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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.
Copyright © 2012. CombineNet, Inc.
Best of Breed E-Sourcing Solutions
Copyright © 2012. CombineNet, Inc.
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
Copyright © 2012. CombineNet, Inc.
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
Copyright © 2012. CombineNet, Inc.
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
Copyright © 2012. CombineNet, Inc.
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
Copyright © 2012. CombineNet, Inc.
70% of CombineNet’s customers
use us alongside
Ariba, SAP, Oracle, or other suites.
Why?
Copyright © 2012. CombineNet, Inc.
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)
Copyright © 2012. CombineNet, Inc.
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.
Copyright © 2012. CombineNet, Inc.
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.
Copyright © 2012. CombineNet, Inc.
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.
Copyright © 2012. CombineNet, Inc.
Trick or Treat?: Achieving Your Strategic Sourcing Goals
Copyright © 2012. CombineNet, Inc.
Establishing Goals for E-Sourcing
Let’s get back to basics: What do you want to accomplish?
Top Goals for E-Sourcing
Copyright © 2012. CombineNet, Inc.
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
Copyright © 2012. CombineNet, Inc.
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
Copyright © 2012. CombineNet, Inc.
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
Copyright © 2012. CombineNet, Inc.
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
E-Sourcing Shortcomings
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
Copyright © 2012. CombineNet, Inc.
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
Copyright © 2012. CombineNet, Inc.
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
E-Sourcing Shortcomings
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
Copyright © 2012. CombineNet, Inc.
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
Copyright © 2012. CombineNet, Inc.
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
Copyright © 2012. CombineNet, Inc.
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
Copyright © 2012. CombineNet, Inc.
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
Copyright © 2012. CombineNet, Inc.
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
Copyright © 2012. CombineNet, Inc.
Copyright © 2012. CombineNet, Inc.
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.
Copyright © 2012. CombineNet, Inc.
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
Copyright © 2012. CombineNet, Inc.
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
Copyright © 2012. CombineNet, Inc.
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”
Copyright © 2012. CombineNet, Inc.
Thank You. Questions & Discussion
Copyright © 2012. CombineNet, Inc.
www.combinenet.com [email protected] Phone: 412-471-8200