curtiss-wright paul stasko - assets.sig.org · source to pay suite: spend analysis | esourcing |...

Digitize or Die:

Procurement's Transformation Imperative

Curtiss-Wright

Paul StaskoSenior Director, Supply Chain

Zycus Inc.

Richard WaughVP Corporate Development

Digitize or Die:

Procurement’s Transformation Imperative

Source to Pay Suite: Spend Analysis | eSourcing | Contract Management | Supplier Management | Savings Management | Project Management | Request Management | Procure-to-Pay

About Zycus – Comprehensive Source-to-Pay Suite

2017 Gartner Magic Quadrant Strategic Sourcing Suite Vendors

Weak Strong

Strong

Weak

Current

Offering

Zycus CLM

Strong

PerformersChallengers LeadersContenders

Strategy

Zycus P2P

The Forrester Wave: eProcurement, Q2 2017; CLM, Q3 2016


Agenda

▪ Digitizing Source-to-Pay• The Digitization Imperative

• Digitization Dividend: Best-in-Class Advantage

• Value of Integrated Approach to Digital S2P

▪ Transformation Case Study: Curtiss-Wright• Transformation Strategy and Approach

• Best Practices/Lessons Learned

▪ What Comes Next? • Added Value Beyond S2P

• Improving Customer-Centricity

• Measuring and Promoting Value to the Business

• Harnessing Emerging Technologies (AI/RPA/IoT/Blockchain)


The Digital Transformation Imperative

Decision Support: New Insights And

Intelligence

Shift Effort: Commercial And Supply

Relationships

Business Alignment: Enhance Agility And

Internal Customer Experiences

Source: The Hackett Group, Digital Transformation Framework

Percentage procurement process cost reduction attributable to digital

transformationValue Beyond Cost Savings: Enhanced

Value Above Spend Cost Reduction

At its Core, Digital Transformation will reduce the

cost to execute business services functions….

…. for Procurement the value of digital goes far

beyond cost savings to better business enablement


Benchmarking Best-in-Class Source-to-Pay Performance

SUM

Avg. – 57%

BIC – 91%

Spend Sourced

Avg. – 47%

BIC – 67%

On-Contract Spend

Avg. – 54%

BIC – 69%

Contracting Cycle

Avg. - 49 Days

BIC - 40 Days

Discount Spend%

Avg. - .02%

BIC - .10%

Cost per PO

Avg. - $17.18

BIC - $4.93

Maverick Spend

Savings

8%

Sourcing Savings

Avg. – 6.8%

BIC – 7.7%

Cost per Invoice

Avg. - $4.84

BIC - $2.23

P-Card Spend%

Avg. - .66%

BIC - 4.75%

Spend w/Line Item

Visibility

Avg. – 38%

BIC – 99%

Suppliers w/Failing

Scores

BIC – 3.8%

Sourcing Cycle

Avg. – 75 Days

BIC – 45 Days

Invoice Approval

Cycle

Avg. - 5 Days

BIC - 3 Days

SM Productivity

Savings

20%

Suppliers per $1B

Avg. -17,899

BIC - 6,795

Source: Hackett Group Benchmarks Source: SpendMatters Benchmark

Source: Hackett Group Benchmark

Source: Aberdeen Group Benchmark

Source: Ardent Partners Benchmarks

Source: Ardent Partners Benchmark

Source: Ardent Partners Benchmark Source: Hackett Group Benchmark


Best-in-Class Advantage – Realized Savings

Best-in-Class

• $1B Spend

• $2.5M Supplier Management Cost

• 75K POs

• 150K Invoices

Savings Management

Spend Analysis

eSourcing

Procure-to-Pay

Contract Management

Supplier Management

₊ 34% More SUM

₊ 20% Incremental Spend Sourced

₊ .9% Higher Savings Capture Rate

₊ 15% Higher Compliance to Contract

₋ 20% Lower Supplier Management Cost

√ Best-in-Class Cost per Transaction

√ Best-in-Class Discount Capture Rate

$200M Incremental Spend Sourced

$15.5M Incremental Savings Identified

$10.7M Retained Sourcing Savings

$.5M Supplier Management Cost Savings

$1.3M Transaction Cost Savings

$1.1M Early Pay Discounts

-------------

$13.6M Incremental Realized Savings

Best-in-Class Advantage


Best-in-Class Advantage – Source-to-Cash Cycle Time

Best-in-Class Achieve Higher NPV of

Savings Realized 53 Days Faster

Best-in-Class

Industry Average

45 Days Sourcing Cycle

75 Days

40 Days Contracting Cycle

49 Days

1 Days Order Cycle

2 Days3 Days Invoice Cycle

16 Days89 Days

142 Days

RFX

Award

Contract

Order

Invoice

Pay


Best-in-Class Advantage – Technology Adoption


▪ Which modules constitute a full

S2P Suite?

