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Tech Mahindra’s Sourcing and Procurement Solutions. Leveraging Ariba On Demand Spend Management Suite. 1. Agenda. Challenges, Trends and Business Imperatives driving Sourcing Transformations. Our Solution. Sourcing Investments. Our Capabilities and Experience. Our Value Proposition.
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Tech Mahindra’s Sourcing and Procurement Solutions Leveraging Ariba On Demand Spend Management Suite 1
Agenda Challenges, Trends and Business Imperatives driving Sourcing Transformations Our Solution • Sourcing Investments • Our Capabilities and Experience Our Value Proposition
Challenges, Trends and Business Imperatives driving Sourcing Transformations
Objectives of the Sourcing and Procurement Organization To be successful, Procurement organizations must develop capabilities and allocate resources effectively to manage across a wide range of critical processes • Focused on reducing non personnel cost base • Periodic – typically every 1-5 years • Selects supplier solutions and negotiates contract terms and conditions Analyze Demand Analyze Supply Market Develop Sourcing Strategy Select Supplier(s) Negotiate Terms and Conditions Execute Supplier Contracts Strategic Sourcing • Contract commitments • Service level agreements • Process changes • Policy changes • Sourcing process feedback and improvements • Sourcing opportunities • Performance management requirements • Ensures contract compliance • Manages integration of new supplier solutions and purchasing processes • Identifies sourcing opportunities • Supports continuous improvement focus Monitor Contract Compliance Track Savings Capture Evaluate Supplier Performance Measure Customer Satisfaction Identify and Address Leakage Evolve Supplier Relationships Supplier Management • Price data • Service performance data • Off-contract spend data • Customer satisfaction levels • Process cost and compliance data • Purchasing trend data • Performance management process • Standard metrics • Issue escalation support • Ensures purchasing process transaction efficiency • Manages day-to-day supplier relationship • Addresses customer satisfaction issues • Captures/reports transaction and process information to support Strategic Sourcing and Supplier Management activities Request Order Purchase Service Track Report Transaction Management
Market Trends: The New Normal in SpendSpend in Cloud Vs Spend under Management You will operate with: • Fewer people, • Less infrastructure • Lower cost structure • Higher volatility & risks Success will require: • More agility • Variable & flexible operating models • Greater responsiveness and collaboration across your value chain Technology platform for automating and optimizing commerce processes shared among trading partners Communityof pre-enabled trading partners to quickly discover, connect, and collaborate Capabilitiesto augment internal resources with always-on category expertise and commerce services Companies will increasingly rely on a technology-enabled business process where technology and capabilities are managed outside their enterprise and where collaboration between various parts of the value chain will become even more important.
Improved operational efficiencies • Enhanced business value • Reduce sourcing and procurement costs • Increase spend under management • Procurement Landscape rationalization • Rationalize vendor base • Address unconventional spend categories Viz. Services, Packaging and Marketing, Fuel and Energy, Logistics and Travel • Improve Contract Compliance • Normalize and Improve Spend Visibility Forces Driving Business: Voice of CustomerWhat are customers demanding and business drivers Rapid, low-cost; low-risk deployment of supply management solutions and services Significantly Cheaper Pay as you go model compared to behind the firewall solutions
Spend Management in Cloud Tech Mahindra’s Sourcing Solution Technology platform for automating and optimizing commerce processes shared among trading partners Communityof pre-enabled trading partners to quickly discover, connect, and collaborate Capabilitiesto augment internal resources with always-on expertise and commerce services Tech Mahindra a leading provider of Spend Management Solutions brings in capabilities and experience in Sourcing, Contract Management, Procurement, Invoice Management and Spend Analytics services Ariba a leading provider of collaborative business commerce solutions and provides the technology and community platform for business-to-business commerce, delivering the most efficient and effective way for
Tech Mahindra’s Sourcing SolutionVirtual Center of Sourcing and Procurement Excellence – How it Works? Review Demand andSupply Strategy Procure -2-Pay Process Outsourcing Client Sourcing & Procurement Mgr Data Services Develop specifications and Conduct Market Analysis TechMConsultant – Client Location Develop RFP and Solicit Bids Evaluate Bids and Conduct Negotiations China supply base Transactional Procurement Global supply base Implement, Savings and continuous improvement TechMBPO TechM– Technology + In direct IPO India - Direct TechMIPO China Direct India Supply Base - Direct Global Supply Base - Indirect
