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Strategic Sourcing &E Procurement for ASEAN Purchasing ProfessionalsBill KohnenPASIA Conference October 2015
ASEAN As a region already among the biggest
Growth rate in total larger than all others
Shift to consumer of large portion of global GDP
Exports will remain important but shift to regional demand
ASEAN regional demand is diverse itself
ASEAN skill base will need to evolve
Transformation From Offshoring ModelArbitrage labor costs by using lower-wage workers in developing nations
Liberalization Economic policy
Capabilities of emerging-market suppliers and workers
Transfer proven management processes to new locales
Transportation and Communications economics and capabilities
As wages and purchasing power rise in emerging markets, their relative importance as centers of demand, not just supply, grows.
Next Shoring Proximity to demand
More than two-thirds of global manufacturing activity takes place in industries that tend to locate close to demand
Proximity to innovation
Adapt products to different regions
Utilize emerging technologies that could disrupt costs and process
New supply ecosystems a differentiator
Network of innovation-oriented partnerships, and a strong focus on technical skills.
Where will skills come from? Grasp the productivity potential of a range of new
technologies
Have enough ground-level knowledge of local markets to influence product strategies and investment trade-offs.
The ability to build external relationships to develop vibrant, sophisticated supply ecosystems—will also be a source of competitive advantage
US, Europe, China, Japan …..Existing skill sets focused on export oriented outsource modelM or F
ASEAN Purchasing Solution Still Developing
Strategic Sourcing
E Solutions
ASEAN Purchasing Model
TRAN
SFOR
MAT
ION
Strategic Sourcing Basic Process
Spend Analysis
SourcingRF(x)
NegoContract
Supplier Mgmt.
Typical Solution
Spend Analysis Sourcing Contracts Catalogue Network Transaction Pay
• Cloud Based• Subscription• Little Differentiation• Tactical Modules more defined• Only Sourcing has delivered any real value
CPO FORUM DISCUSSION HMB RITZ CARLTON JUNE 2015
Purchasing Sits at a Busy Intersection By its nature purchasing deals with virtually all departments
Purchasing directly touch's 50% of the organizations total revenue
At each interface point it seems there is a software solution to interface with that has different characteristics (enterprise, homegrown, cloud based, proprietary, legacy commercial etc…)
The 40 or more interfaces create Strategic and Operational Challenges yet do not necessarily result in improved performance for purchasing.
CPO FORUM DISCUSSION HMB RITZ CARLTON JUNE 2015
“SHORT LIST” OF THE 40+ SOFTWARE SOLUTIONS PURCHASING PROFESSIONALS USE
ERP System Corporate Data Warehouse Corporate Analytic Solution Planning System MES CRM Best of Breed Purchasing Solution(s) Spend, Contract Management,
Sourcing, Catalog Management E Signature System IT Tracking System Service and Hardware Inbound Freight Tracking System Supplier Punch-out and normal websites MS Office HR Employee Portal including punch outs for 401 And benefits External Work related social media sites (Linked In, Professional Orgs) Inventory System Internal QA system Field Support Systems
Internal resource website for Marketing Templates, Presentation Info, company news
Synchronized Email to personal Mobile device Corporate travel booking tool On average 3 personal Aps that also are relevant to work ex.
