Realizing the Strategic Sourcing Vision through an...
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Realizing the Strategic Sourcing Vision through an Ecosystem Approach Abercrombie & Fitch Zach Barber Global Expense Management & Services Ariba, an SAP company Michael Koch Director www.sig.org/eval
Transcript of Realizing the Strategic Sourcing Vision through an...
Realizing the Strategic Sourcing
Vision through an Ecosystem
Approach
Abercrombie & Fitch
Zach BarberGlobal Expense Management & Services
Ariba, an SAP company
Michael KochDirector
www.sig.org/eval
Realizing the Strategic Sourcing Vision
through an Ecosystem Approach
March 11, 2015
3© 2015 Ariba - an SAP company. All rights reserved.
Agenda
• Introduction
• Optimizing Strategic Sourcing Savings
• Abercrombie & Fitch Procurement Journey
• Q & A
4© 2015 Ariba - an SAP company. All rights reserved.
Key Business Challenges/Pains
• Understanding detailed spend and identifying/prioritizing savings opportunities
• I need help to save money and reduce cost “now”
• Difficulty finding new qualified suppliers
• No formal sourcing program in place
• Incorrect, incomplete, and out-of-date supplier information
• Inaccurate and fragmented supplier data across systems Inadequate visibility to supplier failure and risk
• Limited resources to monitor and execute an supplier performance and risk program
Minimize & Mitigate Risks
Improve Compliance
• No contract automation - Takes too long to get a contract signed
• Savings leakage due to due to non-standard contract processes
• No audit of contracts / processes
Achieve Sustainable Savings
5© 2015 Ariba - an SAP company. All rights reserved.
Source: Procurement Leaders
6© 2015 Ariba - an SAP company. All rights reserved.
Source: Procurement Leaders
7© 2015 Ariba - an SAP company. All rights reserved.
Strategic Sourcing ProfessionalsWhat Keeps Them Up at Night?
Manage Savings
Lack of efficiency in sourcing
project management and activities
Savings claims are difficult to
measure and guarantee
Compliance
Poor and ineffective contract
management
Reduced ability to author and drive
contract creation and compliance
Spend Management
Inconsistent, incomplete,
unclassified data
Lack of visibility into enterprise-
wide spend leads to missed
savings opportunities
Supply Risk
Uncertainty regarding suppliers’
financial, legal, and operational
health
Inadequate supplier performance
management program
Expanding the Procurement Sphere
of Influence through an Ecosystem Approach
Zach Barber
AGENDA
• Company Profile
• Challenges
• Strategic Sourcing Program
9
WHO WE ARE
Abercrombie & Fitch Co., operates as a global retailer of casual apparel for men,
women, and kids. Its stores sell casual apparel, such as knit shirts, graphic t-shirts,
jeans, and woven shirts; and personal care and other accessories under the
Abercrombie & Fitch, abercrombie and Hollister.
A&F operates a total of 1,022 stores. They include:
• Domestic
–278 Abercrombie & Fitch stores
–154 abercrombie kids stores
–486 Hollister Co.
• International
–17 Abercrombie & Fitch
–6 abercrombie kids stores
–101 Hollister Co.
Our e-commerce websites can be found at www.abercrombie.com,
www.abercrombiekids.com and www.hollisterco.com.
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CHALLENGES WE FACED
• Disparate systems and methodologies
• Inconsistent reporting
• No formal contract management process
• Goals and objectives not aligned
• Enterprise understanding of what is strategic
sourcing
• No aggregate view of spend data
OUR AREAS OF FOCUS
• Savings
• Improved Payment Terms
• Reduced Risk
• Improved Budget Productivity / Increased ROI
• Decreased Effort with Contracts under Legal Review
• Increased Compliance with Legal Approved Contract
Language
• Corporate Procurement Policy
• Procurement as a Financial Control
SOURCING PROGRAM GOALS/CAPABILITIES
• Smart
• Fast Learners
• Data Driven Strategic Sourcing Category/Commodity Teams
• Fast Paced Environment
• Process & Technology Driven Tactical Purchasing Organization
• Communication to the business: Frequent, In-Person, Customer Service Oriented
• Transparent
• Easy to understand
• “Not” ground breaking
• Ability to flex
• Reportable
• Consistent, Streamlined Sourcing and Purchasing Process that supports rapid turnaround
SLA’s
• Complete Suit of Sourcing, Contracting & Purchasing Tools
• Easy to Use, Relevant Reporting Tools (Budget Tracking & Compliance)
• SaaS
• Fast Implementation
• High number of users
• Ability to integrate
• Secure
OUR FOCUS
People
ProcessTechnology
Pro
cess
Peo
ple
Tech
no
log
y
HOW WE DO ITP
roc
ess
Peo
ple
Tech
no
log
y
ANALYZE
CATEGORY
SPEND
DEVELOP
BUSINESS
NEEDS
ASSESS
SUPPLY
MARKETS
DEVELOP
CATEGORY
STRATEGY
EXECUTE
STRATEGY
IMPLEMENT
NEW
AGREEMENTS
SUSTAIN
RESULTS1 2 3 4 5 6 7
Understand
internal spend
and current
state
Understand
business
requirements
Understand
market players
and key market
drivers