▪ What are the use cases

enabled through a single

integrated S2P suite?

© 2018 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.

Source: Key Issues Study, The Hackett Group, 2018

Many Organizations Plan to Deploy Single Platform S2P


Request

Management

Project/Savings

Management

Spend

AnalyticsSourcing Contracts

Supplier

Management

Supplier

Performance

eProcurement eInvoicing

Request and

track Contract

creation

Create events

from requests

Create, track and

manage

sourcing/savings

projects

Review past

performance before

inviting suppliers

Create sourcing

projects

Convert PRs to

RFP and award

POs

Validate contract terms

for catalogs, PO to

contract matching

Update

preferred

vendor lists

Refer master

data for

creating

invoices

Review supplier

history

Create, track

and manage

contracts

Transfer

Attachments,

T&Cs, Pricelist for

Contract creation

Create and invite

potential

suppliers

Control Layer

Strategic Layer

Operational Layer

Refer

supplier

data

Review supplier scores

before ordering

Connecting the Dots….for a Single Version of S2P Truth

Source-to-Pay Case Study


About Curtiss-Wright

• Created in 1929 from the consolidation of Curtiss Aeroplane and Motor Company, Wright Aeronautical (founded by

Glenn L. Martin and the Wright Brothers as Wright-Martin)

• $2B+ revenue In 2016

• 8,000+ employees

• 160+ locations worldwide

• 9,000+ active suppliers


ProCard™MRO Integration

P2P

80%of our time is spent on only 5% of our

spend!

Our focus is moved to where

the vital spend is!

Pareto everything. Save on the “A” items and

simplify the process on the “C” items.

Supply Chain Transformation Strategy

C- Level Spend A- Level Spend


Spend

analysisE-Sourcing

Supply Base

Management

Map external spendNegotiate Strategic

AgreementsManage compliance

Manage Supplier

Relationships

CLM

VMSP2P

Step 1 Step 2 Step 3 Step 4

Transformation Phasing Follows Best-Practice Approach

Source: Gartner “Best Practices for Sequencing Procurement Solution Investments”


• CW SUM @ World-Class for Direct

• Leveraging Spend Analytics to Target

World-Class for Indirect

• Normalized Spend Taxonomy Across 40+

Disparate ERPs/Part # Schemas

• Multi-dimensional Spend Cube – Supplier,

Category, Part, $, Compliance

Benchmarks

Application

• Triage and Prioritize Savings Projects

• Pinpoint Non-Compliance for Root Cause

and Remediation

Value

Direct Materials Direct Services Indirect Materials Indirect Services

Source: Hackett Group

Spend

Analysis

Step 1: Deployed Spend Analytics to Achieve World-Class SUM


• Direct vs. Indirect Spend – 75/25

• Historical Cost Savings Correlate to

Industry Averages

• Prioritize Direct Materials due to Greater Spend

Leverage

• Maximize Savings Impact by Balancing Scale ($, #

BUs) with Ease of Execution

Benchmarks

Strategy

• Per Project Event Savings Exceed World-

Class Savings Rate

• Utilizing Automation to Target World-Class

Spend Sourced and Savings

Value

eSourcing

Step 2: eSourcing Event Savings Fund S2P Transformation

% of Spend Competitively Sourced

Cost Savings as % of Spend

Source: Hackett Group

Direct Indirect


Auction 1 : Machined

Parts

Category Machined Parts

Total No. of Parts 25

No. of Suppliers 17

Event Value in USD $ 3,800,055.89

Negotiated Rate for

Event in USD$ 1,342,067.24

Savings Value in USD $ 2,457,988.65

% of Savings 64.68%

Auction 2 : Machined

Parts -

CategoryMachined Parts -

Ottawa

Total No. of Parts 24

No. of Suppliers 12

Event Value in USD $ 841,190.64

Negotiated Rate for

Event in USD$ 505,219.99

Savings Value in USD $ 335,970.65

% of Savings 39.93%

Initial Events Yield Superior Savings Results

Strategy: Single Item Lots Strategy: 24 Item Lot


Step 3: Address P2P Challenges

Multiple ERPs Non-Compliant PPV

High-Volume Paper

Processes

Tax Compliance

Visibility Lacking

Non-Standard

Approvals

20%

80%

80% of Time Spent

on C-Level Spend


1 Better, Faster, Cheaper

A key component of the Finance Transformation is the ability to transition the end-to-end procure-to-pay process

from a heavily manual and paper based environment to an environment that introduces best in class automation or

EDI (Electronic Data Interchange) between our business partners.

