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Creating a Roadmap for Best-in-Class Supplier Management

ISM Webinar 9th Nov 11
Mark Peachey Product Strategy Director Advanced Procurement, Oracle Chris Nelms Managing Supervisor Supply Chain Process & Systems, Ameren Services Company

Moderator - Nora P. Neibergall

Senior Vice President Institute for Supply Management

Nora Pollard Neibergall, CPSM, C.P.M., Senior Vice President at Institute for Supply Management. Starting her career with ISM in1994, Nora now oversees ISMs educational program development, professional credentials, public relations, marketing and sales efforts. Prior to ISM, Nora was a supply management professional for manufacturing and retail firms. Nora holds a B.S. from the University of Arizona and an MBA from Arizona State University.

Todays Web Seminar Will Focus On

Understand the role of supplier management and its interdependence with other supply management disciplines Learn best practices for developing organization structures, charters, and talent that foster ongoing improvement Review real-world case studies that emphasize change management and supplier involvement Understand how to develop a technology portfolio that supports emerging supplier management requirements

Presenter Chris Nelms

Managing Supervisor, Supply Chain Process & Systems, Ameren Services Corporation
Chris leads the operations team charged with the ongoing projects around continued eCommerce enablement of Amerens supply base, and leading the continued strategic implementation of processes around the source-to-settle program (S2S) which include further enablement of electronic supply chain collaboration using Oracles Advanced Procurement Suite (R12) especially iSupplier Portal and the Contractor Cost Tracking Module (CCTM) a custom application developed to extend the existing capabilities of Oracles Services Procurement module." Prior to joining Ameren in 2004, Chris was a management & technology consultant in the manufacturing & supply chain systems practice at Cap Gemini and Ernst & Young and has over 15 years of experience in various consumer products, medical device, aerospace and manufacturing industries in the areas of process improvement & design, systems implementation and project management. He holds an MBA from Maryville University and two Bachelor Degrees from Southeast Missouri State University.

Presenter Mark Peachy

Director of Product Strategy, E-Business Suite Advanced Procurement Applications, Oracle Corporation
Mark has spent over 10 years in Oracle's Development division guiding the evolution of the applications that allow buying organizations to streamline their Source-to-Pay processes and collaborate more effectively with their supply base. Most recently, he was responsible for designing and introducing a new set of Supplier Management modules that enable buying organizations to rationalize their supplier master data, manage the qualification process, track supplier performance and monitor supplier risk factors. Prior to joining Oracle, Mark worked in EMEA as a management consultant, gathering 15 years experience on a wide range of IT system implementations for clients in various consumer goods, pharmaceutical, brewing and manufacturing industries. The projects he was involved with ranged from the design of shop floor plant control systems, through the introduction of MRP systems to the deployment of global Supply Chain Planning solutions. He holds a BSc in Technology & Management Science from Bradford University, UK.

The following is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions.

The development, release, and timing of any features or functionality described for Oracles products remains at the sole discretion of Oracle.

Supplier Management Agenda

What is Supplier Management? Why is it Important ?

<Insert Picture Here>

Key Business Challenges

Supplier Management at Ameren Supplier Management at Oracle Q&A

Supplier Management
Exercising Control Throughout the Lifecycle

Discover
Online registration Supplier search Profile enrichment

Qualify
Detailed assessment Compliance checks Approval process

Enable
Account creation Electronic connection Document formats

Transact Transact & Review

Retire
Review process End relationship Close account

Strategic Preferred

Compliance CSR / CoC

Performance Management
Watchlist Improvement Plan Probation Labor Practices EH&S Finance / Credit

Risk Management

Copyright 2011, Oracle and/or its affiliates. All rights reserved.

Spate of Worker Suicides Customers in Damage Control to Protect Brand

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Copyright 2011, Oracle and/or its affiliates. All rights reserved. reserved.

Supplier Relationship Risks

Threats and Vulnerabilities
Reputation Risk Compliance Risk
Negative Media Code of Conduct Breaches Potential Criminal Investigations Product Safety Standards / Environmental Safety Standards Code of Conduct / Hazardous Chemical Usage / Worker Cond. Contract / SLA compliance E-Waste Leakage etc Financial stability / Ability to Grow Credit Problems, Bankruptcy Business Losses Product/Service Delivery Delay / On-Time Performance Product Quality Issues Out of Specification Warranty Support Labor Action, Force Majeure / Natural Disaster / Security Competition Pressures, Transport, Employee Turnover Liens and Claims, Insurance Coverage OFAC / Suspect / Debarred Watch-list Global Public Health Country - Potential and Readiness for Civil Unrest/Military Action

Financial Risk

Transaction Risk Operational Risk

Other Risk

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Copyright 2011, Oracle and/or its affiliates. All rights reserved.

