Is Your E-Sourcing a Trick or Treat? A CombineNet Presentation

Webinar Presentation

Welcome!

Copyright © 2012. CombineNet, Inc.

Agenda

Jennifer Sikora, VP of Marketing,
CombineNet
– Brief Company Introduction
– Challenges in E-Sourcing Adoption
– Customer Case Studies

Greg Holt, Director of Product
Marketing, CombineNet
– Trick or Treat? Achieving Strategic
Sourcing Goals in E-Sourcing

© 2012 CombineNet, Inc.

CombineNet Company Overview

The Company The Technology Customer Value

Established in 2000. Best of Breed Solutions that Capture >2X spend under E-
improve Strategic Sourcing – Sourcing management.
Global: Offices in holding 21 U.S. patents.
Pittsburgh, PA; London, UK; Address complex spends
Hamburg, Germany. Software-as-a-Service (SaaS) with advanced functionality.
Partners for Latin America, delivery model for ease of
Middle East, APAC. adoption and scale Fast implementation and
broad adoption for any type
Customers: Global 2000 Easy integration into your of user.
spanning CPG, Food & Bev, environment to complement
Retail, Manufacturing, existing applications. Nearly 100% see full payback
Transportation, and more. after 1st sourcing event.


Best of Breed E-Sourcing Solutions

Bid Award
CombineNet
Create CombineNet
Expressive Bidding® Scenario
Spend RFxpress for Contract
Expressive Feedback Analysis
Analysis E-RFX or Management
Event Management & Bid
E-Auction
Optimization

CombineNet ASAP

Supporting End-to-End E-Sourcing for All Spend Categories
with Advanced Technology Solutions


Some of CombineNet’s Customers
Industry Leaders in Manufacturing,
Transportation, and Retail


Where Do Our Customers Use Us Today?
Sourcing Across All Spend Categories:
Direct, Indirect, Transportation, Packaging, Services
- sampling -
Chemicals Capital Expenses Air Freight Bottles/Vials Armored Car Svcs
Commodities Construction Mat’s Drayage Cans Facility Services
Fats & Oils Displays Ocean Cartons Labor
Food Ingredients Fleet Vehicles LTL Corrugate Legal Services
Raw Materials Office Supplies Parcel Flexible Films Meetings
Resins Marketing/Media Truckload Printed Labels Printing
Steel Telecom/IT Equip Rail/Intermodal Pallets Treasury/Finance

From the Routine…
 51% of events have <100 items

… To the Complex
 20% have >1,000 items
 20% have >50 suppliers
 18% have >10,000 bids
Based on FY2011 data


Increasing Spend Under Management:
CombineNet Customer #1

Customer Example #1:
European Conglomerate: $ Billion in Spend Managed Annually
>1,000 e-sourcing events conducted 8
annually. 7
Ariba user since 2007. 6
Adopted CombineNet in January 2011. 5
More than 2X Increase in Corporate 4
Spend Managed between years 1 and 2 3
since implementing CombineNet ASAP. 2
On track for additional 2X increase in 1
2012, with majority supported in 0
CombineNet. 2010 2011 2012

Ariba CombineNet


Increasing Spend Under Management:
CombineNet Customer #2

Procurement organization tasked with
Customer Example #2:
$ Billion in Spend Managed Annually
capturing indirect spend
3.5 Long-term Ariba user and with SAP
Sourcing
3
Adopted CombineNet ASAP in 2010
2.5
– Captured “Sacred-Cow” spends
2 – With CombineNet ASAP, able to leverage
the collective spend across all stores in
1.5
sourcing events
1
0.5 Estimated 225% Increase in Spend under
0 E-Sourcing Management in 2 Years –
2010 2011 2012 most run in CombineNet.

Ariba/SAP CombineNet


70% of CombineNet’s customers
use us alongside
Ariba, SAP, Oracle, or other suites.
Why?


The Adoption Lifecycle – and Outcome
Decentralized, Investment in Adoption Issues*
Desktop-Driven Procurement Suite
Sourcing Process
Up to 30% of
+ = Spend

Up to 70%
Excel, Word, Email Use of E-Sourcing Module of Spend

40% *Source: AberdeenGroup, May 2012
35%
35% 33% Best-in-Class
29% 29% 28% 27% 28%
30%
25% 22% Industry Average
20%
15% 12% Laggards
9% 9% 10%
10%
5%
0%
% of total spend % of direct % of total non- % of total services
materials spend production / spend
indirect materials
spend
(Percentage of survey respondents, n=146)


The Tangled Web of Sourcing With Excel

Used as a Work-around for But Creates Problems and Not
Sourcing Suite Shortcomings: a True Solution:
– Bid aggregation & data issues
– Familiar & free
– Analysis is clunky, time consuming,
– Data collection flexibility
and very limited
– Cost model flexibility
– Supplier management &
– Can “work my way through” communication handled via email
analysis
– Not standardized, centralized,
repeatable/scalable
– Data security & confidentiality risks
– Risks of knowledge loss
1 in 2 employees with employer <5 yrs;
1 in 4 <1 year.