2 Change from Cost Center to High-End Value Add

Re-engineer the P2P process to be a strategic advantage to:

• Create process efficiencies and improve effectiveness, and

• Enhance spend management, contract compliance, and cash management capabilities

3 Inextricable value partners

Critical to align strategies of procurement and payables to maximize the end-to-end value stream. Disparate

strategies and lack of communication and transparency between AP and procurement prevents smooth processing

of purchase orders and invoices.

4 Multiple touches vs. Once & Done

Based on the volume of paper that CW processes including invoices, paper checks, supplier contracts, exceptions and discrepancies, incongruent systems over AP and procurement produce excess costs, slow processing times, and inconsistent quality.

Procure-to-Pay

P2P Transformation Goals


Savings Management

Contract Management

Supplier Management

Step 4: Create a Culture of Compliance

• Aggregate agreements in

central, searchable repository

• Proactively monitor compliance

– preempt auto-renewals

• Streamline on-boarding,

governance

• Standardize performance and

risk management disciplines

• Establish consistent savings

project methodologies

• Create transparent savings

pipeline visibility


Project Summary

Objective

Global Support

Execution

▪ To adopt a specialized sourcing and category management solution

▪ To implement the best-value procurement solution rather than managing routine classification and spend-reporting tasks

▪ To enable price discovery and cost reductions and improve supply market knowledge

▪ To bring template and repository standardization

▪ To enable Auctions related to direct materials

▪ To increase buying reach

▪ Stakeholders from United States of America

▪ Interfacing with 4 ERPs (with multiple instances) across multiple legal entities

▪ Extensive UAT conducted offsite

▪ Weekly Webex meetings and Calls to solve customer queries

▪ Tool awareness to Buyer’s and Supplier’s

▪ Step1: Understanding the process of the Customer (KYC) and consulting the best practices to implement Live Auctions

▪ Step 2: Designing strategies for 3 different Auctions

▪ Auction 1 & Auction 3: Each Pricing Lot consisting of only 1 Item

▪ Auction 2: 1 Pricing Lot consisting of 24 Items

▪ Step 3: Finalizing majority of the requirements prior to the Requirement Gathering Workshop

▪ Step 4: Configuration of requirements directly on the Production Setup

▪ Step 5: Collaboration with cross functional teams

“Go Live” in 3 months

200+ Active users

15,000+ Suppliers On-boarded

50+ Contracts Uploaded

50+ BUs

What Comes Next?

Added Value Beyond Source-to-Pay


Multiple Initiatives Focused on Improving Customer-Centricity

▪ How can Procurement be more

responsive to stakeholder’s needs?

▪ Is procurement keeping pace with

Enterprise-wide digitization, or do

users lack a portal to the

procurement process?

▪ Which processes/platforms

encourage stakeholders to engage

procurement early, extending

influence and elevating

procurement to trusted advisor

status?

Source: Key Issues Study, The Hackett Group, 2018© 2018 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.


eSourcing

Contract

Management

Project/

Savings

Management

Supplier

Management/

P2P

ApproverRequester

Sends requests

Approvesrequests

Manages &ProcessesRequests

Create Contract

Create Sourcing Event

Onboard a Supplier

Pre-purchase Request

Supplier Performance improvement

PO Amendment

Contract Amendment

Task Assignment

Initiating a Project

Price or terms change request by Supplier

ProcessUse Cases

Features

A Customer-Centric Approach: Request Management

Procurement

Reject inappropriate requests

Configurable Flexiform

Configurable Approval Workflow

Conditional Logic / Rules

Calculated Fields

Delegation

Comprehensive Reporting


▪ Automated request management and tracking triages

procurement’s work queue – empowers and engages end-users

▪ Sophisticated, conditional approval workflows (>175 conditions,

4-5 approvals per form)

▪ Conditional logic integrates IT security reviews with on-boarding

requests

▪ Supports multiple request use cases, e.g. negotiate contract, run

sourcing project, on-board supplier, capital appropriation project

approval

▪ Seamless process flow from request to execution – e.g.

approved request initiates activity in target module

▪ Also supports non-procurement (Hotel, Facilities, HR, IT)

requests

Extending Beyond

Procurement Users

Integrating Business

Processes

Customer-Centric

iRequest - Porsche

Customer-Centric Case Study: Request Management


▪ How can Procurement more

effectively measure and

communicate performance and

value delivered to the business?