Key Business Challenges

Reducing Supplier Management Cost Enhance productivity by eliminating paper Supplier on-boarding to include setup for
electronic connectivity Provide self-service profile administration to suppliers

Improving Operational Efficiency Socialize supplier qualification details and

performance evaluations Flag and track dependable and cost effective suppliers Be assured that spend analytics is complete and accurate

Discover
Online registration Supplier search Profile enrichment

Qualify
Detailed assessment Compliance checks Approval process

Enable
Account creation Electronic connection Document formats

Transact Transact & Review

Retire
Review process End relationship Close account

Avoiding Data Fragmentation Unify duplicated, incomplete, inaccurate

data held within multiple, disparate systems Consolidate & federate shared information across instances

Minimizing Risk, Improving Compliance Monitor supplier adherence to all laws,

regulations & standards Ensure that suppliers are meeting Code of Conduct requirements Gain visibility to risk factor trends

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Copyright 2011, Oracle and/or its affiliates. All rights reserved.

Hurdles to Success
Practical Issues That Will Impact Any SM Program Technical
Data structure or lack thereof Location, location, location (internal, external, 3rd party) Variable life expectancy

Organizational
Multiple ownership no real control Impacted by multiple projects from across the organization, e.g. Risk, Finance, Engineering (new product development) Supplier Management as a discipline

Operational
Data volume & visibility Definition of scope Executive focus

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Copyright 2011, Oracle and/or its affiliates. All rights reserved.

Key Implementation Considerations

Technical
Organizational Structure

Operational

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Copyright 2011, Oracle and/or its affiliates. All rights reserved.

Supplier Management
A More Complex Choreography
Supplier Profile (W9) Forecast & Schedules
Buying Organization
Phone

Suppliers

v.1

Orders Change Orders Shipment Notices Invoices & Payments

Paper

v.2

Fax

Email

Time Cards Catalogs

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Copyright 2011, Oracle and/or its affiliates. All rights reserved.

Supplier Management
A More Complex Choreography

Certification
Buying Organization
Phone
v.1

Suppliers

Supplier Profile (W9) Forecast & Schedules Orders Change Orders Shipment Notices Invoices & Payments

Insurance Diversity Credit Internal User

Paper

v.2

Fax

Time Cards Catalogs

Email

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Copyright 2011, Oracle and/or its affiliates. All rights reserved.

Supplier Management Agenda

What is Supplier Management? Why is it Important ?

<Insert Picture Here>

Key Business Challenges

Supplier Management at Ameren Supplier Management at Oracle Q&A

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About Ameren
Ameren Corporation, through its subsidiaries, operates as a public utility holding company in Missouri and Illinois. It engages in: Rate-regulated electric generation, transmission, and distribution businesses Rate-regulated natural gas transmission and distribution businesses Non rate-regulated electric generation businesses. Ameren Services is where all the common business elements of the corporation are housed. The company was founded in 1881 and is headquartered in St. Louis, Missouri.

About Ameren

Electric Customers Gas Customers Service Area Generation Electric System Miles Gas System Miles Total Assets Total Revenues Employees Regulated in Missouri Non-Regulated in Illinois

2.3 Million 925,000 64,000 Sq Mi 15,200 MW 81,507 20,350 $18.1 Billion $6.5 Billion 9,400

Oracle Footprint and Direction

Database
Applications
Sourcing Procurement Contracts iProcurement Core Purchasing iSupplier Portal Services Procurement Accounts Payable eCommerce Gateway XML Gateway CCTM2 Buyers Work Center (Complex Procurement) iExpenses Hyperion General Ledger 1Dependent on release timing 2CCTM: Contractor Cost Tracking Module.
Custom bolt on to Services Procurement to handle recurring services such as engineering, consulting and construction.

10g____
2007

11g_____
2012 ?

11.5.7
2003 2003 -

11.5.10.2 R12.0.6_
2006 2006 2007 2007 2007 2007 2007 2007 2007 2007 MAY 2009 MAY 2009 MAY 2009 MAY 2009 MAY 2009 MAY 2009 MAY 2009 MAY 2009 MAY 2009 MAY 2009 OCT 2009 JUL 2011 DEC 2011 2012 ?

