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Yolanda van Norden
Senior Director Procurement
October 23, 2014 | Amsterdam
Procurement Transformation A story of a learning journey
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Before we start… Introducing…
• Yolanda van Norden, Senior Director for NPR
Procurement at ASML
• Over 15 years of experience in global
Procurement roles at ASML, NXP
Semiconductors and Philips Electronics
• Fascinated by Indirect Procurement, and the
potential value usually ‘locked’ within the
organization
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Before we start… Introducing…
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Chips are everywhere….Part 1
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It’s hard to imagine a world without chips 5
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More than 180 billion chips are made every year 6
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IC units (in billions)
• Chips produced in 2012
185 Billion
• Chips per every Man, Woman and child 27
• Global Semiconductor Industry Sales
$300 Billion
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Introducing ASML….Part 2
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ASML makes the machines for making
those chips 8
• Lithography is the critical tool for
producing chips
• World’s top chip makers are ASML’s
customers
• 2013 sales: €5.2 billion
• Payroll: 10,000 FTEs
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Founded in 1984 as a spin-off from Philips 9
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A Global presence © 2014 Ariba – an
SAP company. All
rights reserved. 10
2,522 employees
Source: ASML Q4 2013
Over 70 Sales and Service offices located worldwide
5,654 employees
2,184 employees
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Our procurement journey …. Part 3
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Indirect procurement spend vs ASML’s turnover Public
Slide 15
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ASML’s indirect spend is split over all regions Public
Slide 16
77%
13%
10%
• Highly consolidated spend in
Veldhoven region
• Except for Logistics, our spend
is relatively local per category
• Relatively low and dispersed
spend per country
• Low spend per supplier
• Limited leverage possibilities
• Volume is relatively local per
category (except logistics)
• Relatively low and dispersed
spend
• Low spend per supplier
• Limited leverage possibilities
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Where were we with indirect procurement three years ago?
Benchmarks 2011
Conclusion: Good potential for improvements
Procurement strategies
were incidental
No strong market insights
and deep understanding of
business drivers
Control of spend was
fragmented; organized as
check at the end instead of
directing spend in controlled
ways
Value add was consistent
and just below market
averages (2%-4%)
Supplier consolidation is at
par with market (4%)
Managed spend per
procurement employee is
very high compared to
market
In 2011
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Our intent is to build a High Performance Indirect
Procurement organization
Strategic alignment with the ASML business and
stakeholder needs
Cross-functional partnering to drive category strategy
management processes
Reduced complexity in processes, and
supply base standardization of R2P processes
Standardized technology and tools used within
procurement processes
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We assessed our maturity status
Assessment
Factor
Best Practice Score
1 2 3 4 5
Strategy &
Organisation
Business
Engagement &
Functional
Excellence
Strategic
Sourcing
Category &
Supplier
Management
Purchase
To Pay
People &
Skills
Measurement,
Policies,
Controls &
Compliance
Systems,
Data & Metrics Own Efficio assessment
ASML Readiness
• Trust the Procurement team to use all levers
Team Readiness
• Capability to professionally use all levers
Resources
• Capacity to manage all spend globally
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The Change Program
Business alignment
Processes
People
Strategic NPR Work stream
Operational Excellence Workstream
Category Strategy
• Stakeholder needs
• Supply market dynamics
• Product portfolio
• Category specific targets
Strategy implementation
• RFI, RFQ
• Negotiations & contracting
• Contract implementation
Operational fulfillment
• Requisition to pay
• KPI management
• Supplier performance management
• Contract management
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The transition impacts both the own team as well as the way
we interact with our stakeholders
To
Strategic category management
Business value add KPI’s
Solution focus
Stakeholder centric procurement
Process & Service orientation
From
Tactical Procurement
Procurement KPI’s
Responsibility focus
Managing stakeholders
Task orientation
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Our action plan
Thorough analysis of spend
Set-up cross-functional teams for all main categories
Set-up strategies for all major spend categories
Investment in team in all regions
Improved alignment with Control to ensure recognized value add in P&L
Started a transformation project on the operational requisition to pay
process (EasyBuy)
Public
Slide 22
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We decided to measure our efforts by using the following
metrics Public
