Dr, Marcell Vollmer, CPO at SAP - Future trends in procurement: Procurement shared services
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The document discusses the evolution of procurement from an operational to a strategic function at SAP and the role of procurement shared services. It outlines SAP's procurement organization, including its objectives to achieve standardization, cost efficiency, compliance, and scalability through a global procurement organization. The document also examines the benefits and challenges of implementing procurement shared services, such as increased standardization and efficiency through consolidation, versus difficulties changing cultures and addressing local requirements. Finally, it presents three models for procurement shared services: local, regional, and global.
Dr, Marcell Vollmer, CPO at SAP - Future trends in procurement: Procurement shared services
- 1. The Procurement Organization of the future between shared services and strategic procurement Global Procurement Excellence Dr. Marcell Vollmer, Chief Procurement Officer at SAP AG February 8, 2013
- 2. Agenda 1 SAP's Procurement Organization 2 Evolution Procurement Function 3 Procurement Shared Services @ SAP
- 3. SAP Today 65,000+ SAP employees worldwide 16.3bn revenue (2012) 3.6bn spend (2012) > 446,000 received invoices (2012) 120 / 350 countries / buildings 14,000+ active suppliers worldwide
- 4. What keeps me as CPO awake at night? The business world has witnessed unprecedented challenges in the last years …global …scarcity of …unforeseeable climate catastrophes economic meltdown raw materials Global Procurement has to be prepared to cope with these challenges, being flexible and deliver high class services within rapid changing frameworks
- 5. Vision and Mission and Structural Set-up of Global Procurement Global Procurement Organization (GPO) @ SAP Global Procurement Organization (GPO) combines all SAP procurement units. We significantly improve SAP's performance by leveraging our overall purchasing power and realizing sustainable savings by executing globally streamlined commodity strategies. Within the GPO, we strive to implement best-in-class procurement processes, deliver first-class services to our internal customers, mitigate risk for SAP, and be a fair partner to our vendors. CPO Procure-to-Pay Strategy Group Concentration of all procurement-related activities within GPO and support all countries on purchasing volume in a tiered logic Commodity Procurement Procurement Shared Services (strategic and tactical sourcing) (operational procurement) 44 Locations Worldwide with approx. 200 People
- 6. Objectives of SAP’s Global Procurement Organization Our guiding principles to achieve Global Procurement Excellence Standardization and Automation Scalability Cost Efficiency ONE GPO Compliance
- 7. Agenda 1 SAP's Procurement Organization 2 Evolution Procurement Function 3 Procurement Shared Services @ SAP
- 8. Evolution of Procurement towards Strategic Function Shared Services as Enabler Strategic relevance of procurement within a company Strategic Partner Tactical Partner Operational Partner Time spend on Time spend on Time spend on operational tactical strategic procurement procurement procurement tasks tasks tasks Time spend on Time spend on Time spend on operational tactical strategic procurement procurement procurement tasks tasks tasks In order to enable procurement staff to focus on value adding strategic tasks, procurement shared services strives to Time spend on Time spend on Time spend on operational tactical strategic leverage existing resources to the best procurement procurement procurement extend in order to efficiently handle tasks tasks tasks operational procurement processes until 1950 1950 - today Today 2015 + time
- 9. Procurement Shared Services Benefits and Challenges of Procurement Shared Services Shared Services definition: Concentration of company resources performing activities, typically spread across the organization, in order to service multiple internal partners at lower cost and with higher service levels, with the common goal of delighting external customers and enhancing corporate value Benefits Challenges • Increased standardization • Change Management and top management buy-in to implement Shared Services • Higher degree of automation due to consolidation • Different local cultures, business practices, and legal • Economies of scope and scale (improved efficiency and requirements effectiveness) • Eliminate “Shadow” processes and process inefficiencies • Easier Process Performance Measurement and Analytics (Business process reengineering) • Workload balancing around the globe possible • Difficult to get skilled and experienced project resources • Full transparency on spend, master data and compliance • Service level and charging model