R12.1.3 / 12.21
2012 ? 2012 ? 2012 ? 2012 ? 2012 ? 2012 ? 2012 ? 2012 ? 2012 ? 2012 ? 2012 ? 2012 ? 2012 ?

Supplier Management
Historical Perspective
2004 - 20,000 systemic registered suppliers 2006 consolidation project leaves ~12,000 remaining On-going consolidation
Present day ~9,000 suppliers

Initial Request (usually from Buyers)

Disallow self registration Supplier request form in MS Outlook All new suppliers must use Sourcing & iSupplier Portal Credit history inquiries handled with standard package

Qualification
Insurance Requirements BROWZ

Supplier Management
Accounts Payable
Creates supplier in Oracle AP Creates remit-to site Tracks changes to supplier information

Supply Chain Process & Performance

Creates purchasing sites Creates known contacts records Trains/on-boards supplier Sourcing, iSupplier & CCTM Coordinates/enables iSupplier, Sourcing CCTM responsibilities Advises Buyer of supplier readiness for use

Supplier Management
Ongoing Supplier Maintenance
Update Sourcing, iSupplier & CCTM responsibilities Update remit-to sites (infrequent) Update purchasing sites Update contacts Remediate training Receive and catalog insurance certificates Monitor supplier qualification compliance in BROWZ Transition fax or USPS trans method suppliers to eMail or iSupplier Transition suppliers to EDI/XML trans method Coordinate acknowledgement auto update with EDI/XML suppliers Monitor workflow notification undeliverable messages and intervene for profile updates Merge/consolidate suppliers Purge unused suppliers (3 yrs., no activity) monthly

Supplier Management
In a Perfect World:
AP & Purchasing in the same organization, preferably co-located physically
AP kicks off the setup with FIN information Purchasing fleshes in the relevant PUR information

Designate 1 AP and 1 PUR super user (and a backup for each) as the arbiters of all supplier information
Automate the supplier information collection document
Reject incompletes back to originator no science projects

Restrict new supplier self registration

Supplier Management
In a Perfect World:
Contractually require the use of a supplier collaboration portal or some method of electronic connection (EDI, XML etc) Push existing supplier profile maintenance out to suppliers

Route undeliverable workflow eMail notifications to a designated actionee

Implement a robust purchasing card (credit card) program

Purge no-activity suppliers on an annual schedule

Use no-activity for past three or five years as the criteria (selfdetermined) Route candidate list to Purchasing and Materials Management (Inventory) leadership for review Set a deadline and stick to it

Supplier Management Agenda

What is Supplier Management? Why is it Important ?

<Insert Picture Here>

Key Business Challenges

Supplier Management at Ameren Supplier Management at Oracle Q&A

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Supplier Management at Oracle

Source to Settle Organization

Larry Ellison, CEO

Chief Operations Office

Executive Vice President of Development

Corporate Controller & Chief Accounting Officer

SVP Global Finance Operations

Fusion

E-Business Suite

Peoplesoft Enterprise

JDE

Source to Settle Organization

VP Procurement Systems

Advanced Procurement

Global Procurement Process Owner

Product Strategy

S o u rc e t o S e t t l e
O r g a n i z a t i o n
Product Mgmt, Engineering, QA,

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Copyright 2011, Oracle and/or its affiliates. All rights reserved.

Supplier Management at Oracle

223 ft

100 ft
28 Copyright 2011, Oracle and/or its affiliates. All rights reserved.

Supplier Management at Oracle

Business Challenges

223 ft

Number of Suppliers: Large Number of Invoices: V. Large Number of Systems: 1 Potential New Suppliers: 60,000 /yr

Project Scope
Replaced a number of existing paperbased processes Prospective Supplier Invitation to Register Performance Tracking for Existing Suppliers

100 ft
29 Copyright 2011, Oracle and/or its affiliates. All rights reserved.

Key Project Features

Timeline and Phasing Impact of Sun Acquisition
Highly complex, virtual, direct materials Supply Chain On-line supplier scorecard a key requirement

Short time line; 3 months to complete technical implementation New Supplier Requests (NSR) initiated by requestor base
101,000 Users 60,000 NSR per year

Approached user rollout as a Proof of Concept beginning with low volume countries
17 countries completed

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Copyright 2011, Oracle and/or its affiliates. All rights reserved.

