings pipeline identified
While the initial implementation covers 5
European countries, there is a potential for
further extension around the subsidiaries
The additional focus and resource is enabled
customer to harmonise both specifications and
policies across indirect categories, which is
leading to benefits beyond simply lower prices
Baselining methodology provided by
Xchanging has also helped to get better spend
and specification visibility, and the reporting
processes gives on-going sight of consumption
and spend
The customer gained a consensus across 27
businesses and the project has delivered
measureable and validated bottom-line
savings and raised the profile of procurement
and outsourcing within the organisation
Benefits
© 2015 Xchanging plc
INTERNATIONAL PHARMACEUTICAL & BEAUTY GROUP
Xchanging presentation77
Fragmented spend and absence of clear visibility
Lack of a defined procurement process
Poor service levels by supplier
Control of operational procurement costs
Challenges
Background This customer is an international pharmacy-led health and beauty group. Many of their product brands hold market
leading positions in the UK and are growing fast in both profile and market penetration. They have close to 2,500 stores
from local community pharmacies to large destination health and beauty stores.
Mapped the current main buyers and procurement methods
Developed a panel of services which are easy to access and pay for
Development of centralised procurement process
Developed stringent KPIs to track supplier performance
Revamped the parking process and; tracked and reported the ageing
of invoices
Developed a discount refund tracker to address the issue of duplicate
discounts being refunded to the vendor
Solution
Managed spend in excess of GBP 520 million
Provision of fully leveraged/aggregated spend
whilst retaining customer specific
programme requirements
Customisation of Management Information to
drive compliance combined with policy
support and behavioural changes
Dramatic reduction in turnaround time for
invoicing exceptions
Huge improvement in the number of product
price and contract date queries answered
within an agreed timeframe
Increase in the percentage of ordering
exceptions closed within an agreed timeframe
10% increase in the Order Based
Invoice processing
31% increase in the Non-Order Based
Invoice processing
Benefits
© 2015 Xchanging plc
LEADING EQUIPMENT POOLING COMPANY
Xchanging presentation78
Poor spend visibility and data transparency
Existing procurement to pay process was having a negative impact on
customer’s reputation in the market (65% of agreed supplier payment
terms were 30 days or less, but actual payment average was 45 days.)
Poor process controls (estimated 50% of orders raised after the invoice
was received
Insufficient internal resource to provide a quality service to
internal stakeholders
Uncertainty whether they are getting ‘value for money’
Challenges
Background This customer is the global leader in pallet and container pooling services with a 34% share of global pallets market and
GBP 2.4 billion in annual sales per year. This group is operating in over 50 Countries with 7,950 staff and has 500,000
customer touch-points globally from its 744 Service Centres.
Xchanging agreed a contract with customer covering their 9 largest
countries in the region including the UK; Germany; France and Spain
Xchanging operate a gain-share commercial model approach
enabling the customer to fund Xchanging fees from the value delivered.
Xchanging deliver a full sourcing solution covering:
– Sourcing Expertise – access to a wide range of category specialists using
robust sourcing processes and benefits tracking to increase confidence that
their indirect spend is being optimised
– Effective Purchase Order Management – access to ‘back office’ excellence
with robust reporting capability and benchmarking against other customers to
drive sustained compliance improvements
Solution
Total spend managed across UK and
continental Europe in excess of GBP 58 million
By the end of the 2nd year of the contract,
spend addressability up to 80% resulting to
strong spend visibility and category strategies
implemented
In the 1st two years, sourcing demonstrated
savings in the range of 8 – 10 %
Process compliance has been driven from 50%
to a sustained position of over 80%
Delivered greater spend aggregation and
policy alignment across Europe
Introduced strategic supplier relationships with
critical vendors and initiated behavioural
change programmes to drive incremental
benefits for the customer and the supplier
Improved market insight and sharing of best
practice to allow customer to benchmark
performance against best in class
Benefits
© 2015 Xchanging plc
PO IMPLEMENTATION CASE STUDY:
LEADING BANKING AND FINANCIAL SERVICES FIRM
Xchanging presentation79
Net Revenue: ~GBP 1.5 billion
Industry: Retail banking
Countries of operation: Worldwide, European scope
Buyer details
Drivers
‘Orphan’ procurement team suffering from lack of direction and impetus
Sarbanes-Oxley compliance requirements with inadequate system controls
Desire from COO to transform and seize the initiative
Objectives
Generate significant bottom line savings
Transfer and develop employees
Seek better control, visibility, compliance and management of indirect spend
System investment to become SOX compliant
Drivers and objectives
Duration: Ten years (2006-2016)
Managed spend: In excess of GBP 160 million p.a.
Process scope: End-to-end source-to-pay
Category scope: All spend areas
Geographic scope: U.K. (90%) and C.E.
Delivery locations: Glasgow, Leeds & London (UK)
Contract details
Sourcing
Hybrid model of gain-sharing on realised savings and fees for mature category sectors These are linked to and category-specific SLAs.
Realised savings measured on actual price paid against a fixed baseline, at a subcategory level
P2P
Fee for service – subsidised by savings
Pricing construct
© 2015 Xchanging plc
PO IMPLEMENTATION CASE STUDY:
LEADING BANKING AND FINANCIAL SERVICES FIRM
Xchanging presentation80
A dedicated, joint programme team account manager on both sides to drive the implementation
Regular communications to the external andinternal stakeholders
Face-to-face relationship building
Key Learnings:
Gainshare approach allowed client to avoid up front charges and subsidise investment
Clearly articulate how the model will evolve with maturity
Demonstrable experience in P2P and sourcing
Sensitive management of employees and a clear career path for transferees
Be open and honest in dialogue with the team
Winning theme for Xchanging:
Oracle iProcurement deployed
SAS-70 Sox compliance achieved
40 employees transferred including smooth knowledge exchange
Sourcing and P2P processes optimised
Preferred supplier compliance improved form 25% to 85% & rising
Savings in range of 25 – 30 % validated and approved by the customer to date
Improved savings and activity tracking
Category Plans developed and delivered tothe customer
Compliance to the customers governance model –We are audited and have passed with flying colors every year to date
Results achieved (Meet Objectives):