Customer Information Day

18th October, 2004

Supplier Relationship Management

‘Contract Lifecycle Management’

Kieran O’Doherty – Head of SRM

SAP UK
 Supplier Relationship Management

Strategic Level

Category Supplier Sourcing Supplier Contract Operational Performance

Management Qualification Process Selection Management Procurement Reporting

Operational Level

Requisition Authorize Order Change Track Receipt Invoice Pay

 SAP AG 2002, mySAP SRM, 2

 Contract Lifecycle Management / Information Availability

CONTRACT
PREPARATION CONTRACT
NEGOTIATION
Central
CONTRACT
ANALYTICS Contract
Repository CONTRACT
CREATION
CONTRACT
MONITORING CONTRACT
DISTRIBUTION

SAP - MM

Key Areas:
Document Repository
Contract Distribution
Contract Monitoring

 SAP AG 2002, mySAP SRM, 3

 The OJEU Process

1. Business Case
2. OJEU Preparation
3. Pre Posting Audit
17. Contract Management
Document (SAP)
Repository

Docmt Mngment
4. Posting OJEU Notice incl Public Prcmt Dirctvs
5. OJEU Notice
14. Award Letter
OJEU 15. Unsuccessful Suppliers
Process 16. OJEU Award Notice

6. Expression of Interest Tender & Auctions

7. EOI Replies Evaluation
8. Pre Qualification Quest-nre
9. Approval Process & Report
Supplier
Qualification
10. Invitation to Tender
11. Tender Evaluation
12. eNegotiation
13. Decision

 SAP AG 2002, mySAP SRM, 4

 Contract Repository –
Structured Document Repository (which can be easily searched)

 SAP AG 2002, mySAP SRM, 5

 Structured Portal

Category
Management

Application (SRM)

Functionality

 SAP AG 2002, mySAP SRM, 6

 Category Management Process

Within a Category

Supply
Category Sourcing &
Business Market Chain Contract Sustainable
Strategy Contracting
Needs Analysis Cost Mgmt Value
Selection Execution
Modelling

• Establish • Identify • Build • Develop • Develop • Contract Start • Manage

team industry supply chain category contract draft up Learning
governance structure process strategy
map/ • Execute “go •Performance • Manage
• Gather • Identify Prioritise • Document to market” & Relationship Opportunities
category levers in opportunities category approach Management
data & supply strategy • Maintain
segment market • Build cost • Evaluate • Close Out Specifications
category models and award and
spend • Assess contract Catalogues
current, • Identify
• Review new and non cost and • Develop
business traditional value drivers/ and
requirements suppliers Prioritise implement
and identify opportunities transition
opportunities • Summarise plan
improvement
opportunities

 SAP AG 2002, mySAP SRM, 7

 Contract Lifecycle Management

CONTRACT
PREPARATION CONTRACT
NEGOTIATION
Central
CONTRACT
ANALYTICS Contract
Repository CONTRACT
CREATION
CONTRACT
MONITORING CONTRACT
DISTRIBUTION

SAP - MM

Key Areas:
Document Repository
Contract Distribution
Contract Monitoring

 SAP AG 2002, mySAP SRM, 8

 RFx / Tendering

 SAP AG 2002, mySAP SRM, 9

 Supplier Registration

 SAP AG 2002, mySAP SRM, 10

 Weighting & Ranking

 SAP AG 2002, mySAP SRM, 11

 eAuction

 SAP AG 2002, mySAP SRM, 12

 Live Auction Cockpit

 SAP AG 2002, mySAP SRM, 13

 eSourcing – ASP Model

SAP Hosted Services

Stage 1 Stage 2
POC Hosted Environment
Movement of
85%+ - SAP Customer Base functionality

mySAP SRM Stage 3

Behind Firewall

 SAP AG 2002, mySAP SRM, 14

 Commodity Expertise

Fully Project Everyday

Supported Support Process
Methodology - Knowledge Transfer

Spend Analysis
Service

Commodity Expertise

Pilot Negotiations

Roll Out Project Management

Integration

Time line

 SAP AG 2002, mySAP SRM, 15

 Contract Lifecycle Management

CONTRACT
PREPARATION CONTRACT
NEGOTIATION
Central
CONTRACT
ANALYTICS Contract
Repository CONTRACT
CREATION
CONTRACT
MONITORING CONTRACT
DISTRIBUTION