Slide 23
Strategic Workstream Then
Savings Below
benchmark
Return on Investment At benchmark
Spend covered by a
contract
Above
benchmark
Consolidation Benchmark
% Spend covered by
an approved strategy
Below
benchmark
Operational
Workstream
Then
Catalog orders Below
benchmark
% of e-invoicing Below
benchmark
Spend covered by a
PO
At benchmark
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Our journey starts…. Public
Slide 24
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A mission helped to clarify the new organization's purpose Public
Slide 25
To deliver recognized added value to its stakeholders and the ASML
business by pro-actively driving a cross-functional category strategy
approach
Translating market opportunities into valuable business propositions
Enabling easy buying methods for ASML
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Our Procurement Journey was clarified to our stakeholders
with defining our ‘product’ Public
Slide 26
Our key tasks Strategic value add Tactical procurement Operational fulfillment
Business offering Expertise Process Service
# Stakeholders Very limited: executive mgt More: budgetholders and
up
Many: everyone who can
order stuff
Key care-abouts Support / enable business
strategy
Do the work – secure
delivery of service on time
(and cost)
Quality of service –
reduced complexity and
red tape
Our promise “We know the market, and
can help trigger change”
“We deliver a professional
process any way you like
it”
“We answer any
procurement question you
have”
Our delivery model Procurement & Category
Consultancy – Cluster
managers
Procurement Account
managers -
Anyway you like it
Helpdesk: EasyBuy, email,
telephone
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The Operational Procurement challenge Public
Slide 27
Reduce bureaucracy By steering purchases into the most appropriate and efficient buy-channel
By eliminating “double’ approval loops from contract to requisition
Improve stakeholder satisfaction by a faster procurement process
Improve control on spend by improving the procurement
involvement earlier in the buy-process
Improving the “closed loop” of contract to requisition to order to
deliver to pay
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The Operational Challenge translated into the following
goals Public
Slide 28
Simple and efficient ordering, invoicing & payment process
Substantial reduction in process time reduce with 50%
Minimal manual handling & interventions 30% - 40% hands
free buying via catalogues, templates, and scheduled ordering
< 20% paper invoices
Pushing spend through the right channels and reduce the
alternatives for users Procurement at the start of the process
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Why we choose for Ariba Public
Slide 29
Functionality:
categories
e-Invoicing
NPR & PR
Process:
Authorization
Reporting
Master data
Integration
Interfaces
Architecture
ASML adjustments
Ease of implementation
Implementation
Team and set-up
Planning
Financials & Contract:
Implementation costs
Recurring costs
Business case
Contract conditions
Statement of Work
Supplier network
Amount of suppliers
On-boarding capabilities
ASML suppliers on the network
User interface
Intuitive
User friendly
After go-live
Supplier governance
Support organization
KPIs and business review structure
Suppliers
Presentation / sales team
Cultural fit
Company profile / financials
Customer reference
30
A planning was detailed out
• Phase 1
• E-invoicing
• Technical solution first
• Onboarding suppliers in waves
• Phase 2
• P2O
• Technical solution and catalog
preparations
• Go-life per region
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Top level Ariba landscape Public
Slide 31
Ariba P2O Application
Catalog Buy
Non - catalog
Buy A
ppro
va
l
flow
TIBCO interface
SAP ECC
~ 60 csv
files
PR info
XML Use
rs Catalog
management and
approval
Appro
val
flow
Suppliers
GDS (user roles)
User
info
Ariba Network
Ariba Reporting SAP BI reports
~ 45
manual
files
34
Communications & change management started early Public
Slide 34
Own ‘brand’ for the new solution:
Channel strategy owned by Procurement team, not the Project
Training materials and dedicated website
Instruction sessions for all requestors in all regions
Go life in waves
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Status today… improvements everywhere Public
Slide 35
Strategic Workstream Now
Savings Doubled
Return on Investment Doubled
Spend covered by a
contract
Increased with
10%
Consolidation Down to 3.5%
% Spend covered by
an approved strategy
Increased with
90%
Operational
Workstream
Now
Catalog orders Increased with
20%
% of e-invoicing Increased with
40%
Spend covered by a
PO
Increased with
20%
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Learning along the way…. Public
Slide 36
The Strategic Program went faster, yielded faster results, and was easily
accepted
The Operational Program was more difficult to explain; processes are more
integrated with other stakeholders
Not only Procurement should want the solution, also ALL stakeholders
Understand the impact on your own processes; willingness to change and
adapt
IT architecture is to be understood early in the process; don’t think it is all SAP
now, so it will work
Find a project manager or consultant that has experience with the Ariba
solution (or the solution you have chosen).
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Are we there yet??? Public
Slide 37