Our Solution - Approach Tech Mahindra team will utilize its proven Strategic Sourcing approach to address your sourcing requirements 4 weeks 4 weeks 8 weeks 6 weeks 2 weeks Review Demand andSupply Strategy DevelopSpecifications andConduct MarketAnalysis DevelopRFP andSolicit Bids Evaluate Bidsand ConductNegotiations Implementand AchieveSavings • Create spec sheet Draft RFI/RFP • Analyze responses Gather current category spend and volume Identify potentialopportunities Distribute andsupport supplierquestions andresponses • Vendornegotiating/feedback • Develop industry and vendor overview Implementation and Roll Out Review forecasts or major future changes Review contractsand commitments Draft Contract Usually multiple rounds • Develop target and vendor list Develop scoring and analyticaltemplates • Develop targetSLAs Identify demandmanagementopportunities Vendor selected? The timelines presented above are indicative . We would need insights into the commodities being sourced, current stage of vendor development, technologies being used to source etc Recommend sourcing/ negotiatingstrategy
Key Definitions & Understanding • “Project” means a specific sourcing project in a particular services or commodity category initiated by Subscriber for Subscriber’s internal use and benefit, and can consist of any one event or more related events • An “Event” include: (a) on-line auction, (b) sealed bid, (c) e-negotiation, (d) a RFQ, RFI, or RFP, or (e) Quick Survey. • A Project will be counted for purposes of Usage Limits only in the Month in which the Project is created within the Solution • A monthly Project cap is assumed and calculated at 5X the licensed User count. • “User” means an individual Subscriber employee or contractor who is provided with access to the Ariba Sourcing solution which permits the User to perform any activities and access any functionality available to Subscribers on the Solution, and permits the User to receive Enablement Services as described in the applicable Documentation. • “Team Member” means an individual Subscriber employee or contractor who is provided access to the Ariba Sourcing Professional solution to perform limited activities on the Solution (contrasted with Users who are provided with access to additional functionality). Team Members do not include suppliers or other third parties (other than Subscriber’s contractors) interacting with Subscriber via the Ariba Sourcing Solution. • The minimum Subscription Term for this package is three years.
TechMcan bring together procurement and supply chain competencies of multiple groups to maximize impact of Client’s procurement transformation • Operations and Supply Chain Strategy • Belgium-based management consultancy specializing in Supply Chain and Logistics • Experience in Supply Chain planning, network design and performance improvement • Around 65 Consultants • Business and Procurement Strategy • A Chicago based Business Consulting Group Company • Deep expertise in category management, strategic sourcing and Procurement organization transformation • Around 50 Consultants Procurement Center of Excellence • Procurement Operations Group • India-based group providing outsourced Procurement, Customer Support, FAO and other services to customers worldwide • Expertise in Managed Procurement Services • 10000 + member group • Sourcing Group • 120 Procurement specialists based primarily in China and India • Multi-industry Procurement expertise in Engineered Products and Manufacturing Services • Network of 300+ pre-qualified suppliers • Procurement Technology Services Group • Over 10 years experience and more than 150 associates • More than 5 million person hours of experience • Partnered with best of breed spend management application providers like Ariba, SAP SRM, Oracle, BasWare, Zycus
TechM Program management Product sourcing Component / subsystem sourcing Raw Material sourcing Engineering Change Management Labs Qualification Sourcing Group Expertise: TechM’sInternational Sourcing and Procurement offices in China and India • 120 + Sourcing Engineers with Technology & Quality Background - China and India • Sourcing worth > US $ 300 Mn / yr • 20-25% savings on sourcing from China • Average of 6+ years experience from different industry verticals • 100% localization of resources with Bilingual skills • 300+ qualified suppliers
