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ABB Case Study High Tech Summit San Jose, CA October 25 th , 2007

ABB Case Study High Tech Summit San Jose, CA October 25 th , 2007. Herbert Brecheis Vice President SCM Processes & Tools. Headquarters: Zurich, Switzerland About 111,000 employees in around 100 countries Orders in 2006: $28.4 billion Revenues in 2006: $24.4 billion

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ABB Case Study High Tech Summit San Jose, CA October 25 th , 2007

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  1. ABB Case StudyHigh Tech SummitSan Jose, CA October 25th, 2007 Herbert Brecheis Vice President SCM Processes & Tools

  2. Headquarters: Zurich, Switzerland About 111,000 employees in around 100 countries Orders in 2006: $28.4 billion Revenues in 2006: $24.4 billion Listed on Stockholm, Swiss & New York exchanges; traded on virt-x A leading power and automation technology company with strong market positions in its core businesses Core business organized into 5 divisions; Power Products, Power Systems, Automation Products, Process Automation, and Robotics Facts about ABB

  3. What we offer Power Products Sales: $7.4 billion Automation ProductsSales: $6.8 billion Process AutomationSales: $5.4 billion Power Systems Sales: $4.5 billion RoboticsSales: $1.3 billion Transformers, high- and medium-voltage switchgear, breakers,automation relays Substations, FACTS, HVDC, HVDC Light, power plant & network automation Low-voltage products, drives, motors, power electronics, and instrumentation Control systems and application-specific automation solutions for process industries Robots, peripheral devices and modular manufacturing solutions for industry • Market-leading positions in most key product areas • Integrated solutions for grid reliability, productivity and energy efficiency • Robust global value chain to serve established and emerging markets • Extensive global network of value-added channel partners

  4. 2007 SCM Objectives • Completion of spend transparency: >95% of all external spend visible ‘on-line’ • Enhance ABB external supply base leverage • Ensure achievement of aggressive cost savings • Grow external LCC sourcing, balancing service and quality • Improve supplier quality to reduce COPQ • Drive SCM transformation of processes, competencies and capabilities, develop to ‘next level’ industry-best for excellence in procurement • Continue deployment of user-friendly tools and processes

  5. eProcurement (Catalog Buyer) ERP Procurement PO Management Goods Receipt Manage Invoice Purchase In AP Requisitioning Approval Approval Portfolio Supplier Collaboration (ASCC) SCM applications support Sourcing and Procurement Spend Transparency (eSMART) 8 1 Master Data Management SegmentCommodities ManageContent 2 7 Analyze Supply Market ContractManagement Sourcing Direct /Indirect ImplementContract eSourcing(eRFx) IdentifyLeverage NegotiateContract 3 6 TargetSupply Base Build Strategy 4 5

  6. Manage User &Organisation ManageMaterial Master Data ManageSupplier Master Data ManageContracts ManageRequisition ManageRfx & Auction ManageApproval ManagePO Manage Reminder ReceiveGood/Service ManageInvoice Financial Instruments SCMAnalytics Manage User & Authorization (UO-01) ManageGlobal Codes(MDM-01) ManageSupplier Master (MDM-05) InitiateContract (CM-01) Create PRautomatically (PR-01) Create Rfx (RFX-01) ContractApproval(AP-01) CreatePurchase Order(PO-01) CreateReminder for PO Confirmation (RM-01) CreateGood Receipt (GS-01) Match by Invoice 1-way (MI-01) Performance guaranty (FI-01) SupplierPerformance Measurement (AL-01) MaintainOrganisationalStructure (UO-02) ManageMaterial Master(MDM-02) Manage Supplier qualification (MDM-10) CreateContract(CM-02) Create PRmanually(PR-02) Execute Rfx (RFX-02) Purchase RequisitionApproval(AP-02) CreateBlanket Order (PO-02) Create Reminder for Shipment Advice (RM-02) CreateService Entry (GS-02) Match by PO & Invoice2-way (MI-02) Hedging foreign currency(FI-02) eSmart integration (AL-02) ManageService Master(MDM-03) Manage InfoRecord T & C (MDM-06) DistributeContract (CM-03) Budget Control(PR-03) Execute Auction (RFX-03) Purchase OrderApproval (AP-03) Transfer Documentsto Supplier (PO-03) Create Reminder for Delivery (RM-03) ApproveGR/SE(GS-03) Match by PO & GR & Invoice 3-way (MI-03) Down payment(FI-03) Ad-HocReporting(AL-03) ManageCatalogs(MDM-04) Manage Source List (MDM-08) UtilizeContract (CM-04) Awarding (RFX-04) RejectionDelegation Escalation(AP-04) ManagePO Confirmation& Status Updates (PO-04) Reverse Receipt (GS-04) Payment Plan (MI-04) CreditAssessment(FI-04) Reporting(AL-04) Manage Documents (MDM-07) Manage Quota Arrangement (MDM-09) Batch Management (GS-05) Foreign Trade(AL-05) Forms(AL-06) Process Cluster Macro Process(BPD) SCM Business Process Map (SCM CORE)

  7. Business Requirements defined on micro level Business Process Map Business Requirements Repository - 672 requirements

  8. ABBERP e.g.localA/P Freight Calculator Knowledge Management eProcure- ment BI Local EAI 1 ... n ABB ERP ABB ERP ABB Sales Unit LocalSupplier ERP Customer Facing Applications Ware house Warehouse Management Collaboration Global Supplier ERP Global Supplier ERP SCM Tools Architecture ABB Buyers ABB Sales Group SCMEAI Suppliers SCM Tool Link exists Link has to be built

  9. eSMART (BI) is providing spend transparency Who purchases (Business Unit) ? What is bought (commodity) ? From whom (supplier) ? How much ? Strictly Confidential

  10. eSMART – Excel Pivot interface • Drag and Drop the Dimension fields in the „Rows“, „Columns“ or the in the „Page“ Area • Drag and Drop the Value fields in the “Data Items” Area

  11. eSMART– features and next steps Present features: • Spend Transparency • Cost Saving Reporting • Data feed to SCM Dashboard Next steps: • Improved data gathering from ERP systems: • Rejections and OTD, to calculate supplier quality • Payments without ERP PO, to capture total spend of ABB • Power User capabilities to create own reports, on the fly • Cost Saving Planning (Score Card)

  12. 100% 90% 85% 80% 60% 57% 40% 33% 20% 0% Dec 2004 Dec 2005 Dec 2006 Sep 2007 Spend transparency has significantly improved

  13. Transactions via Web or B2B Orders Order Change Order Confirmation Shipment Advise Invoice Reduced Cycle Times Process Cost Savings through Elimination & Automation of manual process steps Collaboration Forecast Report Performance Reports Improved Supplier Performance Material Cost Savings throughimproved Ease of Doing Business for Suppliers with ABB Information Non ERP content PDM Integrations ASCC (Collaboration) – features and benefits

  14. ASCC Utilization 2007 Total amount of registered suppliers: 2292 Reports Usage meaning all requests for reports. Transactions meaningthe Web and B2B transactions (as order, order confirmation, Shipment advice and invoicing) per line item.

  15. ABB Revenue and EBIT margin 1988 – H1/2007

  16. Your questions please

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