The E-Sourcing “House of Horrors”

Despite having Center-Led sourcing
processes and Centers of Excellence,
technology utilization remains low.
Investments are not well suited to support
your sourcing challenges and strategy.
Technology limitations force users to make
one of two choices:
1. Put constraints on their sourcing project or
strategy, OR…
2. Go back to use of spreadsheets, word
documents, email, etc.

But Wait! There is another way out….


The CombineNet Solution

© 2012 CombineNet, Inc.

CombineNet ASAP® for Strategic E-Sourcing

Key Differentiators:
SaaS-based Best-of-Breed product used Flexibility and Usability.
by sourcing teams and their suppliers.
Optimization Engine and Scenario
Speeds, simplifies, and centralizes the Builder enables rapid and advanced
creation and management of sourcing ‘what-if’ analysis. 21 U.S. Patents.
events of any size, scale, or complexity.
Expressive Bidding® and Expressive
For any spend category (direct materials, Feedback support an expressive,
indirect materials, transportation, collaborative marketplace between
services). buyers and suppliers.

Complements and enhances existing Fast Implementation – 1 ½ day training,
solutions and processes. quick-start wizards, template uploads,
event editing, and more enable fast,
smooth adoption and immediate ROI.


Trick or Treat?:
Achieving Your Strategic Sourcing Goals


Establishing Goals for E-Sourcing

Let’s get back to basics: What do you want to accomplish?

Top Goals for E-Sourcing
 More Spend Under Central E-Sourcing
Management
 Managing Costs in Volatile Markets
 Increasing Efficiency and Productivity
 Meeting the Needs of Spend Owners
and Stakeholders
 Improving Supplier Relationships and
Innovation


Missed Goal Ratings

Rotten Pumpkin: The feeling you get when you
put a lot of time and effort into a project, only
to see your work go to waste

Spreadsheet Zombies: An unfortunate and
unhealthy side-effect of spending too much
time staring at spreadsheets in the course of
manipulating, cleansing and analyzing data

Pitchfork-wielding Mobs: Unsatisfied
(sometimes angry and unruly) spend owners
and stakeholders that are ready to set fire to
the sourcing team’s laboratory


More Spend Under Central Management
Centralize more spends through aggregation of similar spends across
business units and locations for enhanced efficiency, leverage, and
visibility into costs.

Requirements 100s of Items
x Dozens of Locations
Ability to run larger events, = 1,000s of individual Items
with more items across more x Dozens of Suppliers
locations and suppliers = 10,000s of Bids

E-Sourcing Shortcomings Hard Limits on # of Items,
Bids, & Suppliers creates
Severe data and event size limited options on how to
limitations execute


E-Sourcing Options-Central Management

Option #1
Lot groups of items based on -Hedged bids on lots
similar characteristics or -Less competition
geography

Option #2 -No efficiency gains
Resort to Excel spreadsheets -Weeks worth of
to collect and analyze bids Spreadsheet work

Option #3
Return to status quo of -Not leveraging spend
regional or item-based e- -No efficiency gains
sourcing events

CombineNet Option
-Leverage consolidated
Conduct large-scale,
spend across suppliers
consolidated e-sourcing
-Increased competition
events


Managing Costs in Volatile Markets
Commodity prices, raw materials, and fuel costs are driving rising prices
across all goods and services, requiring sourcing teams to look for
additional areas to reduce corporate spending

Raw materials
Requirements
+ Processing cost
+ Packaging
Ability to identify savings on
+ Freight/Delivery
the right cost components
= Total Landed Cost

E-Sourcing Shortcomings Limited ability for collecting
and analyzing cost
Poor support for detailed cost component breakdown and
breakdowns and total landed complex cost models
costs


E-Sourcing Options-Managing Cost Volatility

-Lack of should-cost
Option #1 visibility
Continue to work with All-in -Missed savings
pricing from suppliers opportunities

Collect and evaluate cost -Weeks worth of
components in spreadsheets Spreadsheet work

CombineNet Option
Collect and drive competition -Understand suppliers’
on detailed cost components, total cost model
and analyze complex cost -Identify areas for cost
models for savings reductions
opportunities


Increasing Efficiency and Productivity
Automate and improve the management of the e-sourcing cycle:
event creation > supplier management > bid collection > bid analysis

Requirements As the Sourcing Team
increases its influence over
Easy to use solution that more spend, workload
reduces effort and drives increases, as does the need
adoption for efficiency

E-Sourcing Shortcomings Painstaking RFP creation
leads users to default to
Inflexibility and lack of Excel- existing spreadsheet-based
based event creation bid sheets


E-Sourcing Options-Increasing Efficiency

Discard spreadsheets and -Unhappy team-
rebuild RFPs from scratch members

-Limited efficiency
Option #2 gains
Reuse spreadsheets attached -No visibility
to e-sourcing solution -Weeks worth of
Spreadsheet work

CombineNet Option -Improve efficiency
Quickly convert existing throughout the cycle
spreadsheets into fully -Add advanced
functional online RFPs functionality


Meeting Spend Owner and Stakeholder Needs
Supporting the diverse and often competing needs of spend owners
and internal stakeholders for whom you are managing sourcing events

