© 2012 Ariba, Inc. All rights reserved.

BPC Advanced Webinar Series Sourcing Pro

Standard Sourcing Templates 101

2/13/2013

© 2012 Ariba, Inc. All rights reserved. 2

BPC Advanced Webinar SeriesStandard Sourcing Templates 101

Presented by:Ariba’s Best Practice Center (BPC)

Today’s Presenter:Mauricio Roveri

Sourcing Consultant

© 2012 Ariba, Inc. All rights reserved. 3

Overview• When you’re creating an event, do you

ever wonder which sourcing template is best suited to meet your needs?

• This session will take you through the differences between the out of the box templates, and how to make better decisions about what template to use and when to use them.

• It is expected that you are already somewhat familiar with the Ariba Sourcing Technology.

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Let’s start at the beginning…..how do you choose the right opportunity for eSourcing? Below are common questions you may ask...

Creating the Project - Selecting the right opportunity

Who are my suppliers?

Do I have my data and specifications ..... and are they accurate?

How soon can I award this business?

Will I have internal resistance to new suppliers?

How attractive is this business?

Can I expect any savings?

Is the business even available?

How well do I know this industry?

How strong are our incumbents?How much information do I need?

Will my suppliers be resistant to the new technology?

How much time do I have?

What is the risk?

How will success be defined?

These questions are not unique…buyers ask them anytime they need to address a basic business need

What are the gaps in my information?

How will my incumbents react?

What’s the best strategy for awarding the business?

The easiest and quickest method for selecting an opportunity for Sourcing is the use of the “Six C’s”

• Contractually Available• Commercially Attractive• Competitive Supply Base• Clearly Defined Requirements• Compressible Margins• Commitment

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Make sure your project meets all the Six C’s requirements

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Contract award is based on price alone

You as the buyer make the final award decision, and price is only one factor in that decision. The solution is designed to find market price.

Small businesses are placed at a disadvantage

Projects can be configured (i.e. lotted) in such a way to carve out parts of the business for smaller suppliers. You as the buyer make that decision.

Process works well for commodities but not complex goods or services.

The process has proven to be effective for most categories of spend… use the “Six C’s” as the litmus test for identifying projects

Myth Truth

When you consider projects for eSourcing, don’t be swayed by any of the following myths…..

Creating the Project - Selecting the right opportunity

The Sourcing Process

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The Two Phase Sourcing Process is Recommended for All Sourcing Projects

Sourcing Analysis

Request for Proposal

Preliminary MarketAssessment

Preliminary Plan

Initial Supplier List

Final presentation of requirements

Final Price and Performance Evaluation

Award Recommendation

Phase 1 Phase 2

Negotiate

Sourcing Analysis

Request for Proposal

Preliminary MarketAssessment

Preliminary Plan

Initial Supplier List

Present initialrequirements

Collect initial bids

Collect creative options

In-depth optionsanalysis

Short list suppliers

Determine Phase 2approach

Final presentation of requirements

Final Price and Performance Evaluation

Award Recommendation

Phase 1 Phase 2

Negotiate

RFP/Sealed Bid

Reverse Auction

Creating the Project:

Choosing the Appropriate RFx Type

© 2012 Ariba, Inc. All rights reserved. 10

Request for Information (RFI)

• Create a Questionnaire, gather supplier feedback and qualify suppliers based on their responses.

• Items/Lots can be created for informational purposes but pricing cannot be collected at this stage, only qualitative information.

• Buyers can weigh and grade supplier responses, and create an overall score for each supplier.

© 2012 Ariba, Inc. All rights reserved. 11

RFPs – Non-Competitive

Request for Proposal• Collect Pricing

Information through Line Items/Lots

• Contains the Essential Features to conduct most RFPs

• Buyers can weigh and grade supplier responses, and create an overall score for each supplier.

RFP with Total Cost• Contains features that

allow the buyer to additional cost factors (terms) which will calculate additions, subtractions, multiplications, on top of an Extended Price to calculate a Total Cost per line item/lot for each supplier.