▪ In particular, how can Procurement

align more effectively with Finance

to ensure value contributions are

acknowledged?

▪ Which processes/platforms can

enable Procurement to create

credibility with the C-Suite and

sign-off from the CFO on value

delivered?

© 2018 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.Source: Key Issues Study, The Hackett Group, 2018

Few Satisfied with Ability to Measure Business Value


Challenges

• Most organizations tracking with spreadsheets/home-grown tools

• Existing tools lack Finance collaboration and approval workflow

• No standard definition of savings calculation and allocation methods exists, and lifecycle tracking visibility is missing

Solution

Align:• Import baseline spend from

Spend Analytics

• Establish Finance-approved

spend baseline and savings

calculation formulae on

common, enterprise

platform

Validate:• Employ workflow to obtain

validation from stakeholders

• Map savings projects to

stakeholders and approvers

Analyze:• Segregate savings by type,

e.g. cost reduction vs.

avoidance, and accounting

period

• Identify savings by

project/sourcing strategy

• Map savings impact to P&L,

Balance Sheet, Cash Flow

Source: Gartner/Rutgers Survey

Financial Savings Management Challenges/Solutions


Case Study: Financial Savings Management

600+Savings Projects Initiated

$40-50MAnnual Incremental Savings Realized To Date

000’s of Users40 Power Users Create Savings Projects and Collaborate

with 000’s of Stakeholders (600 Financial Analysts Alone)

25% Productivity Gain Category Managers Save 2 Hours per Day from Data

Gathering Tasks

Single Version of Savings Truth ▪ Standardized calculation/allocation formulae

▪ Full audit trail and version control

▪ Secure user access by BU/Div/Dept/Cat

▪ Fx conversion and multi-lingual UI

▪ Flexible/multiple savings types/definitions

▪ Approval workflow sign-off by budget owner and Finance

▪ Dashboard analytics and Financial Statement impact

reporting: P&L/Budget/Balance Sheet,/Cash Flow

Savings Tracking for Non-Procurement Platform applied to non-procurement savings projects (e.g.

Reorg, ERP Consolidation, M&A), Budgeting/S&OP, Cash Flow

Forecasting

iSave - Qualcomm


Procurement Adoption of Emerging Technologies to Grow 3-5x

9%

33%

7%

30%

4%

16% 17%7%

18%

23%

18%

33%

11%

35%

11%

26%

9%

28%

27%

56%

24%

63%

16%

51%

11%

43%

9%

35%

Current 2-3 years Current 2-3 years Current 2-3 years Current 2-3 years Current 2-3 years

Internet of things Robotic process automation Cognitive computing/artificialintelligence

Virtual assistants/chatbots Blockchain

Mainstream adoption Limited adoptionSource: 2018 Key Issues Study, The Hackett Group


AI-Driven Source-to-Pay

Contract

Management

Spend

Analysis

Supplier

ManagementeSourcing

Procure-to-Pay

Financial

Savings

Management

Spend Mining

Spend Monitoring Guided Buying“SmartAssist” Suggestions

Supplier Risk Monitoring

+1 866 563 9219

[email protected]

www.zycus.com

Thank You

Evaluation How-to:

▪ Your feedback drives

SIG Event content

▪ By signing and

submitting your

evaluation, you are

automatically entered

into a prize drawing

Why?

From the App

1. Select Sessions

2. Select Day

3. Select Session S10

4. Click on Clipboard Icon

How?

COMPLETE &

SUBMIT EVAL

Session # 10

Tweet: #SIGspring18

Download the App: sig.org/app

Digitize or Die: Procurement's

Transformation Imperative

+1 866 563 9219

[email protected]

www.zycus.com

https://twitter.com/hashtag/SIGSpring16?src=hash

http://bit.ly/SIGOrlando

Thoughtonomy

Have an idea or want to present?

If yes, please take a moment and submit your name and idea here:

www.sig.org/present

http://www.sig.org/present

curtiss-wright paul stasko - assets.sig.org · source to pay suite: spend analysis | esourcing |...

Documents