Procurement Organizational Transformation: Standardization, - - PowerPoint PPT Presentation

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Procurement Organizational Transformation: Standardization, - - PowerPoint PPT Presentation

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Procurement Organizational Transformation: Standardization, Centralization, Automation May 4, 2017 ABInbevs Global Procurement Journey First step in centralization in 2010 Global Procurement Office (GPO) Increasingly agile

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SLIDE 1

Procurement Organizational Transformation: Standardization, Centralization, Automation

May 4, 2017

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SLIDE 2

ABInbev’s Global Procurement Journey

2008 2009 2010 2011 2012 2013 2014 2015 2016 GPO Setup Project Denali Planning>Implementation

2017 2018 2019…

RPO Setup

  • First step in centralization in 2010 – Global Procurement Office (‘GPO’)
  • Increasingly agile determination and realization of M&A synergies
  • Global transformation (‘Project Denali’) in 2015-2016
  • New setup allowed quick integration of SABMiller’s Procurement organization

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SLIDE 3

Reflections & Key Learnings: Denali project

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  • Leaner, more efficient organization
  • Spend control with compliance to terms & policies
  • Increase Procurement coverage of tail spend
  • Improve business interface with Procurement
  • Better reporting analytics
  • Overhead cost control
  • Capture additional tax efficiencies
  • Implement excellence program
  • Standard state-of-the-art Tech platforms
  • ‘Plug & Play’ M&A readiness

The dream.. … dependent on

  • Strong leadership and change management in

the Zones

  • Process & org. design standardization
  • Clear & aligned Collaboration Model
  • Investment in automation (POs in SAP, platforms)
  • Cross functional support (People, IBS)
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SLIDE 4

Keys to Success

  • Change Management
  • Over-communicate
  • Organization needs to believe in the model
  • Quickly identify blockers & supporters, address the blockers & recruit supporters
  • Build multi-functional local teams to deal with day-to-day logistics, and a central team to

ensure consistency of approach (and fund adequately)

  • Invest first in learning (benchmarking, fit-gap), then plan
  • Transform before “Lift & Drop”
  • Knowledge management – document & train
  • Hyper-care is critical
  • Service level will be different – focus on KPIs
  • People & Leadership are (as usual) KEY

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SLIDE 5

Clearly Defined Procurement Offices Roles

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Front Office

(Managerial & Strategic)

Middle Office

(Tactical)

Back Office

(Transactional)

Global Regional Global Global/Regional

GPO

Global Procurement Office

RPO

Regional Procurement Office

RPSS

Regional Procurement Shared Services

GPSS

Global Procurement Shared Services

BSC

Business Service Centers 1 Global 1 per Region 1 per Region 1 Global 1 per Region

  • Global Category Management
  • Category strategy
  • Sourcing execution
  • SRM strategy/exec
  • Global Planning &

Performance Management

  • Risk Management
  • Global Capabilities &

Compliance*

  • “Smart Value Creation”**
  • BuySell
  • Regional Category

Management

  • Category strategy
  • Sourcing execution
  • SRM strategy/exec
  • Regional Planning &

Performance Management

  • Regional Capabilities
  • Operations
  • Stakeholder management
  • Contract implementation

Language-dependent activities

  • Spot Buy desk
  • PR/PO follow up
  • Content management
  • Supplier enablement
  • Contract admin & optimization
  • Continuous Improvement
  • BuySell support

Non-language-dependent activities

  • PO creation
  • Continuous Improvement
  • eSourcing Factory
  • Analytics Engine
  • Compliance & Value Tracking
  • Centralized Operational &

Financial Reporting

  • Global BuySell support
  • AP (invoice processing,

payment)

  • MDM
  • Demand Management
  • Service levels (SLA/KPI)
  • Helpdesk

Provides Services to RPO Provides Services to RPSS Provides Services to RPO Provides Services to GPO

* S2P Process ownership, Compliance, Tech Agenda, Learning and Development ** Supply chain consulting, Design to Value, Sustainability

Provides Services to PSS

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SLIDE 6

Design Source to Pay Process Framework

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Managerial processes

  • Performed by procurement Management team
  • Includes target setting and ownership
  • Drives the development of the procurement

function

Tactical processes

  • Repetitive value creation activities
  • Focuses on process commonality
  • Managed through defined service requests
  • Data and analytics enabled

Strategic processes

  • Core to the company strategy
  • Drives business value agenda
  • Specialized and category specific
  • Requires stakeholder proximity

Transactional processes

  • Repetitive processing activities
  • Efficiency driven
  • Low-interaction activities
  • Language and location neutral
  • All activities are process-oriented in an efficient end-to-end procurement organization
  • Allows focus on the right KPIs and tracking Procurement performance from source to pay
  • Processes split into different levels of complexity:
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SLIDE 7