© 2012 Ariba, Inc. All rights reserved. 12

Auctions - Competitive

Reverse Auction• Competitive and

Dynamic Bidding Event where suppliers compete for business

• Contains the Essential Features to conduct most RFPs

• Focused on Price• Time Compressed

Total Cost Auction• Contains features that

allow the buyer to additional cost factors (terms) which will calculate additions, subtractions, multiplications, on top of an Extended Price to calculate a Total Cost per line item/lot for each supplier.

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Request for Information (RFI)

“In order to make intelligent purchasing decisions, factors other than price must often be considered. The RFI enables you to create a questionnaire and assign preliminary scores and grades to each question.”

Request for Proposal (RFP)

“An RFP provides an efficient means of gathering competitive market and pricing information. RFPs provide a non-competitive negotiation format.”

Auction

“…is a dynamic online bidding session in which suppliers submit legally binding bids for business. Suppliers can receive feedback about others bids…..and can then adjust their own bids.”

Ariba Sourcing provides you with three event types to assist you in your buying decision

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Use the RFI type when:• You need additional information about the capabilities of the supply base.• You are anticipating a future need• You are not prepared to go to market because of incomplete data

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Use the RFP type when:• You may not be sure what you need and are asking suppliers to offer suggestion to include pricing• You want the option to award business now or in the future via auction• You know the supply base will reject an online auction

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Use the Auction type when:• There are clear indicators of a competitive landscape• You know what you want and can satisfy all Six C’s

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Event Process

Internal Practice Auction

Supplier Practice Auction

Spend Assessment

SourcingAnalysis

Initial Planning

Draft Phase 2 RFx

PublishRFx

Live BiddingEvent

Prebids

PostEventCommunication

Phase 1 RFx

• Phase 1 RFx• Execute Phase 1 RFx to determine Phase 2 approach• Draft Phase 2 RFx

¨ Construct RFX

• Internal Practice Auction¨ Test event settings with internal practice event

• Publish RFx¨ Publish event for supplier review and response

• Supplier Practice Auction¨ Conduct practice event to complete suppliers’ training

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Recommended Sourcing Process

Always focus on Total Best Value regardless of which sourcing approach is used.

The best buyers know which Phase 2 tactic to utilize and are skilled at executing that tactic.

Avoid negotiations after Phase 2 RFP or Reverse Auction. It undermines the effect of the competitive bidding process.

© 2012 Ariba, Inc. All rights reserved. 19

Wrap-Up• Questions and answers will be posted

on Ariba Exchange by close-of-business today

¨ http://exchange.ariba.com

• Help us improve this offering¨ You’ll be prompted at the conclusion of the

webinar¨ 10-question multiple-choice survey

• Please join us for our next sessions:¨ February 27th, 2013 @ 2:00pm ET – Working with

Notifications (Sourcing & Contracts)¨ February 28th, 2013 @ 9:00am ET –

Administration Best Practices (Sourcing & Contracts)

Follow Up on Ariba Exchange• To sign up for Ariba Exchange:

¨ Go to http://exchange.ariba.com/welcome ¨ Click on the “Register” link, and enter your

email address to begin the quick and easy registration process.

¨ Access the Community on the left-hand side of the screen for the product you are interested in to see what other customers are saying, and to ask questions and interact.

¨ Use to tag of “BPC_Webinar” in any of your posts. We will do the same with any follow up, making it easy for you to use the search term “BPC_Webinar.”

© 2012 Ariba, Inc. All rights reserved.

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The BPC and Your Company

• Subscribers to Ariba’s Best Practice Center gain access to experts consultants like your presenter today and get strategic advice and guidance on getting the most out of your Ariba solutions when you need it.

• Customers Subscribing to the BPC can access additional Advanced Webinar Recordings via Exchange. Topics include:

¨ Administrative Features: Enumerations and Mass Edit¨ Administrative Features: User Management, Data Imports

and Exports¨ Contracts: Preparing the Main Agreement: Document

Preparation, Cleansing and Styles¨ Contracts: The Contract Request Process¨ Sourcing: Matrix Pricing¨ Sourcing: Custom Offline Response Sheet¨ Many more topics on the way!

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The BPC and Your Company

For more information on how the BPC could have an impact at your company, contact your Customer

Engagement Manager.

If you are currently a BPC subscriber, ask your BPC

Representative or your Customer Engagement Manager about how

to access these recordings.

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