Tech Mahindra’s broad range of categories expertise Sample Areas of Competence Corporate & Overhead Direct Materials Indirect Materials • Metals and Plastics • Steel • Aluminum • Rare Metals • Machined Components • Castings • Extrusions • Stampings • Forgings • Roll-forming • Plastics • Polyethylene • Polystyrene • Plastic Components • Injection Molding • Compression Molding • Plastic Extrusion • Other • Electronics/Embedded Design • Motors • Pumps • Tires • Glass • Gases and Chemicals • Heat Treatment • Paint MRO Pallets Packaging Utilities Cleaning Supplies Chemicals Safety Supplies Fasteners • Telecomm-Related • Long-Distance / Local • Cellular • IT-Related • LAN/Desktop • Data Centers • PCs and Peripherals • Media/PR-Related • Media Buying • Public Relations • Overhead and Administrative • Office Supplies • Furniture & Fixtures • Temp Services • Facilities-Related • Security • Signage • Property Management • Professional Services • Consulting • Legal • HR and Benefits • Pension • Relocation
Tech Mahindra’s experience across Strategic Sourcing, Technology and Procurement operations
Our Value PropositionWe work closely with our clients and leverage internal staff and build internal skills Key Tech Mahindra Differentiators • Structure work and relationships around how clients want to be served. We almost always have a client team who works alongside of us in order to build client experience. We firmly believe the clients must own the sourcing process and lead all negotiations. We support the sourcing group and use our expertise and tools to shorten the time to vendor negotiation and selection. • Leverage a repository of tools and methodologies that can help speed the process. These include: • - Category overviews and vendor profiles that can be used with clients • - Category sourcing strategies that can be used as a foundation for client specific opportunities • - Standard RFIs and RFPs for all the direct commodities (Auto Components, Metal Sheets, Castings, Forgins, Fuel Cells, Wafers, Electrodes, Indirect goods and services categories etc that will provide the baseline for Client’s RFPs • Employ seasoned professionals with a unique blend of sourcing and technical skills from across the Mahindra family of companies. We can call upon our technical experts as necessary to speed the RFP development process. • Provide the experience of blue-chip firms, but more flexibly and cost-effectively and deploy smaller, more experienced teams than do other top-tier firms. The team serving customers has sourced these services multiple times before and can shorten the time to RFP and to contracting
A Case in Example- Strategic Sourcing @ Global Soft drink and Beverage Company • e-Sourcing • Strategic sourcing process using an electronic tool • Execute, expedite, support & optimize sourcing • TCCC eSourcing Center of Excellence (CoE) • Established in 2003 • Part of the Global Procurement Best Practices initiatives • Implement best practices of eSourcing and • Gain Total Cost of Ownership benefits using eSourcing • eSourcing imperative at TCCC • Develop procurement process efficiencies • Produce tangible cost savings • Build a world class procurement organization by 2006 • Implement best practices
A Case in Example: Tech Mahindra’s Role • Part of The Client Company’s e-Sourcing CoE team • Consulting around MindfloweSourcing suite & Sourcing process • Requirements gathering in consultation with Category managers • Mapping the requirements in Sourcing tool • Suggesting suitable sourcing strategies, if needed • Training Category managers and Suppliers in Sourcing • End to End Event management (RFI / RFQ / RFP / RA) • Run what-if optimization scenarios (Business Constraints) as needed by category managers • Testing Sourcing application and suggesting suitable enhancements • Managed 150 events per year both on direct & indirect
A Case in Example: EVENT SNAPSHOT • Juices • USD 500 mn • Apple, • Orange, • Pineapple, etc Recruitment Agency (Reduced Cycle time 30%) Meeting and Events Planning (Spend approx USD 25 mn) • Freight • Spend approx USD 40mn • Savings USD 4.8 mn • Sales & Marketing Equipment • Spend approx USD 1bn • Savings USD 50mn) Direct Spend Indirect Spend Indirect Spend Cycle time pressure Client Corporate Consumers Customers Bottlers and Mfg Plant Service DCs Indirect Spend Indirect Spend Indirect Spend Cycle Time Pressures Direct Spend • Ingredients- • Caramel, • Ascorbic, • Salt, etc • Coolers, • Vending Machines, • Fountain, • Payment Systems • Small Package Dist • Spend approx USD 13 mn • Savings USD 1.2 mn) Custom Specialty Merchandise (Reduced cycle time by 30%) • Truck, • Ocean Freight
Strategic Sourcing Framework Define User Requirements/ Specifications “Profile” the Commodity Develop the Sourcing Strategy Select Suppliers Negotiate & Contract Implement & Monitor Performance Steady-State Agreements and Supplier Management Supply Agreements Transition Monitor Supplier Performance Collaborate with Supplier on Perf. Mgt Execute Supplier Relationship Mgt. Define Supplier Metrics Develop Metric Tracking Process
Workshop-Strategic Sourcing Process Define User Requirements/ Specifications Identify Stake holders Identify Requirements Analyze Requirements Validate with Stake holders Profile the Commodity Spend Analysis Demand Management Build Total Cost Model Analyze Supply Market Develop the Sourcing Strategy Identify SourcingObjectives Analyze Supplier Perspectives Develop Sourcing Strategies Build a Business Case Validate/Gain Approval Select Suppliers Identify all potential suppliers Develop Evaluation approach Develop Supplier shortlist Engage Supplier Evaluate Responses Negotiate & Contract Negotiate Supplier Contract Sign Agreements Implement & Monitor Performance Sign Agreements