Requirements “Not my spend”
Ability to evaluate award “I have specific
strategies that reflect requirements for the
stakeholder preferences and suppliers that keep my
goals business running”

E-Sourcing Shortcomings “One-size-fits-most” bid
Lacking ability to analyze and analysis and award
understand the cost impact of strategies severely limit
stakeholder preferences stakeholder alignment


E-Sourcing Options-Stakeholder Alignment

Option #1 -Unhappy stakeholders
Push a “One-size-fits-most” -Loss of stakeholder
award strategy confidence

Option #2 -Less efficiency gains
Resort to Excel spreadsheets -Weeks worth of
analyze bids collected in Spreadsheet work
e-sourcing

Option #3 -Not leveraging spend
Conduct limited-scale e- -No efficiency gains
sourcing events

CombineNet Option -Gain confidence of
Support stakeholder stakeholders
preferences with detailed -Improve stakeholder
“What if?” analysis buy-in to award


Improving Supplier Relationships and Innovation

Driving Competition while Inviting Collaboration from Suppliers:
Reduce costs, encourage creativity, embrace innovation

Requirements Focus on total value-add
Provide suppliers the ability -Better pricing if you’ll
to put their best foot forward accept this alternative item
and respond more -If you give me this, then
strategically I’ll give you that

E-Sourcing Shortcomings
Price-driven RFPs leave little
Limited bid collection
room for supplier-driven
flexibility and Price-focused
innovation or efficiencies
award analysis


E-Sourcing Options-Supplier Innovation

Option #1 -No expansion of e-
Bypass e-sourcing when price sourcing beyond the
is not the deciding factor routine

Option #2 -Less efficiency gains
Collect and analyze non-price -Weeks worth of
factors in spreadsheets Spreadsheet work

Option #3 -Unhappy stakeholders
Shoehorn the project into a -Unhappy suppliers
Price-focused format

CombineNet Option -Improve supplier
Encourage supplier relationships
competitiveness and strategic -Identify areas of
innovation supplier innovation


Case Examples


Case Study: The Schindler Group

Schindler mobility solutions move one
billion people every day. Key Sourcing Stats
17,000 vehicles 27 cost
Initial Project: Fleet Vehicles, one of
their most complex spend areas. 7 vehicle types elements
per region Quarterly price
Collected price and non-price
24 countries and changes
factors, including fuel economies,
leadership teams 2 million price
end-of-contract damage costs,
financing charges. CO2 emissions points
Results: “This is a mature spend category for
– 10% + cost savings Schindler, one that we’ve strategically
– $4 M in OEM rebates sourced for 10 years. Yet with
– 5% reduction in lease prices CombineNet, we were able to achieve
excellent cost savings.”
Now adopting for a range of spend – Douglas Else-Jack, VP of Purchasing
categories. Excellence and Indirects, The Schindler Group


Case Study: SAB Miller

World’s 2nd Largest Brewing Company
- Consolidated European Freight Key Stats
EU road freight typically sourced by 2,500 lanes. 8% + savings.
country because of size and analysis
limitations of existing technology Mostly Full Truckload Retained 80% of
Consolidating all EU lanes created (FTL) incumbent carriers
more competitive environment for Inbound/Outbound Single sourcing
carriers, and reduced workload of between breweries, event for all of
sourcing team
warehouses, customers Europe
Inter-country volume consolidation
provided more opportunity for
carriers to leverage their assets for “With more data under one tender event, there was the
reduced pricing need to support the process with a strong e-sourcing
Expressive Feedback drove solution. We chose CombineNet based on its intuitive
competition within carrier base handling of large data sets, the flexibility in defining
during bidding tender variables, and the strong analytical engine to
assess and visualize different implementation scenarios.”
Optimized Scenario Analysis enabled
Flavio Gall, Global Category Director for Freight and Fleet, Trinity
fast bid analysis and stakeholder Procurement
alignment across EU business units


Case Study: Procter & Gamble

P&G Brands touch the lives of 4 Billion
Consumers. 23 “Billion-Dollar” Brands. Sourcing Stats: Categories Sourced

Began use on most complex sourcing Raw Materials Packaging
activities in 2003 Industrial Parts Chemicals
Other sourcing suites already in place Marketing/ Transportation
Advertising (all modes)
Gradually expanded to additional
advanced sourcing activities Legal Services

Now adopting across the organization
for all e-RFX needs
Results: “CombineNet has been a valued source
– Time savings of 15-20% per sourcing of technological innovation for many
event – 1 day/week/user years."
– Hundreds of $millions in savings – Rick Hughes, Chief Purchasing Officer,
across categories Procter & Gamble


What Next?

Learn more about adding Advanced Sourcing capabilities
to your E-Sourcing bag of tricks
– White Paper: “Adding Advanced Sourcing to SAP, Ariba,
Oracle, and Other Procurement Suites”


Thank You.
Questions & Discussion
www.combinenet.com
info@combinenet.com
Phone: 412-471-8200


Is Your E-Sourcing a Trick or Treat? A CombineNet Presentation

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