Improve your P2P Performance with Guided Procurement Systems July 30, 2014 Richard Waugh, VP, Corporate Development, Zycus Scott Fitzgerald, Director of Procurement, The Mentor Network Sponsored by: 1 Presenter Bio – Richard Waugh VP Corporate Development Zycus Inc. Richard Waugh, VP Corporate Development at Zycus, has an extensive background in B2B E-Commerce, going back to his early career at GE, where he helped launch GE'S Trading Process Network (TPN), the first on-line Marketplace for Sourcing and Procurement in the mid 1990's. He was Co-Founder of B2eMarkets, one of the first SaaS (Software as a Service) Sourcing Suite providers and later covered the Supply Management market as an Industry Analyst for the Aberdeen Group.. Presenter Bio – Scott Fitzgerald Director, Procurement The Mentor Network As Director of Procurement for The MENTOR Network, Scott overseas the Procurement organization and all third party supplier relationships for MENTOR’s 27,000 employees and 2,700 locations across 34 states. Since joining the Network in 2012, Scott has been reengineering and reorganizing the Procurement function from a historically transactional based compliance function to a strategic business partner to all of Mentor’s operating units. Scott has over 20 years’ experience as a professional procurement and business leader. His expertise includes strategic sourcing, cost control and containment, supplier management, contract management, process improvements, organizational development, training and technology/best practices. Scott has held Procurement and Strategic Sourcing leadership positions at Bank of America, Leerink-Swann, Houghton-Mifflin, MetLife, Pioneer Investments, Genzyme Corporation and Fidelity Investments. Scott holds a BS in Industrial Management from Georgia Tech, an MBA from Suffolk University and an MS in International Economics from Suffolk University. In addition, Scott is a Lifetime Certified Purchasing Manager (C.P.M.) and holds a Six Sigma Green Belt with Lean certification. Agenda P2P Goals: A Balancing Act A GPS (Guided Procurement System) for P2P Happy Path Detours The Case for Guided Buying P2P Case Study and Interview - The Mentor Network Q&A P2P Goals: A Balancing Act Objectives Requisitioner • Right items/services from right suppliers From ‘Preferred Supply’ Get What You Need P2P • Right processes Procurement Supplier • Right resources and operating model Efficiently (for all) • Right tools ‘Safely’ (i.e., with controls) Finance, IT 5 Make P2P More Like a GPS – Guided Procurement System • • • GPS enables mobile, social, Internet of Things (IoT), etc. An Amazon experience is “necessary, but not sufficient” So, how to apply to B2B? Some common traits: – – – – – • • • Mobile. (Android, iOS, etc… ‘App’ or browser-based) Global. Multi-lingual, multi-protocol (e.g., GSM vs. CDMA) Intuitive. Simple walk-up UI, and engaging (maybe even fun ) Multi-channel (or ‘omni channel’). Tied to the physical world Smart. Keeps getting smarter, more relevant, more predictive Know who you are: Personalization (tracking; third-party content; metadata) Predicts what you are looking for and/or trying to do Tries to help/guide you with relevant recommendations 6 Applying B2C to a GPS-enabled P2P “Moment of Truth”… SOURCE (strategic or tactical) • • • Employee Needs Something Search for Supply BUY (Req/PO/Re ceipt) PAY (invoicing & payments) Knows who you are: Roles, permissions (items, categories, suppliers, $ limits, functionality, etc.) Predicts: Starts with auto classifying your need and type of supply/spend, and then not just pushing you to catalog, but to suppliers, existing supply, internal/external resources (e.g., ‘buying desk’)…via the right tool Tries to help and guide you, with relevant recommendations. If not relevant, the System (big S) must learn why to improve the Supply itself - or the guiding process/technology that takes you there 7 P2P Process – The Happy Path Requisition Buy Transmit Catalog Auto Workflow “Touchless” PO xCML/EDI/Port al Pay Approve Invoice Receive EFT/P-Card Auto Match (3 or 2 Way) E-Invoice Goods Receipt P2P Process – Happy Path Detours The Guided Path Top Performers - On Catalog 50% Off-Catalog/On-Contract 40% 30% 77% Off-Catalog Spend for Top Performers 94% Off-Catalog Spend for Others 20% Transaction s 42% 23% 10% 0% Transactions % Negotiated Cost Reduction Lost Due to Maverick Buying The (Buyer) Guided Path Off-Catalog/Off-Contract Spend Significant Maverick Buy Potential 6x More Lost Savings for Worst Performers Bottom Quartile Peer Group 1.6% Top Quartile 3.9% World-Class 4.6% Peer Group 9.6% Bottom Quartile World-Class 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% The Bread Crumb Path No PO Invoices Higher Non-PO Indicates Less Control 1 in 5 are Non-PO for Even Top Performers % Non-PO Transactions 38% 40% 30% 21% 20% World-Class 10% Peer Group 0% World-Class Peer Group Source: Hackett Group Procurement Benchmarks The Case for Guided Buying Drive Compliant Spend and Process for Total Indirect Spend Steer Users to Approved Suppliers and Buy/Pay Channel Simplify User Experience to Increase Adoption Achieve World-Class P2P Performance Leverage Accurate Item-Level Spend Visibility The Mentor Network Case Study Building Relationships. Enhancing Lives. Founded in 1980, The MENTOR Network is a national network of local health and human services providers. We proudly serve people with intellectual and developmental