Procurement executives, though continually challenged to maintain sustainable savings, face numerous challenges integrating supply risk management holistically into spend management. This is especially true for organizations that have focused on reducing costs and limiting working capital levels as a response to difficult market conditions. Join this session to hear from leading experts and Ariba customers as they share how to leverage smarter supplier management and embark on a journey from being company-centric to being customer-centric and demand-driven using business networks.

1. Mitigating Global Supply Chain Risks
through Smarter Supplier Management
Speakers
• Christine F. Ross – Forrester Research
• Jamie Ashford – The American Red Cross
• Doug Cloutier – Cabot Materials
Moderator
• Sundar Kamakshisundaram – Ariba, an SAP Company
#AribaLIVE
@ariba

2. Agenda
•
•
•
•
2
Introduction
Panel Presentations
Key Takeaways
Q&A
© 2014 Ariba – an SAP company. All rights reserved.

3. The Panel Team
Speakers:
• Christine Ferrusi Ross –
Forrester
• Jamie Alford – The American
Red Cross
• Doug Cloutier – Cabot
Materials
Moderator:
Sundar Kamakshisundaram
3
© 2014 Ariba – an SAP company. All rights reserved.

4. Defining Supplier Management…
“Supplier Management” is multi- faceted and
Registration &
On-boarding
Process
Supplier
Discovery
touches many aspects of Business Commerce
Supplier
Portals
Supplier
Management
or SRM
Vendor Master
Management
Risk
Management
© 2014 Ariba, Inc. All rights reserved.
Performance
Management
Diversity/Green/
Corporate
Responsibility
• Supplier Information Management that unifies
platform, process and supplier profiles across the company and
keeps it current, complete and correct.
• Highly usable web-based portal for suppliers to register and
manage information collaboratively with customers
• Supplier Performance Management capabilities including
Process Workflow and approvals, Surveys and
scorecards, flexible role based dashboards and customizable
reports
• A Robust technology platform that seamlessly integrates incontext Supplier info such as Parentage, Financials, Diversity
and Sustainability to manage and mitigate Supply Risk
• A unified Supplier Record merging data and process flows to
third party systems and data sources

5. Increasingly Complex Supply Chains Can Create
Significant Risk
Brand
Damage
Increased
Costs
5
© 2014 Ariba, Inc. All rights reserved.
Revenue
Loss
Unsatisfied
Customers

6. Many Sources of Supply Chain Risks
 Price
 Disruption
 Brand
•
•
•
•
•
•
•
Mergers & acquisitions
International sourcing
Commodity volatility
Capacity shortage and Growing lead times
Lack of available credit
Quality and sustainability
Tier 1 and 2 supplier performance
“Research from across 62 countries has revealed that 85% of organizations surveyed recorded at
least one supply chain disruption in 2011. 40% of disruption originated below the immediate
supplier.”
- Business Continuity Institute, Nov. 2011
6
© 2014 Ariba, Inc. All rights reserved.

7. The Risk Most Important to You Depends on
Your Function and Industry
Brand
Disruption
Price
Brand
CEO
High Tech
CPO
Manufacturing
CRO
COO
Price
Financial Serv
CFO
Disruption
Retail / CPG
BOTTOM LINE: ELIMINATE WHAT YOU CAN. MANAGE THE REST!
7
© 2014 Ariba, Inc. All rights reserved.

8. Mitigating Global Supply Chain Risks
through Smarter Supplier Management
Christine Ferrusi Ross, Vice President and Principal Analyst
#AribaLIVE

9. Making Leaders Successful
Every Day

10. Finding Customer Advantage in
Managing Vendor Risk
Christine Ferrusi Ross, Vice President and Principal
Analyst

11. What if you weren‟t afraid of anything?

12. Agenda
› Why being customer-obsessed
means rethinking your vendor
risk approach
› A simple plan for using vendor risk
to create customer advantage
› Focus on risk treatment and
become fearless
© 2013 Forrester Research, Inc. Reproduction Prohibited
12

13. You need to become customer-obsessed
Transform
the customer
experience
Embrace
the mobile
mind shift
Age of the
Customer
Turn big data
into business
insights
© 2013 Forrester Research, Inc. Reproduction Prohibited
Become
a digital
disruptor
13