1 Define User Requirements & Specifications Define User Requirements/ Specifications Profile the Commodity Develop the Sourcing Strategy Select Suppliers Negotiate & Contract Implement Identify Stake holders Identify Requirements Analyze Requirements Validate with Stake holders • Identify internal Stake holders • Identify who determines the buying criteria and specifications. • Identify who makes the buying decisions. • Interview stake holders to collect purchase requirements, criteria, and specifications. • Consolidate all stake holder requirements. • Prioritize requirements. • Evaluate customer requirements • Assess criticality and risks to business in meeting the requirements • Challenge customers to determine “needs”, “wants” and “nice to haves” • Check findings with relevant stakeholders • Agree on priorities Objective – Definition, Validation and Freezing of Stake Holders Requirement
2 Profile the Commodity Define User Requirements/ Specifications Profile the Commodity Develop the Sourcing Strategy Select Suppliers Negotiate & Contract Implement Spend Analysis Demand Management Build Total Cost Model Analyze Supply Market • Define Data Elements • Develop a data collection process • Analyze data across supplier, category, customer and other dimensions • Define communication Process of key demand events to procurement • Consensus forecasting process between procurement and the customer • Monitor forecast against actual spend • Identify the different cost components – Product cost, acquisition cost, maintenance cost, inventory carrying cost, administrative costs etc • Conduct Market Research – key players, trends • Supplier’s value chain analysis • Analyze supplier – customer bargaining power. Apply frameworks like Porter’s 5 forces etc Objective - Proactively develop global view of Demand & Supply Sources
3 Develop Sourcing Strategy Define User Requirements/ Specifications Profile the Commodity Develop the Sourcing Strategy Select Suppliers Negotiate & Contract Implement Identify SourcingObjectives Analyze Supplier Perspectives Develop Sourcing Strategies Build a Business Case Validate/Gain Approval • Analyze attractiveness of the buyer account • Understand relative value of the buyer’s business • Validate strategies and business case with stakeholders • Gain approval from senior management and stakeholders on the chosen strategies & priorities • Review best practices • Evaluate applicability of each sourcing tactics • Select strategies for each category • Assess the baseline total cost of ownership • Estimate the improvement potential • Document sourcing opportunities • Assess category business impact – category sourcing matrix • Analyze sourcing objectives Objective – Freeze on a Sourcing Strategy Plan for Optimum Benefits
4 Select Suppliers Define User Requirements/ Specifications Profile the Commodity Develop the Sourcing Strategy Select Suppliers Negotiate & Contract Implement Identify all potential suppliers Develop Evaluation approach Evaluate Responses Engage Supplier Develop Supplier shortlist • Develop framework • Determine evaluation & process criteria • Receive and compile supplier responses • Check responses for completeness • Organize data for analysis • Evaluate data • Summarize the results • Identify sources to locate suppliers • Obtain a list of all possible suppliers • Determine methods to engage suppliers • Draft the RFQ/RFP document to exchange information w/ suppliers • Issue RFQ/RFP • Research and obtain supplier capability data • Review supplier data & performance expectations • Evaluate capabilities & develop shortlist Objective- Holistically Evaluate various suppliers
5 Negotiate & Contract Define User Requirements/ Specifications Profile the Commodity Develop the Sourcing Strategy Select Suppliers Negotiate & Contract Implement Negotiate Supplier Contract Sign Agreements • Develop negotiation strategies & plans • Form negotiation teams & schedule negotiations • Conduct negotiations (eSourcing, Reverse Auctions) • Develop Negotiation Feedback • Prepare for the agreement award meeting • Conduct meeting to make final decision • Gain relevant approvals • Notify suppliers of award decision • Sign agreement Objective- Arrive at the best possible supply agreement
6 Implement Define User Requirements/ Specifications Profile the Commodity Develop the Sourcing Strategy Select Suppliers Negotiate & Contract Implement Sign Agreements • Develop transition plan • Develop communication plan • Manage risk Objective- Arrive at the best possible supply agreement
Typical Strategic Sourcing Diagnostic Exercise High Level Project Plan Approach – detailing stages, t asks, milestones, benefits
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