disabilities, children with emotional and behavioral challenges, people with medically complex conditions, and individuals with brain and spinal cord injury. Our services are designed to help people facing a range of challenges lead full lives in the community and include: Local Touch, National Reach With programs located throughout the country, we are able to provide personalized supports to individuals in the communities they call home. States with The MENTOR Network programs Our Partners Partners of The MENTOR Network work together to provide a continuum of care and include: Our Commitment We are dedicated to helping people of all abilities reach their full potential. To learn more about The MENTOR Network and how you can make a difference, visit us at: www.MakeaDifferenceatHome.com About Background • No assigned commodities • 30 Contracts Under Mgmt • $200M Addressable Spend o $36M Spend Under Management (SUM) – 16% o $2.5M Savings • 24,000 Purchase Orders processed annually o 18,000 Requisitions • 528,818 Accounts Payable payment transactions annually • 6,000 P-Cards Yr1 Strategy • Reorganized staff by commodity, LOB • 110 Contracts Under Mgmt o New contract database • $200M Addressable Spend o Currently $60M Spend Under Management (SUM) – 40% o $3M Savings Target – Actual: $7M o Target incremental 45% SUM (25% Catalog and 20% offcatalog) Next Phase: P2P Replacement First Generation P2P Challenge CURRENT ORACLE IPROCUREMENT ENVIRONMENT • Server Based - Network A structured feedback loop is not in place to generate valuable inputs to the category strategy reevaluation process. access required • Lacks Ease of UseFormal Training Required, Not intuitive • Long lead times (2 mos.) for catalog on-boarding - IT Resources Required • Licenses based on company revenue o Contractors do not have access to Oracle • It has been estimated that about 20% of total spend is coded with incorrect GL accounting codes, resulting in inaccurate spend categorization. Workflow changes require formal IT SERF There are no tools in place to actively monitor spend trending over time. Pain Points The current spend analysis process does not include vendor name normalization prior to categorization. Quarterly business reviews appear to be focused on a review of statistical information rather than measuring supplier performance and value-add opportunities. Poll Question What is the greatest challenge your organization has faced with P2P? a) Low user adoption b) Inability to gain compliance on majority of spend c) Lack visibility to accurate spend transactions d) Long lead times for supplier onboarding e) P2P model not scalable Guided Buying – Search What Users Want? Search One Stop Shop Auto-classifies search term and suggests relevant category to ensure proper categorization and relevant search results Multiple Search Options (Category, Keyword, Supplier, Part #) View Item details with rich product images Guided Buying – Selection What Users Want? Selection Filter results by price, supplier, manufacturer, etc. Steers users to preferred, approved vendors and highlights diverse, or green vendors & products. Compare products side-by-side with long descriptions, attachments and specifications, ratings and reviews or certifications Guided Buying – Navigation What Users Want? Navigation Guidance to find and order services or nonstandard products not available in catalogs Menu of guided e-Forms for off-catalog requisitions instead of blank, free-form requisitions Guided Buying – Specification What Users Want? Specification Remove guesswork and eliminate keystrokes for catalog AND “free form” requisitions Guided form, wizard interface to prompt for required attributes and specifications if “offcatalog” service or configurable product Eliminate back and forth with buyer which delays process for getting the required service or product Guided Buying – Express Checkout Default accounting, category, shipping/billing from user profile Allow editing at line item level to update default values on exception basis or split accounting or delivery What Users Want? Express Checkout Auto-classify to correct category code, invoke category-specific workflow, map to GL account and default ship to/bill to from profile Guided Buying – Visibility Budget*: $371K Overall consumption: Your consumption: Split across budgets Acme Aviation > Microchips What Users Want? $606,000 (61%) Details $ 1,500 $ 950 Visibility Preview workflow approval process Display graphical workflow process and dynamically update if cart changes trigger spend or category-specific approval thresholds Budget utilization feedback In-process approval status updates Guided Buying – Mobility What Users Want? Mobility Provide feedback if rejected or comments if more information is needed for approval Review, approve or reject requisitions from e-mail on smart phone device without logging into e-Procurement application Current Status • Phase I: “Soft Launch” o90 Users/Approvers from all LOB’s o40 Suppliers – 3 punch-out catalogs o Payment Methods: Check, EFT, Card o Oracle Integration Payment feed to Oracle Cost Center feed from Oracle o Full workflow o Custom Reporting • Full Rollout Q4 2014 Q&A/Contact Info For more information, please contact: Scott Fitzgerald Director of Procurement The MENTOR Network firstname.lastname@example.org Richard Waugh, VP Corporate Development Zycus Inc. Richard.Waugh@zycus.com Thank You for attending this Web Seminar!