CombineNet Webcast: 2013 Resolution for Creating Win-Win E-Sourcing Solutions with Suppliers

Welcome!

Copyright © 2012. CombineNet, Inc.

Agenda

© 2012 CombineNet, Inc.

Jennifer Sikora, VP of Marketing, CombineNet

– A Brief Company Introduction

– Putting Yourself in Your Suppliers’ Shoes: The Results of Traditional E-Sourcing Approaches

Greg Holt, Director of Product Marketing, CombineNet

– 2013 New Year’s Resolution: Using Advanced Sourcing to Engage Suppliers

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.


Best of Breed E-Sourcing Solutions


Supporting End-to-End E-Sourcing for All Spend Categories with Advanced Technology Solutions

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.


Some of CombineNet’s Customers

Industry Leaders in Manufacturing, Transportation, and Retail


http://www.maersk.com/

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


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

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2010 2011 2012

Customer Example #1: $ Billion in Spend Managed Annually


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 business locations in sourcing events

Estimated 225% Increase in Spend under E-Sourcing Management in 2 Years –

most run in CombineNet.

Ariba/SAP CombineNet

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2010 2011 2012

Customer Example #2: $ Billion in Spend Managed Annually


The Results of Traditional E-Sourcing Approaches


Putting Yourself in Your Suppliers’ Shoes

An Abridged History of E-Sourcing (A Supplier’s View)


Face-to-Face Negotiations Reverse E-Auctions E-RFPs

The Technology

The Result

Live, Relationship-Driven Negotiations

The “Good Old” Days

Different circumstances led to different negotiation strategies, but enabled buyers and suppliers to:

– Discuss new ideas & explore options

– Introduce innovative products or services

– Negotiate to find common ground that achieved a positive outcome for both parties


The Introduction of Reverse E-Auctions

The rise of the E-Auction in the late ‘90s created pain for buyers and suppliers alike.

Suppliers, hammered on margin reductions, lost all hope of total-value-based decisions

Participation began to drop, especially by incumbent suppliers

Lotting strategies limited smaller suppliers; suppliers hedged their bids on lots

Suppliers felt commoditized, not part of the team

Long-term relationships were damaged


Growing Adoption of E-RFPs

Provided a means to ease the hammer of E-Auctions, but still leverage the automation and scale of Internet technologies.

An improvement over E-Auctions, as (limited) non-price considerations are included

The flexibility and creativity of personal negotiations still not captured

Rigid structure means suppliers have to shave Square pegs to fit into Round holes; whittling away potential value they could introduce to buyers


Re-engage Suppliers for Win-Win Solutions


New Year’s Resolution

E-Sourcing Resolutions Your Suppliers will Love!


“I will evaluate suppliers on the total value they bring to my business.”

• Unique capabilities, strengths, advantages over other suppliers.

• Relationships and history.

• Potential risks (financial, legal, geographical, etc.).

“I will encourage suppliers to bring creativity, innovation and efficiency to my business.”

• New product introduction and differentiation.

• Supplier efficiencies roll into supply chain efficiency.

• Favorable terms and conditions.

“I will provide suppliers with guidance and feedback to better participate in my E-Sourcing process.”

• Pre-event communication.

• Completeness of RFI/RFP response & areas to focus attention.

• Competitiveness of Bids on Price and Non-Price factors.

• Suggestions on creative offers.

Help from Advanced Sourcing Technology


CombineNet Can Help you Keep Your Resolutions

Encouraging Supplier Innovation and Creativity

CombineNet ASAP’s Expressive Bidding® enables suppliers to plug holes with pegs of all shapes

and sizes to put their best foot forward.


Unbundled Bidding Each item is treated as a separate line item in your RFP, letting suppliers pick and choose which business they want to compete for.

Non-price Factors Any non-price bid & item information, including supply capacity, lead times, service

levels, product specifications, inclusive of the RFI. Alternate Offers Allow suppliers to propose alternates to your item specifications based on their

capabilities or production efficiencies: Materials, production processes, service levels, price structures, lead times, equipment, etc.

Conditional Offers If/Then proposals that reflect supplier business strategies, offering volume discounts,

rebates or tiered pricing on items based on unit volumes, percentages, or $$ in awarded business, for any combination of items.

Package Offers Discounted, supplier-defined bundles or lots of items based on their business

strategies.

Providing Supplier Guidance and Feedback

CombineNet’s Expressive Feedback drives supplier collaboration and guides more strategic competition in RFPs & E-Auctions.

Encourage strategic, more competitive responses

Provide expressive, timely feedback to suppliers based on a combination of price, cost drivers, and overall value to your organization

Guide more complete and strategic responses


Evaluating Total Supplier Value

CombineNet’s Optimized Scenario Analysis helps you capture and evaluate more supplier information.

Evaluate supplier strengths, capabilities, risk profiles, and other business information alongside their proposals – Optimization-enabled Bid Analysis – “What if?” scenarios consider

unlimited Price and Non-Price factors for a Total-Value picture of award options

RFI-linked Scenario Analysis – Ask suppliers anything, and evaluate their RFI responses directly in scenario analysis

Supplier information (from SIM, SPM, Contract Management, other systems of record) easily evaluated in scenario analysis



Examples of Supplier Win-Win in Action

Case Study: Fleet Vehicles

Tapped vehicle manufacturers and leasing companies for total-value proposals

– Vehicle fuel economies

– End-of-contract damage costs

– Financing charges

CombineNet replaced spreadsheet-based approach

Results:

– 10% + cost savings

– $4 M in OEM rebates

– 5% reduction in lease prices

“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.” – 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 Facts

27 cost elements

Quarterly price changes

2 million price points

Schindler mobility solutions move one billion people every day.


Case Study: European Truckload

“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

CombineNet allowed them to consolidate lanes across all regions, creating a better overall picture of what was available for suppliers/carriers:

– Encouraged carriers to pick and choose which transportation lanes to bid on

– Enabled carriers to leverage their assets to best meet SABMiller’s needs with Packaged Bids and Conditional Offers

Using CombineNet’s Expressive Feedback provided carriers with guidance on their competitiveness during bidding

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 Facts


Case Study: Product Labels

Product Labels for Consumer Packaged Goods Company

CombineNet allowed them to:

Consolidate Labels specifications and spend across multiple countries and brands

Encourage suppliers to differentiate their abilities with multiple cost components and alternatives

– Paper grades

– Conversion alternatives based on volume forecasts

– Tooling information and capabilities

– Freight options

– Payment terms

80 Label Types

15 Suppliers

$13.5 Million spend

Multiple countries

Key Facts


Results

Rationalized suppliers based on unique capabilities to support product lines and geographies

What Next?

Learn more about the power of Expressive Bidding and Expressive Feedback to drive win-win solutions with Suppliers

– White Paper: “Expressive Feedback – A Collaborative Sourcing Edge over Conventional RFPs & Reverse Auctions”

Found under the Resources tab on the Webinar console


http://www.combinenet.com/resource-center/whitepapers/expressive-feedback.php





Thank You. Questions & Discussion


www.combinenet.com [email protected] Phone: 412-471-8200

mailto:[email protected]

