Supplier Connectivity-the Key to Procurement Agility

Jon VassTradeshift

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Examples from the high street

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How Big Business Used to Work

Porter's value chain

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Then This HappenedComputing power doubles every two years!

- Moore’s law is the concept of computer power doubling every two years at the same cost.

- Consistent over past 30 years.- Have an idea what that means.- Apple processor costs $300 - in 1994

cost $54m.- Bleed out into the physical world -

brand new materials that weren’t being used 5 years ago.

- In less than 5 years time you will be able to print your own pair of trainers.

Why do we need agility?

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• Hyper Competition• Less predictable markets and events• Exponential Innovation

…. all because of Moore’s law

So, improving agility is a procurement problem

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But it can feel more like this...

Why isn’t procurementagile?

There are two key reasons...

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How can procurement be more agile if the focus

is on cost only?

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Reason 1: Cost Focus

In order to improve agility procurement needs to develop a more value based approach...with a focus on value procurement can begin to tap into supplier innovation, procurement can leverage its understanding and handle of the

supply market to shift and adapt to new or changing needs.

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How Big Business Used to Work

You lower cost per transaction at the price of agility

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Concrete is cheap, until you want to change it

Change can come in high volumes, just like transactions

How can procurement be more agile

when the connectivity is so complex?

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Reason 2: Connectivity Complexity

In order to improve agility procurement needs to develop a more value based approach...with a focus on value procurement can begin

to tap into supplier innovation, procurement can leverage its understanding and handle of the supply market to shift and adapt to

new or changing needs.

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Supply chains are essential, but cause

inertia due to complexity

Every connection needs managment

Source; Stefan Zeeb Blog

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● Medium Luxury Goods Manufacturer

● 500 key direct suppliers● Exchanging Purchase Orders,

Ship Notices and Invoices● Producing goods and services

for core product line● Complex supplier

relationships managed by many individuals

● Challenges around communicating change effectively

● Onerous regulatory/compliance environment,

All processes are manual

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This business was trading in the year AD 398, located in the Eastern Roman Empire.

Shouldn’t we be able to do supplier connectivity a little better…. than them?

...electronic is not just about faster transmission!

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Not a technology problem… (a Roman one!)

• Differing standards of messaging - no standardisation

• Difficult to get suppliers culturally and technically onboarded- fast!

• Many stakeholders in every network node with different priorities

• Inherent risk in onboarding new suppliers

• Existing technology only allows transaction of the formal data sets (no

real collaboration)

• Every business has to build their own network (or galaxy) - no

sharing/overlap

But true supplier networks - like Tradeshift - do solve these problems

What does the research say?

The Hackett Group

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Innovation is A High Priority

98%

62%

33%

30%

32% 35%

8%

Innovation will become a more important competitive differentiator in the next 5 years

Creating disruptive innovation is an important part of our business strategy

Our company has the right KPIs, processes and incentives in place to meet its innovation goals

strongly agree neutral disagree/strongly disagree

1%

1%

Industry agrees on this one...

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Top 2016 procurement priorities

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Agility Assessment - tools

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The lack of connectivity has led to a broken S2P process No foundation of connectivity

Spend Analysis

Supplier Assessment / Qualification

Sourcing Contract Management Procurement Receiving Invoicing &

Payment

Real-time supplier master data missing Not enough

suppliers providing catalog content

Cannot send digital POs to suppliers

Supplier invoice not digital

Goods received… or not?!

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Conclusions

● The world is changing at a pace we haven’t seen before

● Procurement is a fundamental business process that has to be agile

● Cost Focus and Complexity make agility in procurement challenging

● It can be addressed by proactive decision making and using the latest technologies to simplify complexity

Confidential

Tradeshift and Supplier Connectivity

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Who we are...

● Our Mission is to be the supplier network and platform to connect all the companies in the world on one platform.

○ We want to provide value to everyone participating in the B2B process.

○ We believe the future of business software is a flexible and open, cloud-based platform for facilitating document exchange and collaboration.

○ We strive to deliver a modern, state-of-the art user experience.

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Core offerings...

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Tradeshift unlocks value from all categories of suppliers

High Value High Volume

High ValueLow Volume

Strategic/non-recurring suppliersComplex transactionsMed-large suppliers

Low ValueLow Volume

Low ValueHigh Volume

Strategic/recurring suppliersCritical transactions

>70% of spend

Small/medium suppliersNon-recurring tail spendHigh cost per transaction

Large suppliersCommodity transactions

Recurring tail spend

Transaction Value

Transaction Volume

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Innovative approach to connecting to suppliers

74% of all case customer suppliers were onboarded within 7 months. Today the total is 97%.

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Questions?

07930 803 008jva@tradeshift.com