Good spend management begins with good spend visibility. Your spend data holds the key to unlock hidden opportunities on maximizing savings, improving compliance and mitigating risks in your supply chain. Discover through customer stories on how spend analysis unravels actionable insights to drive confident and trusted business decisions in their organizations.

1. Spend Analysis: Let the Numbers
Do the Talking
Speakers
• Karen Westbrook – Walt Disney Company
• David Chesnut – R.J. Reynolds Tobacco Company
• Tony Verheggen – Air Products and Chemicals, Inc.
Moderator
• Keertan Rai – Ariba, an SAP Company
#AribaLIVE
@ariba
© 2014 Ariba – an SAP company. All rights reserved.

2. Agenda
•
Overview and Introductions
•
Panel Presentations
- Karen Westbrook - <Designation > Walt Disney Company
- David Chesnut - Senior Manager of Procurement, R.J. Reynolds Tobacco Company
- Tony Verheggen - Sourcing Process Owner, Air Products and Chemicals, Inc.
•
2
Q&A
© 2014 Ariba – an SAP company. All rights reserved.

3. Spend Analysis: Let Your Numbers Do
the Talking
< Opening slide to be added >
3
© 2014 Ariba – an SAP company. All rights reserved.

4. Panelists
Karen Westbrook
<Designation >
The Walt Disney Company
4
David Chesnut
Senior Manager of Procurement
R. J. Reynolds Tobacco
Company
© 2014 Ariba – an SAP company. All rights reserved.
Tony Verheggen
Sourcing Process Owner
Air Products and Chemicals, Inc.

5. Agenda
•
Overview and Introductions
•
Panel Presentations
- Karen Westbrook - Walt Disney Company
- David Chesnut - Senior Manager of Procurement, R.J. Reynolds Tobacco Company
- Tony Verheggen - Sourcing Process Owner, Air Products and Chemicals, Inc.
•
5
Q&A
© 2014 Ariba – an SAP company. All rights reserved.

6. Agenda
•
Overview and Introductions
•
Panel Presentations
- Karen Westbrook - Walt Disney Company
- David Chesnut - Senior Manager of Procurement, R.J. Reynolds Tobacco Company
- Tony Verheggen - Sourcing Process Owner, Air Products and Chemicals, Inc.
•
6
Q&A
© 2014 Ariba – an SAP company. All rights reserved.

7. About Reynolds American, Inc.
Parent Company of
R.J. Reynolds Tobacco
Company
Major Brands
•
•
•
•
7
Camel
Pall Mall
Winston
Kool
© 2014 Ariba – an SAP company. All rights reserved.
Santa Fe Natural
Tobacco Company
American Snuff
Company
Major Brands
•
•
Grizzly
Kodiak
Major Brands
•
Natural American
Spirit

8. Spend Analysis Journey
•
Procurement department had implemented spend analytics solutions
using prior e-procurement systems
Data clean-up and categorization had been completed
several years earlier
Procurement staff accustomed to custom taxonomy and categorization
•
•
8
Data extracted from SAP and Pcard systems
Business case based on replacing existing e-procurement system
with Ariba suite
© 2014 Ariba – an SAP company. All rights reserved.

9. Implementation
•
•
Used the “self-implementation” model using internal resources
and phone support from Ariba
Implemented four modules simultaneously
Ariba SIPM – Supplier Information and Performance Management
Ariba Sourcing Professional
Ariba Contract Management Professional
Ariba Spend Visibility Professional
9
© 2014 Ariba – an SAP company. All rights reserved.

10. Spend Visibility Implementation
•
•
•
•
10
Most recent four quarters of spend data
Utilized existing taxonomy
Data validation required review and input from entire Procurement staff
Several iterations of validation required to correct taxonomy issues
© 2014 Ariba – an SAP company. All rights reserved.

11. Go-live and Optimization
•
Training
Conducted several training sessions for Procurement
Buyers, Finance, Internal Audit
While system was somewhat intuitive, most people required additional
“re-training” to fully understand system
•
Center of Excellence Approach
Developed subject matter experts on Ariba Spend Visibility system
Empowered tactical staff with responsibility of becoming
Ariba Spend Visibility SMEs
11
© 2014 Ariba – an SAP company. All rights reserved.

12. Return on Investment
•
Improved knowledge by Buyers of spending trends
Review of historical spend data to identify potential future opportunities
Procurement focus on spend areas not previously managed
•
Credibility based on improved business function knowledge via
detailed spend analysis
Improved relationships with client areas
Identification of potential sourcing opportunities
More strategic approach, partnership and collaboration with client areas
12
© 2014 Ariba – an SAP company. All rights reserved.

13. Agenda
•
Overview and Introductions
•
Panel Presentations
- Karen Westbrook - Walt Disney Company
- David Chesnut - Senior Manager of Procurement, R.J. Reynolds Tobacco Company
- Tony Verheggen - Sourcing Process Owner, Air Products and Chemicals, Inc.
•
13
Q&A
© 2014 Ariba – an SAP company. All rights reserved.

