Creating a purchasing shared services is easier said than done. Unlike in an accounts payable shared service, it is often hard to instil a customer service mindset when moving from local procurement to serving business units remotely. Resistance will happen.
In this session Jerker Gunnarsson will share how DHL overcame this to set up a shared purchasing service center for North America. He then discusses how to set up a global service delivery without losing the quality of service originally provided by local procurement.
2. Deutsche Post DHL facts & figures
DP DHL financial
key indicators (2011):
Revenue: 53 bn €
EBIT: 2.4 bn €
Corporate Center (CC)
MAIL EXPRESS GLOBAL SUPPLY
• 82 high-tech mail sorting • Operations in 220 FORWARDING CHAIN
centres countries and territories FREIGHT • Facilities in over 3,000
• 80,000 mail delivery staff • More than 124,000 • ~ 11,000 employees locations with more than
• 34,600 vehicles for mail Express employees • More than 40m tons 148,000 employees
delivery • 36 express hubs transported per year • Around 1,400 logistics
• ~ 3,300 delivery bases worldwide • More than 160 Freight centres, terminals and
• ~ 54,700 delivery districts • More than 4,700 terminals in Europe warehouses worldwide
• Nearly 40 million households express facilities • 35,000,000 sqm
worldwide warehouse storage
• 108,000 letter boxes
• 420 aircraft operating on capacities worldwide
• 69 million mail items every day
behalf of DHL Express • More than 30 countries
• 930,000 P.O. boxes
• Around 72,000 express covered
• More than 12,500 retail outlets vehicles
Global Business Services (GBS)
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3. Questions to determine the path to a
successful Shared Services Purchasing Organization
1 2
How do we organize
What processes do
ourselves to be cost ORGANIZATIONAL
BUSINESS we implement to
efficient while STRUCTURE
PROCESSES optimize performance
improving business
of the organization?
value?
Success
TECHNOLOGY depends on us
covering ALL
THREE of these
areas!
What tools do we deploy
to facilitate the business
3 processes and improve
efficiency?
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4. Breaking out Procurement group from
the business into one global organization
DP DHL bundled in 2006 all major internal support functions in a new division
“Global Business Services” to streamline and strengthen service and efficiency.
Global Coverage 10 Service Lines
• ~10,000 FTE Europe (incl. • IT Services
Germany) • Finance Operations
• ~2,000 FTE Americas • Real Estate
• ~1,000 FTE Asia Pacific
In total 13,000 GBS employees GBS – a •
•
Procurement
HR Operations
worldwide • Legal
worldwide • Risk & Insurance
• Fleet
organization • Business Consulting
• Global Customer Solutions
Basic Volume
• 3 Global Data Centers
• 5 Regional Accounting Centers
• 350 milo square feet properties
• >90,000 Fleet managed
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5. Standardized the setup, but ensure to
deliver to each specific need
BUSINESS PROCUREMENT
• Establish demand requirements • Conduct standardized Purchasing process
• Define initial specifications • Perform spend analytics/benchmarking
• Transfer technical understanding • Utilize advanced ePurchasing platforms
• Communicate customer needs • Leverage volumes and best practices
Foundation on standardized toolset
supplier bid management supported end-end solution templates
documented audit trail contract management
standardized process risk database spend analytics
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6. Identifying the process steps in scope
for shared services
Purchasing Transactional
Get Tool (Operational procurement) Marketplace
1 2 3 4 5 6 7
Contract & Catalogue
Demand Management Requisitions Approval Purchase Delivery Invoice Reconci Payment
5 (Demand Identification) Order liations*
Analyze
Purchasing Monitoring
4 Sourcing
(Strategic procurement)
1
The procurement process consists of two
3 major parts. These are sourcing (strategic
procurement) and purchasing (operational
2
procurement). An efficient procurement
operation can separate the processes and
optimize the individual services
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7. Steps to centralize Operational
Procurement – US & CA
Centralization of Operational Super users with authority to
staff to one location transact with preferred
vendors under “sandbox”
concept
Catalog solutions for all high
transaction items P-card with spending limits
and blocked merchants for
all low value ad hoc
transactions
Results: Reduction in Operational Purchasing cost by >50%
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9. Ensure balanced performance tracking
with all stakeholders considered
Development of KPIs need to consider the balance of the
expected performance of the Procurement organization
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10. Dashboard keeps business informed of
progress in procurement operations
The Procurement Dashboard is an automated
report pushed from a data warehouse to
Business Partners directly
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11. Technologies used in our Procurement
shared services operation
GeT
eProcurement Information
System Management
e-Marketplace Document
Hosted Catalogs SharePoint
/ Punch-out Contract
Catalogs Repository/Mana
Catalog & non- gement
catalog via Supplier
same Management
requisition
Global
Procurement
Sourcing
Data Warehouse
Application
Reporting
Strategic
capabilities for
Sourcing
the whole
Reverse e-
“Procure to Pay
Auction
Process”
Supplier
Spend Cube
Database
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12. Conclusion
• Implement shared • Standardize product
services structure to offering/processes
drive cost efficiencies • Consolidate and
and synergies. ORGANIZATIONAL automate operational
• Maintain business BUSINESS procurement
STRUCTURE
partner intimacy and PROCESSES • Implement KPIs and
clarify roles and scorecards to drive
responsibilities behavior
TECHNOLOGY
• Make sure the technology support each step of
the process
• The right technology will help drive down the
processing cost
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13. Backup
Moving towards a touch less P2P process
Procurement Content
• Item search/Punchout
• eCatalog Management
Backend ERPs • Content Enrichment
https/OCI or cXML
PO & Inv Automation
• Transaction Routing
https/cXML • Vendor Self-Service Portal
Email
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14. Questions
THANK YOU
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