Markit - Danfoss IT Procurement Case Study
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The document discusses the Markit Tech Showcase at the Procurement Leaders Data Intelligence & Technology Forum 2019, highlighting Danfoss's case of supplier consolidation and automation in IT procurement. Key trends include decreased product prices, increased product variety, and growth in IT personnel costs, while emphasizing the importance of local sourcing and transparency in procurement processes. By implementing a single supplier contract across 33 countries, Danfoss achieved significant cost savings and improved efficiency, showcasing the effectiveness of Markit's solutions in streamlining procurement operations.
Markit - Danfoss IT Procurement Case Study
- 1. MARKIT TECH SHOWCASE FOR PROCUREMENT LEADERS DATA INTELLIGENCE & TECHNOLOGY FORUM 2019 DANFOSS EMEA SUPPLIER CASE: CONSOLIDATION AND AUTOMATION MARGUS VAHEMÄE HEAD OF SALES
- 2. 30BILLION EUR TOTAL ANNUAL REVENUE ESTONIAN TOP 500 COMPANIES ESTIMATED SPEND ON IT DEVICES FORBES GLOBAL 2000 COMPANIES TECH COMPANIES FROM ESTONIA TACKLING BIG GLOBAL CHALLENGES
- 3. CHALLENGES FACING GLOBAL COMPANIES IN IT HARDWARE COMMODITIES PROCUREMENT Amount of products increasing 10 x, but unit prices going down. Change of traditional 80/20 rule and common procurement methods not ensuring optimal results anymore. For global companies: problem is small at “entity” level, but big when consolidated. Ideal sourcing and delivery should be local – to – local with local invoicing process. Side-effects: low visibility of spend and purchasing guidelines are not always followed - leading to maverick spend with no savings in sight.
- 4. EFFICIENT PROCESS BECOMES PARAMOUNT THREE KEY TRENDS SHAPING IT PROCUREMENT Dramatic decrease of product prices Explosion of product variety IT personnel cost growth and scarcity 1 2 3
- 5. EMEA SUPPLIER CONSOLIDATION AND AUTOMATION Global Technology company creating innovative solutions to bring savings in field of energy, food, heating and power. HQ in Denmark with 6,1 bn EUR revenue, 28 000 employees in 38 countries 130 SUPPLIERS IN EMEA FOR IT ACCESSORIES TOTAL YEARLY SPEND OF 2 MIL EUR 22 COUNTRIES OPERATIONAL IN EMEA
- 6. DANFOSS KEY NEEDS 1. Direct costs savings of purchased products and internal process cost decrease 2. Increased insights due to information availability 3. Visualization and cost awareness 4. Transparency and simplicity 5. Automation & workflow
- 7. RESULTS WITH MARKIT 1. ONE SUPPLIER CONTRACT for 24 countries vs 130 different suppliers to manage 2. AUTOMATIC REAL-TIME e-TENDERING for each item the 400 IT buyers are ordering (30 000 items in 2018 with a transparent pricing model). 3. DIRECT SAVINGS OF 110 000 EUR from 750 K EUR spend on the first year. Average 13.5 % extra savings on an annual basis with order revenue increasing 50% Y- to-Y
- 8. RESULTS WITH MARKIT 4. DELIVERY TIME DOWN from 28 days to 2.4 days globally. This has remained stable for since implementation 3 years. 5. 500+ HOURS SAVED ANNUALLY from purchasing activities and now a clear overview of spending by countries and product categories. Additional product categories are added each year to leverage co-operation.
- 10. ONE CONTRACT FOR DANFOSS IN 33 COUNTRIES One supplier frame-contract for up to 33 countries Markit local entities ensure local – to – local invoices with local VAT
- 11. REAL TIME MARKETPLACE FOR FAIR AND TRANSPARENT COMPETITION Markit is a real time marketplace for IT products with local-to-local deliveries in 33 countries. We integrate approximately 300 leading IT distributors world-wide: real time and transparent catalogue representing 80% of market-share in every country. One login to access in 33 countries.
- 12. BEST SOLUTION FOR IT PROCUREMENT SPECIALISTS AND BUYERS Efficient e-tendering of every purchase order with local invoicing Multiple offers from all the leading distributors for more than 1 million SKU-s View the winning offer versus the rest and place a fast local-to-local order with quick lead times (1-3 business days)
- 13. INTEGRATION WITH DANFOSS ERP AND INTERNAL PURCHASING SYSTEM ARIBA FULLY AUTOMATED PROCESS
- 14. DETAILED ACTIVITY AND PROGRESS REPORTS Markit provides detailed information to analyse and decide next steps for further improvements in purchasing.
- 15. TAKE THE CHASING OUT OF IT PURCHASING MARGUS VAHEMÄE HEAD OF SALES MARGUS.VAHEMAE@MARKIT.EU WWW.MARKIT.EU THANK YOU!