14. About Air Products and Chemicals, Inc.
•
•
Leading suppliers of industrial gases, performance materials, equipment and technology
Air Products is the world’s largest supplier of hydrogen and helium and has built leading global supply positions in
growth markets such as semiconductor materials, refinery hydrogen, coal gasification, natural gas liquefaction, and
advanced coatings and adhesives.
Air Products by the numbers
21,600 employees | 73 years in business | Headquartered in Allentown, PA | Operations in 50+ countries | 750 production
Facilities | 30+ industries served
Financial performance 2013
10 billion revenue | $1.6 billion operating income | $2 billion capital expenditures | 33 percent total
shareholder return | 31 years of consecutive dividend increases
14
© 2014 Ariba – an SAP company. All rights reserved.

15. Importance of Data Quality
•
•
UNSPSC categorization helps segment our spend into categories that can be
better managed.
•
Supplier Enrichment helps us understand the breadth and depth of our
relationships with our suppliers.
•
15
Ariba Spend Visibility helps find hidden opportunities in the company’s
costs and expenses.
Improving Data Quality accuracy helps make these opportunities visible and
credible. Without it, the picture becomes confusing.
© 2014 Ariba – an SAP company. All rights reserved.

16. Data Enrichment Journey
•
•
•
Began in 2010
$8 Billion Spend
Large Energy Spend
Easily classifiable
•
Smaller Categories Difficult to Classify
Indirect Spend
Non-PO Spend
Text Descriptions
16
© 2014 Ariba – an SAP company. All rights reserved.

17. Early FY10 Enrichment Efforts
•
•
Found that small spend categories were getting short changed, while large
categories exceeded agreement minimums
•
Needed to improve the overall classification in order for these small
categories to be well classified
•
17
Met agreement minimums of 90%
Set higher goals than 90% to achieve this
© 2014 Ariba – an SAP company. All rights reserved.

18. Early FY10 Enrichment Efforts and Results
New Construction
74%
99.9%
Construction Maintenance
74%
99.9%
Mechanical Parts
38%
44%
Mechanical Equipment
34%
45%
Business Services
74%
85%
Consulting (ex IT)
70%
79%
(Energy & Non PO Payments)
93%
97.5%
Potential Improvement
18
FY10 Improvement
Material Group
F Y10
Beginning
91%
94.5%
© 2014 Ariba – an SAP company. All rights reserved.

19. Spend Visibility Key Takeaways
FY12
Year
FY10
FY11
Prior
Overall
91.8%
94.3%
95.4 % |
Current
98.6%
FY13
96.7%
Moved Target Goal to 96%
Steady Improvement > Goal
Added acquisition data from two acquisitions to Ariba Spend Visibility in FY13 with some loss in
data accuracy, but to take advantage of rapid analysis of acquisition synergies
– Acquisition A (Two successful auctions on cylinders)
– Acquisition B (Benchmarked fuel savings rapidly)
Online rule improvements retroactively improved FY12 data from 95.4% to 98.6%
SAP Classification Accuracy > 98%
19
© 2014 Ariba – an SAP company. All rights reserved.

20. How Did We Achieve This?
•
•
•
Provided Ariba with UN mapping of all material masters that were unclassified
(400,000 materials)
Provided Ariba with clarification rules on all 188 material groups mapped to
UN codes
Created 820 online rules for weak material groups and non-PO payments using
G/L Account, Supplier and other hint fields
E.g. Approximately ½ of Business Services is GO Plant Maintenance ,which belongs to CPF,
not Corporate
•
Added 28 new fields
G/R Date and Quantity for Chemical Raw Materials
Project Details and Activities
Improved Profit Center Hierarchy
20
© 2014 Ariba – an SAP company. All rights reserved.

21. Progress in Categories Since FY10
Material Group
F Y10
Category
FY10
unclassified
FY10
% Classified
FY13
Category
FY13
unclassified
FY13
classified
New Construction
$250MM
0
99.9%
$331MM
0
99.9%
Complete
Construction
Maintenance
$214MM
0
99.9%
$360MM
0
99.9%
Complete
Mechanical Parts
$99MM
$55MM
44%
$113MM
$.2MM
99.8%
96%
Mechanical
Equipment
$85MM
$46MM
45%
$157MM
$.5MM
99.7%
96%
Business Services
$140MM
$21MM
85%
$72MM
$0MM
100%
96%
Consulting
(ex IT)
$63MM
$13MM
79%
$41MM
$0MM
100%
96%
None (Energy &
Non PO Payments)
$3.2B
$77MM
97.5%
$3.1B
115MM
96.3%
99%
21
© 2014 Ariba – an SAP company. All rights reserved.
Goal

22. Forward Plan
•
•
Add new Material Groups to SAP to provide more descriptive classification
•
Revise Classification Rules to reflect new G/L Accounts for non-PO Spend
•
Improve PCard classification by mapping Material Groups to UN Code and investigate
if Level II Amex data can be added
•
Take advantage of SAP’s HANA technology to speed up reporting
•
22
Maintain current levels of data quality
Use 10K for US Suppliers to improve Supplier Partnering
© 2014 Ariba – an SAP company. All rights reserved.

23. Agenda
•
Overview and Introductions
•
Panel Presentations
- Karen Westbrook - Walt Disney Company
- David Chesnut - Senior Manager of Procurement , R.J. Reynolds Tobacco Company
- Tony Verheggen - Sourcing Process Owner, Air Products and Chemicals, Inc.
•
23
Q&A
© 2014 Ariba – an SAP company. All rights reserved.

24. Q&A
Contact Information:
24
© 2014 Ariba – an SAP company. All rights reserved.
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