Develop
strategy to
effectively
source category
Develop and
execute sourcing
strategy and
negotiation plan
Sign new
agreement,
develop
implementation
plan
Monitor supplier
performance, capture
savings, evaluate
market
ANALYZE
CATEGORY
SPEND
DEVELOP
BUSINESS
NEEDS
ASSESS
SUPPLY
MARKETS
DEVELOP
CATEGORY
STRATEGY
EXECUTE
STRATEGY
IMPLEMENT
NEW
AGREEMENTS
SUSTAIN
RESULTS
• ID stakeholders,
sourcing team
•Roles and
responsibilities
•Work plan
•Collect internal
baseline
•Understand
requirements
•Sign-off on
baseline
•Document
current sourcing
approach
•Develop market
insight
• ID opportunities
•Develop sourcing
strategy
•Align on potential
opportunity
•Finalize
objectives
•Develop supplier
selection criteria
•Develop supplier
list
•Profile supplier
capabilities
•Filter using pre-
screening criteria
•Review final list
• ID Strategic
Sourcing position
•Align
stakeholders with
strategy and
workplan
•Develop go-to-
market approach
•Develop/publish
RFPs
•Analyze bids
•Develop
negotiation plan
•Develop award
scenarios,
anticipated
benefits
•Create
negotiation team,
hold negotiations
•Finalize awards
•Notify suppliers
•Create transition
team
•Develop
implementation
plan
•Finalize contracts
• Implement new
agreements
•Track
performance
•Participate in
savings audits
•Periodically re-
evaluate
purchases and
supplier
performance
•Team member/
stakeholder list
•Workplan
•Draft cost model
•SWOT analysis
•Current
procurement
process map
• Incumbent
supplier list
•Supplier
assessment
matrix
•Sourcing
Strategy
•Negotiation plan
•Draft transition
plan
•Stakeholder
approval
checklist
•Signed contracts
•Finalized
transition plan
•Key Learning
report
•Supplier
management
plan
•Savings tracking
plan
KE
Y A
CT
IVIT
IES
DE
LIV
ER
AB
LES
FINANCIAL BASELINE SOURCING STRATEGY EXECUTE CONTRACTGA
TE
S
A&F STRATEGIC SOURCING PROCESS
1 2 3 4 5 6 7
HOW WE DO ITP
roc
ess
Peo
ple
Tech
no
log
y
Sourcing / Category Leads
ANALYZE
CATEGORY
SPEND
DEVELOP
BUSINESS
NEEDS
ASSESS
SUPPLY
MARKETS
DEVELOP
CATEGORY
STRATEGY
EXECUTE
STRATEGY
IMPLEMENT
NEW
AGREEMENTS
SUSTAIN
RESULTS1 2 3 4 5 6 7
Understand
internal spend
and current
state
Understand
business
requirements
Understand
market players
and key market
drivers
Develop and
execute sourcing
strategy and
negotiation plan
Monitor supplier
performance, capture
savings, evaluate
market
Develop
strategy to
effectively
source
category
Sign new
agreement,
develop
implementation
plan
TEAM STRUCTURE
VP GEMS
TRAVELGLOBAL
UTILITIESIT/DTC
STORE
SUPPORTSUSTAINABILITY
EUROPEAN
UTILITIES
VENDOR
SETUPS
IT/DTCHOME OFFICE
SUPPORT
TRAVEL &
EXPENSE
TRAVEL
AGENTS
TRAVEL &
EXPENSE
17
$500MM+
SPEND UNDER
MANAGEMENT
HOW WE DO ITP
roc
ess
Peo
ple
Tech
no
log
y
SOURCEGEMS
PROCUREAP
PAYAP
Sourcing / Category Leads
ANALYZE
CATEGORY
SPEND
DEVELOP
BUSINESS
NEEDS
ASSESS
SUPPLY
MARKETS
DEVELOP
CATEGORY
STRATEGY
EXECUTE
STRATEGY
IMPLEMENT
NEW
AGREEMENTS
SUSTAIN
RESULTS1 2 3 4 5 6 7
Understand
internal spend
and current
state
Understand
business
requirements
Understand
market players
and key market
drivers
Develop
strategy to
effectively
source category
Develop and
execute sourcing
strategy and
negotiation plan
Sign new
agreement,
develop
implementation
plan
Monitor supplier
performance, capture
savings, evaluate
market
THE SOURCE-TO-PAY TECHNOLOGY
SOURCEGEMS
PROCUREAP
PAYAP
Spend
Classification
Commodity
Management
eSourcing
Contract
Management
Supplier
Registration
Spend Analysis
Opportunity
Identification
Supplier
Enablement
Requisition
Management
Invoice Exceptions
Catalog
Supplier
Collaboration
Payment Gateway
ERP
Supplier
Collaboration
Invoice Imaging &
Workflow
Vendor Portal Payment Audit
Supplier Performance Management
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OUR SOURCE-TO-PAY MODEL
People
ProcessTechnology
Procurement
Supplier
Registration
Supplier
Management
Spend
Analytics
7-step
Sourcing
Contract
Management
Pay
GEMS
Manage supplier
information and track
performance
Ensure compliant
procure-to-pay cycle
on a daily basis
Create, store, search
contracts & track
compliance
Use this
information to
source efficiently
People
ProcessTechnology
21
LESSONS LEARNED
Grow into Solution – “Evolve At a Steady Rate”
BE PATIENT!!
Leverage Existing Budgets – “Avoid Special Funding Requests”
Build Transparency – “Maintain Pipeline”
Obtain Executive Support – “Leverage Organizational Alignment“
Create Center of Excellence – “Drive Adoption”
Alignment of Resources – “Do what you do best”
Optimize Sourcing Process – “Add Velocity”
22© 2015 Ariba - an SAP company. All rights reserved.
Thank you QA&
Michael Koch
Director, Solutions Marketing
Zach BarberSr. Manager, Global Expense Management & Services
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Session #5
Realizing the Strategic Sourcing Vision through an
Ecosystem Approach
Zach Barber
Abercrombie & [email protected]
Michael Koch
Ariba, an SAP [email protected]
Speakers:
www.sig.org/eval