14. Age of the customer changes how to
approach vendor risk
“Removing Bad” Approach
“Creating Good” Approach
Objective: reduce risk to “zero”
Objective: actively manage risk to
business advantage
Consider all risks negative
Consider some risks positive
Use one treatment for all risks
Use multiple treatments
Think about only internal
stakeholders/business impact
Make customer-impact a key
consideration
Key question: What can I do to avoid
any risk?
© 2013 Forrester Research, Inc. Reproduction Prohibited
Key question: How can I use risk to
my advantage?
14

15. Customer-obsession mean you need to
consider multiple kinds of supplier risk
Forrester Research, October 2013 “Understanding Software Options For Managing Vendor Risk”
© 2013 Forrester Research, Inc. Reproduction Prohibited
15

16. Each industry weighs those four risks
differently
› Examples:
• Retail
• Financial services
• Oil/gas/utilities
• Automotive
© 2013 Forrester Research, Inc. Reproduction Prohibited
16

17. Emerging suppliers complicate the
risk picture
› Start-ups often lack the sophistication and/or funds to
properly secure data to client specifications
› Access to validated financial data often isn’t available
› Traditional definitions of financial viability don’t apply
› If we reject a vendor because it is risky, the business
user can overrule us and buy anyway

18. Your big suppliers aren‟t inherently less
risky, by the way…
How well do you understand your suppliers‟ supply chains?
›
Is there a reasonable chance that my supplier’s
subcontractors could hurt my supplier’s viability?
› What subcontractors does my supplier use?
› Can the supplier validate that its subcontractors follow
the same privacy/disaster recovery/compliance policies
that it does?
›
How viable are those subcontractors?
© 2013 Forrester Research, Inc. Reproduction Prohibited
18

19. A simple plan…
›
›
›
›
Crystallize your suppliers’ overall risk with
a risk index
Clarify your own risk tolerance
Track supplier-related risks based on their
strategic importance to you
Create a treatment plan for every likely or
critical risk

20. Crystalize your suppliers„ risk
Financials
News
Strategy
Customer
base

21. Clarify your own risk tolerance
Financial
Process
and
execution
maturity
Business
Resources

22. Match your supplier‟s risk to your tolerance
Client risk
Tolerance index
Too risky
Safe
Vendor Risk Index
0
A B
C
D
F
E
G
Z
100

23. Track and TREAT vendor risk

24. Focus on risk treatment and become
fearless!
›
As the Age of the Customer continues, rethink
your vendor risk approach
› Create a treatment plan to address any very
likely or devastating risks
›
Use the treatment plan to collaborate with
product/business execs and gain advantage
with customers
© 2013 Forrester Research, Inc. Reproduction Prohibited
24

25. Thank you
Christine Ferrusi Ross
+1 617.613.6124
cross@forrester.com

26. Mitigating Global Supply Chain Risks
through Smarter Supplier Management
Jamie Alford, MScPM
American Red Cross
#AribaLIVE

27. American Red Cross
The American Red Cross prevents and alleviates human suffering in the face of emergencies by
mobilizing the power of volunteers and the generosity of donors.
Vision: The American Red Cross, through its strong network of volunteers, donors and
partners, is always there in times of need. We aspire to turn compassion into action
so that...
...all people affected by disaster across the country and around the world receive
care, shelter and hope;
...our communities are ready and prepared for disasters;
...everyone in our country has access to safe, lifesaving blood and blood products;
...all members of our armed services and their families find support and comfort
whenever needed; and
...in an emergency, there are always trained individuals nearby, ready to use
their Red Cross skills to save lives.
© 2014 Ariba, Inc. All rights reserved.

28. The Starting Point
•
•
•
2007 – 2009 Strategic Sourcing Organization
implemented
2009 – 2011 – Search began for an end-to-end Supply
Chain Management System
May 2012 – ReQuest, the Red Cross Ariba solution
was implemented!
© 2014 Ariba, Inc. All rights reserved.

29. Ariba Solutions Deployed
•
•
Ariba Solutions Implementation was a rapid deployment to the NHQ, Chapters,
Disaster, In-Kind and non-regulated Biomedical lines of business. The roll-out
moved us from paper to online ordering overnight.
Full Suite of solutions:
Supplier Information
Procure to Pay
Sourcing Professional
Contract Compliance
Contract Professional
Integration of solutions to current data sets
(Oracle, data warehouse, etc…)
Order Management
Process changes necessary to
implement solutions
Supplier Performance Management
Supplier Enablement
Spend Visibility
29
© 2014 Ariba, Inc. All rights reserved.