Maps, currency, business news feeds Customer Support tracking system for key suppliers P Card System Travel and Expense Card System Accounts Payable System Invoice Tracking/Supplier Payment System Internal Expense Reporting System Share point Department Shared Files Document Control System Purchasing Transaction System Key Supplier hosted sites Corporate Social Responsibility reporting internal and external Purchase Request Systems Internal KPI reporting systems Video Conference Phone Conference
Traditional Purchasing Tech Choices
Manual ERP System Enterprise Solutions Internal Development Hosted Cloud Based Shared Service / BPO
Vision and Solution
Vision Strategic Innovation Integrated Mobile Insightful Decision
Making
Solutions Tactical Digitizing old practice Modules ERP on the web Excel spread sheet
“Pie in the sky”
Spend Analysis Sourcing Catalogue Transactional Pay0
2
4
6
8
10
12
Purchasing Professional Value vs. Solutions Capability
Purchasing Value Solution MaturitySolution Provider Interst
ISM SV Bill Kohnen July 21 2015
SPEND ANALYSIS IS THE TOP TOOL FOR A CPO
CPO CHALLENGES
• MORE
• SPEED
• GROWTH
SAVINGS
• 2% NOW
• 10% MONTHS
• 30% POTENTIAL
BENEFITS
• TRANSPARENCY
• BASELINE
• ORGANIZATION
TECHNOLOGY
• HELPS
• CLOUD SaaS
• ROI of 10X
IN PRACTICE FEW ORGANIZATIONS HAVE THE CAPABILITY TO CONDUCT A COMPREHENSIVE SPEND ANALYSIS
WHY AFTER OVER 100 YEARS OF CORPORATE PURCHASING IS SPEND ANALYSIS NOT WIDESPREAD
• HARD TO GET• DISPERSEDDATA
• PEOPLE• TOOLSRESOURCES
• SHARING DATA• REVIEWINGCOLLABORATION
PROJECT • NON REPEATABLE EVENT • STATIC RESULTS
ISM SV Bill Kohnen July 21 2015
SPEND ANALYSIS Technology Not The Answer So Far
TECHNOLOGY CONSTRAINTMAINFRAME Access to Data
No User InterfaceCLIENT SERVER/NETWORK Data Further DispersedERP Access to Data
Poor AnalyticsMS OFFICE SUITE Start to Analyze Data
Driven by Strategic SourcingCLOUD SOLUTIONS Security
Process and Capability
EVEN WITH IMPERFECT DATA YOU CAN START THE PROCESS AND GET IMMEDIATE VALUE FROM SPREADSHEETS
ISM SV Bill Kohnen July 21 2015
Spend Analysis Cloud Solution
What Does this Mean:
• You will provide raw spend data in any format to the solution provider who will transform the data into meaningful views.
• Solution provider delivers the service via an internet connection so no hardware is needed
• Implementation is measured in weeks
• Complete ROI should be achievable in 6 months or less
• Repeatable Process
Questions TO ASK
Data Acquisition
• Formats• Data Prep
Data Processing
• Automated• Proprietary
User Experience
• References• Configurable
Product
• Standalone• Information
Security
Implementation
• Time• Professional
Services
• ULTIMATELY USER EXPERIENCE WHICH IS VIEWING MEANINGFUL OUTPUT IS MOST IMPORTANT
• TO BEST DETERMINE CAPABILITY HAVE PROVIDERS RUN A DEMO USING A PORTION OF YOUR DATA
Solutions Have Challenges Enterprise “powers” are behind and know it
Really are introducing new products Newer Solutions providers do not have deep
subject knowledge Really little differentiation Adoption is the key metric Basic things still challenges
Supplier On boarding Document Output Auto close of purchase orders
Choice is who do you ant to start journey with
What to Look For Ideal Social Media Real value from IoT Real Mobile Access Easy Data Analytics Effortless Transactions Single data sources Optimized for you
“BEST PRACTICES” DO NOT CREATE SUSTAINED VALUE
Formula For Sameness
Risk Averse
Efficiency
Commodity
Best Practice
Best For Company
Learning
Innovation
Value
Unique Practice
WEALTH IS CREATED BY INSIGHT TO DIFFERENTIATE WITH DISTINCTIVE PRODUCTSSummary of Thoughts Presented by Jules Goddard at Nudgestock2
ASEAN Based Purchasing Professionals Strategic Sourcing and E Commerce are important and
will be increasingly important because of regional growth driven by local demand
Skills needed are unique and not what is being practiced in BPOs, shared services organizations or purchasing outside of ASEAN
Merge high end strategic sourcing, regional knowledge and e commerce B2B solutions that meet needs in ASEAN countries not ‘off the shelf” western tool.