- 10. Procurement Shared Service Center (SSC) Models Three models can be differentiated: local, regional and global Geographic scope Local Set-Up (Centers) Regional Centers Global Center Separate SSC per location providing individual services to local Regional SSC providing services to all subsidiaries within a One Global SSC providing services to all subsidiaries globally subsidiaries specific region • Easy implementation of global standards Benefits • Good balance between customer proximity • Customer proximity and standard setting • High degree of automation due to high • Easy adoption to local culture transactional volume (lights out shared • 24x5 service services) • Time zone coverage (deliver 24x5 service) • Difficult to set-up global standards • Regional standards instead of global Risks standards • Business continuity • Low degree of automation due to limited transactional volume • Collaboration between regional centers • Competition for skilled people in one location
- 11. Agenda 1 SAP's Procurement Organization 2 Evolution Procurement Function 3 Procurement Shared Services @ SAP
- 12. Procure to Pay @ SAP Overview of Key KPIs Procurement Volume @ SAP in 2012 incl. Sybase FTE are working for P2P @ FTE still working for P2P SAP outside GPO & GFSSO for a non automated P2P process cycle Active Suppliers in 2012 Clicks, <1 min. to create a shopping cart – but Purchase Order Line items in 2012 TRAINING REQUIRED Invoices in 2012 Trip Entries in 2012 Run P2P … ... Procurement Savings ... Show Case Run P2P… ... cheaper ® (FRBT) ... cleaner ® (Data) ... smoothier ® ... Efficiency & Effectivness ... saver ® (BRBF) ... High Quality (SOX) ... friendlier ® (Usability) ... User friendly ... SAP Runs SAP ... standardizier ® (Self ... stronger ® ... controllier ® (Governance) ... Compliance Assessment) (KPI)
- 13. House of Procurement 2015 - Focus, Align and Engage Best in class procurement organization to be established 2015 GPO Strategy Best-in-Class Procurement Strategic Excellence Margin Operative Excellence Generation of sustainable savings using global procurement SSC with lean and standardized processes Commodity Strategy Customer Success Organization Best in class procurement services for our customers as innovative frontrunner and example Sourcing Strategy Customer Centricity Growth Be volume ready for 2015 with customer centric operations and Supplier Management PMI support Processes People Frontrunner & Innovation High GPO workforce engagement through leadership, empowerment, Standardization & Automation trainings and promotion of diversity People Excellence Leadership Development Diversity Experts Governance & Compliance
- 14. Procurement Shared Services @ SAP From As-Is (regional) to To-Be (global) until end of 2012 as of 2013 Regional Centers Global Organization with Regional Centers EMEA/DACH Procurement Operations Americas EMEA Americas APJ APJ • Procurement Operations organizational units How do we get there: • One globally operating Procurement handled in a Shared Services Model • Centralization of procurement Operations organization with three regional • Separate regional organizations for EMEA, operations for EMEA region in Prague centers for EMEA, APJ and Americas Americas and APJ (Q1 2012), using existing SAP SSC • Globally aligned standards and working • Centralized centers in Americas and APJ, co- infrastructure in Prague principles located to existing finance Shared Services • Bringing all three Procurement • In very few exceptional cases operations Centers Operations organizational units under employees can still be located outside a • No globally standardized working principles one global umbrella (Q1 2012) in order Shared Services Center to ensure globally standards
- 15. Procurement Operations today and in future From 12 to 3 Locations Worldwide Stockholm until 2012: Dublin Berlin Warsaw St. Ingbert Prague Dresden Regional Walldorf Denver Newtown Square Centers for Procurement Operations Singapore without global coordination Buenos Aires in 2013: One Prague standardized global Procurement Operations Singapore Organization operating within three regional Buenos Aires centers Location with more than 10 employees Location with less than 10 employees Location with less than 3 employees
- 16. Current Scope of Procurement Shared Services @ SAP Request handling, Master data and Operational support • Check quality of Shopping carts Order & • Perform PO management & processing 1 request • Manage Procurement Cards (P-Card) handling • Support RfX processes/e-sourcing (tactical support) for Commodity and Country Procurement Master • Execute vendor master management 2 data • Execute material master data and catalogue management management • Execute Contract management • Provide • end-user support • helpdesk functionality Operational • system support (power user) 3 • Support/manage M&A activities Support • Provide quality management functionality • Provide analytics (for Commodity/Country Procurement) on request • Provide operational management for car fleet
- 17. Take Away’s and Lessons Learned • The Procurement Function developed from a purely operational function towards a more strategic Business Partner Function within a company • Procurement Shared Services is an enabler for the Procurement Function to focus on strategic tasks • Different Procurement Shared Services Models exist and each company has to decide on the best model, according to it‘s geographic scope and organizational set-up • Each Procurement Shared Services Organization has to define their service portfolio according to the maturity and desire for an organization