Designed Procurement Processes from Scratch – Level 1 to SOPs

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Sourcing Supplier Mgmt Contract Mgmt P2P

  • Proc. Capabilities

Service mgmt. Managerial processes

Manage Strategy, Policy, Op. Model & Ways of working Manage Top Line Growth Manage Performance Objectives & Business Alignment Manage People and Competencies Manage Knowledge Manage Procurement Projects (PMO) Manage Technology & Tools Manage Services delivery Manage Stakeholders and Communication

Strategic processes

2.1 Define & Approve Category Strategy 2.3 Define & Execute Category Risk Management 2.5 Define and Execute Supplier Management Strategy 2.6 Define Contract Management 2.7 Define P2P strategy 2.8 Define and execute sustainability & BW strategy 2.10 Execute Budgeting cycle 2.12 Define S2P KPI/SLA 2.2 Execute Sourcing Project 2.4 Execute Value Engineering Project 2.9 Define & execute innovation strategy 2.11 Execute PPM activities

Tactical Processes

3.1 Execute Spot Buys 3.2 Execute Contract Implementation 3.4 Execute predictive analytics 3.7 Execute sourcing analytics 3.9 Execute Continuous Improvement 3.3 Manage contracts 3.5 Execute performance 3.8 Execute Inventory Optimization 3.10 Execute SLA/KPI corrective actions 3.6 Perform VE analytics

Transactional Processes

4.1 Perform Supplier Enablement 4.2 Perform Contract Administration 4.3 Perform Requisition to Order 4.6 Perform eSourcing support 4.7 Perform Helpdesk services 4.8 Perform Operational Reporting 4.4 Perform PO Mgmt. 4.9 Perform Master Data Management 4.5 Perform Accounts Payable 4.10 Perform IT tools Management

GPO/RPO PSS BSC

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SLIDE 8

Some Processes are not Trivial to Centralize

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  • PR triangle
  • PR quality check
  • Analyze Specification
  • Identify & Conduct RFx
  • Negotiate agreement & Select Supplier
  • Update Requisition & Create PO
  • PR/PO follow-up
  • Handle order acknowledgements
  • Reduce Spot Buy
  • Check Completeness of Request
  • Register Supplier
  • Develop eSourcing event
  • eSourcing set up & supplier enablement
  • Manage eSourcing event
  • Commodity analytics
  • Inventory optimization
  • Value Tracking
  • Budgeting
  • Contract analytics (compliance)
  • Supply risk analytics
  • P2P analytics
  • Should-Cost model
  • VE analytics
  • Supplier performance analytics
  • Strategic Sourcing
  • Follow up strategy category implementation
  • Execute Tier 2 helpdesk
  • Execute SLA/KPIs corrective actions
  • Identify and implement continuous

improvement actions

  • Generate set of standard reports
  • Create ad hoc reports based on available

system data

  • Distribute reports to stakeholders
  • Quality suppliers
  • On-board & Enable suppliers and e-Invoices
  • Support performance, collaboration,

development and phasing-out

  • Create contract in SAP
  • Enable catalogues
  • Retain Contracts in Repository
  • Monitor contract expiration dates
  • Manage/Update Buyer Portal Content
  • Maintain catalogues

Offshore services

Supplier Enablement & Management Support Content Management Contract Administration & Optimization Operational Reporting Service Management PSS suitable spend Sourcing & Category Mgmt. Spot Buys Analytics Engine eSourcing Factory

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SLIDE 9

Tackling Tail Spend

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Type Strategic Sourcing (~80% of spend, few suppliers) Tail Spend Tail of the Tail Responsibility GPO & RPO PSS Business User Keys for Success

  • Centralization
  • Separate Sourcing vs.

Operations

  • Business Insights &

Market Analytics

  • Process Standardization
  • Catalogue/Contracts Automation
  • eSourcing
  • Knowledge Management &

Training

  • Global Supplier Portal & Clean

Master Data

  • Analytics for Continuous

Improvement

  • P-Card

(Visibility & Control)

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SLIDE 10

Collaboration Model Overview

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GPO

Risk Mgmt Supplier Mgmt Contract Mgmt Planning / Order Implementation Sourcing Strategy Planning Risk Mgmt Supplier Mgmt Contract Mgmt Planning / Order Implementation Sourcing Strategy Planning

GPO Led Non Compliant

Risk Mgmt Supplier Mgmt Contract Mgmt Planning / Order Implementation Sourcing Strategy Planning

Strategy Country Sourcing Country Strategy GPO Sourcing RPO & GPO

(PSS spot buys)

Strategy GPO Sourcing GPO

(PSS spot buys)