30. The Numbers
•
•
•
•
•
30
1.3 billion = Sourceable spend
85 - 90% = Spend under Management
7,500 Suppliers
350 Suppliers Enabled to-Date
25 Catalogs are Live
© 2014 Ariba, Inc. All rights reserved.

31. Supplier Performance Management
•
•
•
The Supplier Performance Management (SPM) provides the Red Cross with the ability to
proactively manage its supplier base, while mitigating the associated supplier risk. Its particular
focus is on those suppliers that are critical to the day-to-day operations of the Red Cross.
By utilizing the Ariba Supplier Performance Management module within Ariba, the program
can easily track and manage all aspects of supplier management, as well as maintaining
scorecards and required supplier documentation including the newly developed supplier
risk deliverables.
Partnering with each Line of Business (LOB) SPM:
1.
2.
3.
4.
5.
31
Addresses current audit requirements for managing suppliers
Enables the Red Cross to better manage supplier risk
Leverage spend categorizations and the reporting capabilities of Ariba
Define, track and associate scorecards and metrics to supplier profiles
Support the Supplier Diversity Program reporting requirements
© 2014 Ariba, Inc. All rights reserved.

32. Supplier Risk Deliverables
SUPPLIER TIERING & RISK DELIVERABLES
TIER 1*
TIER 2*
u
Business Critical
Supplier Registration or
Registration Refresh
X
X
X
Financial Viability & Risk
Rating Score (FVRR)
X
X
Insurance Certificates
X
X
X
Diversity Certifications, if
applicable
X
X
X
Business Resiliency/Continuity
Plan
X
X
Scorecards
X
X
Diversity Spend Metrics
X
X
Others TBD
32
Strategic
Tier 3
Everyone else
X
© 2014 Ariba, Inc. All rights reserved.
X

33. BLUE SKY - Supplier Management
• Oracle = System of Record for all suppliers
• New Suppliers desiring to do business with Red Cross register in Ariba.
• ARC Eform utilized for supplier set up in Oracle.
• Customer Administrator approves Eform after verifying supplier does not already
•
•
33
exist in Oracle or Ariba.
Oracle Integration will feed (nightly) Ariba downstream (Procure-to-Pay), thus
creating partitioned suppliers which will be utilized for contract terms and PRs.
Supplier available for selection in Contract Terms and PRs
(both in-flight and new).
© 2014 Ariba, Inc. All rights reserved.

34. BLUE SKY- Supplier Management
Common
Supplier
Upstream
Oracle
E-Form
The System
of Truth
Daily, Oracle
suppliers are loaded
into ReQuest. This
process runs each
evening or it can be
run on demand
when a supplier
must be set up
quickly (usually
reserved for
suppliers associated
with Disaster
Operations).
© 2014 Ariba, Inc. All rights reserved.
Common Suppliers are utilized
in the modules:
1-to-1 Relationship
Common Supplier
Downstream
•
•
•
•
•
Supplier Management
Sourcing Professional
Contract Professional
Supplier Performance Management
Spend Visibility
Partitioned Suppliers are
utilized in the module:
Partitioned
Supplier
• Procure to Pay (P2P)
• Contract Compliance
1-to-Many Relationship
Supplier
Location
Supplier
Location
(Ordering
Location)
(Ordering
Location)
1-to-1 Relationship
Remittance
Location
Remittance
Location
(Remittance Location)
(Remittance Location)
Fact: Every Partitioned Supplier has a Common Supplier
(the converse of this statement is not true)

35. Gray Sky - Disaster Sandy
•
•
•
•
•
•
35
Oracle = Still System of Record for all suppliers
Requestor creates PR.
Procurement receives PR and submits ARC Eform.
Customer administrator approves Eform and pushes to Oracle.
Oracle feeds Ariba downstream via a manual push into Oracle rather
than waiting for the nightly feed thus creating the partitioned supplier.
Supplier available for selection in Contract Terms and PRs
(both in-flight and new).
© 2014 Ariba, Inc. All rights reserved.