Supplier Invitation to Registration

Prospective Supplier to Oracle
LOB REQUESTER

INVITE SUPPLIER Provides estimated annual spend and business justification RECIEVES NOTICE OF APPROVAL

SUPPLIER

RECEIVE INVITE AND ACCESS LINK

SUBMIT NEW SUPPLIER REQUEST

ON-LINE ACCESS GRANTED

STRATEGIC OWNER

STRATEGIC OWNER; APPROVER(S) MAKE DETERMINATION

SUPPLIER MGMT ADMIN.

SEND NOTICE OF APPROVE OR REJECT

APPROVE: RECORD ADDED REJECT: NO RECORD CREATE

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Copyright 2011, Oracle and/or its affiliates. All rights reserved.

Supplier Online Registration

S o u rc e t o S e t t l e
O r g a n i z a t i o n

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Copyright 2011, Oracle and/or its affiliates. All rights reserved.

Progress to Date
Efficiency Improvements
Replaced offline supplier registration process
Introduced automated supplier review/approvals driven by supplier type, estimated spend dollar threshold and business classification Supplier data ownership & collaboration Attachment support (W9)

Automated new supplier welcome letter distribution (custom)

Deployed to 17 Countries

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Copyright 2011, Oracle and/or its affiliates. All rights reserved.

Supplier Performance Management

Tracking Buying Team Feedback
Key Drivers Allows for Automated Global Evaluations Promotes Uniformity in Scoring Collaboration across multiple teams Result history maintained in Suppler Master

Score Card tracking:

Cost Quality Availability (Delivery & Lead Time) Strategic/Technical Development

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Copyright 2011, Oracle and/or its affiliates. All rights reserved.

Supplier Management Results

Increase in efficiency
Data accuracy increased 100% Accommodated a 54% increase in volumes with only a 10% headcount increase

Decrease in costs
35% decrease in cost per transaction 33% decrease in time required to enter supplier data

Next steps
Additional Supplier Onboarding Capabilities
Walk up Registration, Qualification/Risk Assessment Process (RFI)

Supplier Self Service Profile Maintenance

Improve data quality on existing supplier records, annual review

Contracts Integration
Master agreements integrated into Supplier Master

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Copyright 2011, Oracle and/or its affiliates. All rights reserved.

Supplier Management
Exercising Control Throughout the Lifecycle

Discover
Online registration Supplier search Profile enrichment

Qualify
Detailed assessment Compliance checks Approval process

Enable
Account creation Electronic connection Document formats

Transact Transact & Review

Retire
Review process End relationship Close account

Strategic Preferred

Compliance CSR / CoC

Performance Management
Watchlist Improvement Plan Probation Labor Practices EH&S Finance / Credit

Risk Management

36

Copyright 2011, Oracle and/or its affiliates. All rights reserved.

Oracle Supplier Lifecycle Management

The Vendor Management Application that Institutes Formal Supply-Base Oversight
eRFx & Auctions Contract Negotiation & Binding Profile and Banking Details

Supplier Qualification

Supplier Search

Streamlines Registration and Qualification of Prospective Suppliers Web-based self-service registration Supplier evaluation and scoring Configurable approvals

Order Collaboration

Enables Cross-Functional Performance Evaluation

Templatized questionnaires Flexible feedback mechanisms Visibility into archived supplier appraisals

Supplier Inactivation

Catalog Authoring Mfg Planning Forecasts Capacity Waterfall Analysis Invoicing, Inquiry & Dispute Resolution VMI & Consigned Inventory Shipping & Work Confirmations

Supplier Performance Management

Assures Effective Governance and Risk Mitigation

Extensible profile management Risk-driven supplier segmentation Integration with third-party supplier information services

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Oracle Supplier Hub

Unifies and Shares Critical Info about an Organization's Supply Base Consolidate Supplier Information
Flexible data import formats across heterogeneous systems, advanced attributes and relationships models, and configurable rules governing a golden supplier record

Legacy

Legacy

Trusted Supplier Data

Cleanse & Enrich Supplier Details

Embedded data-quality tools, fuzzy matching de-duplication and intelligent merge, and integration to third party data sources like D&B and Trillium

Share Supplier Profile across Silos

Comprehensive business events, syndication and federation services, and real-time message delivery

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Questions and Answers

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Frequently Asked Questions (FAQs)

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