Level of GPO involvement

More Extensive Less Extensive Not Involved

PSS

Risk Mgmt Supplier Mgmt Contract Mgmt Planning / Order Implementation Sourcing Strategy Planning

Strategy PSS Sourcing PSS

RPO

Risk Mgmt Supplier Mgmt Contract Mgmt Planning / Order Implementation Sourcing Strategy Planning

Strategy RPO Sourcing RPO (PSS spot buys)

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SLIDE 11

Roles & Responsibilities – GPO CM

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  • Ownership of overall category strategy
  • Ownership for specific sourcing strategies
  • Select suppliers
  • Evaluate suppliers and negotiate Contracts/ key Terms

& Conditions

  • Follow compliant Contract management process

(approval, signature, retention)

  • Provide market intelligence, manage innovation,

manage commodity risk and lead Value Engineering activities

  • Manage overall procurement knowledge, tools and

technology The role of the GPO, is to develop and implement procurement strategy and own relationships with suppliers

  • Undertake transactional purchasing
  • Manage supplier performance monitoring/ reporting in

line with GPO guidance

  • Manage budgeting and value tracking
  • Undertake material planning and execution
  • Ensure inbound logistics management
  • Escalate any chronic supply issues or major disputes to

GPO Category Managers Local procurement/PSS support the management of daily transactional activities with the suppliers

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SLIDE 12

Roles & Responsibilities – GPO Led CM

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  • Ownership of specific sourcing

tactics

  • Select suppliers
  • Evaluate suppliers and negotiate

Contracts/ key Terms & Conditions

  • Follow compliant Contract

management process (approval, signature, retention)

  • Provide market intelligence,

manage innovation, manage commodity risk and lead Value Engineering activities The role of the RPO is to support the procurement strategy implementation and own relationships with suppliers

  • Undertake transactional purchasing
  • Manage supplier performance

monitoring/ reporting in line with RPO guidance

  • Manage budgeting and value

tracking

  • Undertake material planning and

execution

  • Ensure inbound logistics

management

  • Escalate any chronic supply issues
  • r major disputes to RPO Category

Managers Local procurement/PSS support the management of daily transactional activities with the suppliers

  • Ownership of overall category

strategy

  • Retains overall responsibility for the

category and provides DAG approvals in line with global requirements The role of the GPO is to develop and own the overall category strategy, and retain overall responsibility for the category

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SLIDE 13

RPO Standard Structure

GPO/CPO

PSS Director

Zone President Regional Procurement VP

Regional PPM

Variable Costs Fixed Costs WAPT & e- sourcing

Procurement Capabilities

PMO Supplier Dev. Compliance Category Mgrs Local Operations Mgrs Sourcing Specialists

Procurement Shared Services Zoom follows

Regional CatMan Director(s)

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SLIDE 14

PSS Standard Structure

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PSS Director Continuous Improvement Specialist Legal Support People Business Partner Planning & Performance Mngr PR Distribution Specialist PO Creation Specialist PO Mgmt Lead Sourcing & Spot Buy Lead Category Mgrs Spot Buyers Sourcing Support Lead eSourcing Specialist Contract Management Specialist Procurement Analytics Lead Procurement Analytics Specialist Inventory Optimization Specialist Content & IT Mgmt Lead Contract Catalogue Enablement Specialist IT tools maintenance Specialist Supplier Management Specialist MDM SPOC PO Follow-Up Specialist Reporting Specialist

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SLIDE 15

Compliance Process: GPO Example

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Evidence that GPO is leading and delivering the value should be collected throughout the end to end sourcing process (e.g. meeting minutes, negotiation summaries) Supporting Documentation Evidence that GPO is accountable for the category strategy Category Strategy Raise DAG Approval Request GPO DAG Approvals Signed Global Agreement with ABI Global Procurement GmbH Legal Approval BAU / Supplier Management Escalation of Chronic issues / Strategic decisions Manage Chronic issues / lead strategic decisions

It is the responsibility of GPO to collect and store required compliance documentation for GPO categories, regardless

  • f who produces the Compliance ‘deliverables’

Supplier Selected Provide key terms to relevant local entities

Key

GPO Activity GPO Deliverable PSS Activity RPO Deliverable

RPO Activity

PSS Deliverable Local Country Deliverable Local Country Activity

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SLIDE 16

Set Routines to Track, Monitor, Sustain, & Improve

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SLIDE 17

Sustain & Continuously Improve: Procurement Excellence Program

Focus on process excellence while not losing sight of delivering financial results

  • Enabled by a global standardization of

processes and centralization of transactional activities

  • System-measured KPIs (no physical audit required)
  • Leveraging standardized global KPI program

with aligned targets Finance & Shared Services

  • rganizations
  • Quarterly results centrally

compiled & reported by GPSS analytics

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