36. Mitigating Global Supply Chain Risks
through Smarter Supplier Management
Doug Cloutier – Cabot Materials
#AribaLIVE

37. About Cabot

NYSE: CBT since 1968

Founded 1882

Global performance materials company

43 manufacturing sites in 21 countries


Core technical competencies in fine particles and
surface modification
FY2013 sales: $3.5 B
MARCH 2014 / SUPPLIER INFORMATION AND PERFORMANCE MANAGEMENT / CONFIDENTIAL / NOT FOR REDISTRIBUTION
37

38. Global Overview
manufacturing sites
affiliates
regional headquarters
43 manufacturing sites in 21 countries, all with local management teams – serviced by
one purchasing team, managed centrally, with a globally distributed team.
Sales by Region
Asia
Americas
Europe, Middle
East & Africa
Spend by Region
35%
35%
34%
39%
30%
27%
MARCH 2014 / SUPPLIER INFORMATION AND PERFORMANCE MANAGEMENT / CONFIDENTIAL / NOT FOR REDISTRIBUTION
38

39. MARCH 2014 / SUPPLIER INFORMATION AND PERFORMANCE MANAGEMENT / CONFIDENTIAL / NOT FOR REDISTRIBUTION
39

40. Cabot’s Purchasing Tools Evolution
Supplier
Contact
Info
Savings
Database
Contract
Archive /
Approvals
Supplier
Feedback
Competitive
Bidding (BVA)
SH&E
JDE

Global processes and
systems in place with one
global ERP instance but…

Pre-Qualifications

Trade
Extensions
Dec
2012
Manual
information
exchange with
suppliers


SUPPLIER HIDDEN
SUPPLIER HIDDEN
No data integration between
purchasing management
systems
No direct supplier interaction
from within tools
Substantial email and phone
call volumes to maintain
supplier data
SH&E contractor prequalification process
performed over email and fax
with written documents and
hard copies of certificates
MARCH 2014 / SUPPLIER INFORMATION AND PERFORMANCE MANAGEMENT / CONFIDENTIAL / NOT FOR REDISTRIBUTION
40

41. Purchasing Tools Evolution
Supplier
Contact
Info
Savings
Database
Competitive
Bidding (BVA)
SH&E
JDE
Manual
information
exchange with
suppliers
Supplier
Feedback
Savings Tracking
Contract Approvals
& Archive
Pre-Qualifications
Dec
2012
JDE
Contract
Archive /
Approvals
Competitive Bidding
(BVA)
Key Supplier
Information
Sourcing
Trade
Extensions
eCatalogs and
eRequisitions
Supplier Feedback
Order
Acknowledgement
and Receipt Tracking
Supplier Scorecards
SH&E
Pre-Qualifications
Supplier Information
Management / Portal
Trade Extensions
(Complex
Tenders Only)
Dec
2014
MARCH 2014 / SUPPLIER INFORMATION AND PERFORMANCE MANAGEMENT / CONFIDENTIAL / NOT FOR REDISTRIBUTION
41

42. Supplier Onboarding Strategy and SIPM Rollout

July 2012 – Project start of our initial Ariba implementation





December 2012 – SIPM Go-Live



Questionnaires and surveys full go live - English, French, Dutch, German & Italian
March 2014



North America full go-live for SIPM
South America, Europe and Asia – Top 5 suppliers each for supplier quality scorecards
March 2013 – Europe Go-Live


Training and data design to build our Ariba foundation for expansion to sourcing, contracts
and P2O
SIPM – Supplier scorecards for top mission critical suppliers
SIPM – Maintain critical insurance and safety information for all contractors working onsite at
Cabot facilities
SIPM – Key supplier information management for all managed suppliers
Asia launches in English, Chinese and Japanese
South America launches in English, Spanish and Portuguese
Today – 1,200 suppliers managed in Ariba servicing mix of SH&E and Performance Requirements
5 MARCH 2014 / PRESENTATION TITLE / CONFIDENTIAL / NOT FOR REDISTRIBUTION
42

43. Performance Management Process
Supplier/Contractor SH&E Pre-Qualifications

Cabot’s largest use thus far of SIPM


Critical review of insurance, safety history and contractor SH&E programs by Cabot’s
SH&E teams before a supplier is allowed to work on site. Requires renewal every 1,
2 or 3 years depending on risk associated with work performed.
Process overview:






Onboard a supplier to Ariba SIPM either by self-registration link or by manual invite.
Send a custom Ariba survey to the supplier through the supplier workspace
Use the survey interface to track responses and gather additional information
Retrieve results from completed survey and transform into Cabot internal survey for
the SH&E managers to review and send through Ariba to Cabot SH&E managers
Cabot SH&E managers approved, leave comments and rank the risk to determine
recurrence timing for next renewal of certification
Cabot purchasing sets a task reminder in workspace to indicate when renewal
is required
5 MARCH 2014 / PRESENTATION TITLE / CONFIDENTIAL / NOT FOR REDISTRIBUTION
43

44. Process Walk Through
SH&E Surveys within SIPM
Contractor Name
Contractor Name
Contractor Name
Contractor Name
Contractor Name
MARCH 2014 / SUPPLIER INFORMATION AND PERFORMANCE MANAGEMENT / CONFIDENTIAL / NOT FOR REDISTRIBUTION
44

45. Process Walk Through
SH&E Surveys within SIPM
MARCH 2014 / SUPPLIER INFORMATION AND PERFORMANCE MANAGEMENT / CONFIDENTIAL / NOT FOR REDISTRIBUTION
45

46. Process Walk Through
SH&E Surveys within SIPM
Contractor Name
Contractor Name
Contractor Name
Contractor Name
Co
ntr
ac
tor
Contractor
Name Na
m
Contra e
ctor
Contractor
Name
Name
MARCH 2014 / SUPPLIER INFORMATION AND PERFORMANCE MANAGEMENT / CONFIDENTIAL / NOT FOR REDISTRIBUTION
46

47. Performance Management Process
Scorecards

Global supplier quality management organization

1 global leader

3 regional supplier quality managers

Initial rollout was 5 scorecards per regional supplier quality manager

Expanded to 5 scorecards per sub region in 2013

In 2014 suppliers selected for scorecards in Ariba by critical risk ranking



A, B or C ranking determined by type of equipment or service delivered by supplier
B level ranking can be moved up to A based on additional internal justification
All ‘A’ level suppliers will receive scorecards from within Ariba

Type of goods/service will determine if data is pulled and reviewed quarterly, bi-annually
or annually
5 MARCH 2014 / PRESENTATION TITLE / CONFIDENTIAL / NOT FOR REDISTRIBUTION
47

48. Lessons Learned

Scope and planning is key when designing your process

Cabot Legal was already “in” Ariba as a contracts user

Supplier information management transition does not happen on its own

The concept of “load all your suppliers into Ariba in 2013” simply did not work

SIPM was “additional work” on the purchasing teams…..

You need a burning issue to motivate and excite the purchasing organization





SH&E qualification process was challenging and manual
Ariba automated and provided a way to organize the process
Scorecard process was loosely managed if it even existed and was manual
Ariba centralized, standardized and helped to automate the process
Do not underestimate the need for power users, trainers and the time to develop
a process that works
5 MARCH 2014 / PRESENTATION TITLE / CONFIDENTIAL / NOT FOR REDISTRIBUTION
48

49. Future Strategy and Rollouts


We are in the process of fully rolling out our SIPM foundation in Asia and
South America
In 2014 our internal competitive bidding documentation, contract review/approval
processes and savings tracking will all go-live in Ariba globally



More reasons for supplier creation and management in Ariba
Supplier risk ranking for scorecard usage has begun and we are anticipating
significant scorecard usage in 2014 across our supply base
We are linking results of our internal supplier complaint system into our scorecard
fact tables

We are linking core JDE transaction order data into scorecard fact tables

We are preparing our P2O enablement and initial go-live in 2014
5 MARCH 2014 / PRESENTATION TITLE / CONFIDENTIAL / NOT FOR REDISTRIBUTION
49

50. Summary and Key Takeaways
Build Collaborative Relationships
and Obtain Executive
Sponsorships
Determine Supplier Segmentation Model
Pilot specific categories and/or supplier tiers
Use technology as an Enabler
Measure and plan for continuous
improvement
ACCELERATE SAVINGS, IMPROVE COMPLIANCE & MITIGATE RISK!
© 2014 Ariba, Inc. All rights reserved.

51. Thank you
Q&
A
Contact information:
Sundar Kamakshisundaram
Sr. Director – Global Solutions Marketing
E: sundar.kamak@sap.com
51