SAP - MM

Key Areas:
Document Repository
Contract Distribution
Contract Monitoring

 SAP AG 2002, mySAP SRM, 16

 Create Contract

 SAP AG 2002, mySAP SRM, 17

 Contract Lifecycle Management

CONTRACT
PREPARATION CONTRACT
NEGOTIATION
Central
CONTRACT
ANALYTICS Contract
Repository CONTRACT
CREATION
CONTRACT
MONITORING CONTRACT
DISTRIBUTION

SAP - MM

Key Areas:
Document Repository
Contract Distribution
Contract Monitoring

 SAP AG 2002, mySAP SRM, 18

 SAP AG 2002, mySAP SRM, 19
 Contract Distribution

PLM SCM
ERP System -
Procurement Backbone:
Financials
SRM HR
CRM
Supplier & Product Data
Corporate Services
Contract Detail
Materials Management
SRM Reporting
SAP NetWeaver
Application Platform (Web AS)
People Integration (Portal)
Information Integration (BI, MDM)
Process Integration (XI)

 SAP AG 2002, mySAP SRM, 20

 SAP AG 2002, mySAP SRM, 21
 Contracts – 3x Different Deployment Options

Backend Contract
Local Contract
Supplier selection in SRM
Contract creation in SRM
Call-off in SRM
Central Contract
Supplier selection in SRM
Distribution to Backend
‘Leading‘ contract in SRM
Supplier selection in SRM
Creation in backend
Call-off in backend SRM
Global Outline
SRM Agreement

SRM ‘Sourcing Hub’

Local Contracts
= Contract creation
1
 SAP AG 2002, mySAP SRM, 22
 SAP AG 2002, mySAP SRM, 23
 Contract Lifecycle Management

CONTRACT
PREPARATION CONTRACT
NEGOTIATION
Central
CONTRACT
ANALYTICS Contract
Repository CONTRACT
CREATION
CONTRACT
MONITORING CONTRACT
DISTRIBUTION

SAP - MM

Key Areas:
Document Repository
Contract Distribution
Contract Monitoring

 SAP AG 2002, mySAP SRM, 24

 SAP AG 2002, mySAP SRM, 25
 Contract Monitoring / Spend Analysis

 SAP AG 2002, mySAP SRM, 26

 Contract Monitoring - Reporting

 SAP AG 2002, mySAP SRM, 27

 Contract Lifecycle Management

CONTRACT
PREPARATION CONTRACT
NEGOTIATION
Central
CONTRACT
ANALYTICS Contract
Repository CONTRACT
CREATION
CONTRACT
MONITORING CONTRACT
DISTRIBUTION

SAP - MM

Key Areas:
Document Repository
Contract Distribution
Contract Monitoring

 SAP AG 2002, mySAP SRM, 28

 Contract Management – Structured Portal

 SAP AG 2002, mySAP SRM, 29

 Supply Base Management

Compliance
•

Management
Supplier
• Operational
•

Profiles Performance
•

Key
Suppliers

New Base Preferred Discontinued

Suppliers Suppliers Suppliers Suppliers

Niche
Suppliers

Supplier
•
Supplier
•

Development
•
KPIs
•

Plan Supplier
•

Audit
•

 SAP AG 2002, mySAP SRM, 30

 US Influence / SAP Strategic Development Projects

DLA

 SAP AG 2002, mySAP SRM, 31

 Contract Lifecycle Management

Create
Template &
Term Library

Establish New
Contract Set
System Alerts Negotiation
& Parameters Creation
Renewal or Contract Guidelines
Termination Negotiation

Contract Enterprise Contract

Define Change Define
Adjustments Contract Review &
& Participation Workflow
& Extensions Repository Approval
Guidelines

Contract
Contract
Storage &
Execution
Access
Create User Notification Identify
Groups & Contract Signatories
Distribution
Define Legend
Distribution
Lifecycle Processes
Lists
Administrative Processes

Source:
 SAP AG 2002, mySAP SRM, 32 Automating the Contract Lifecycle: Challenges & Solution Strategies, Sanjay Rajagopalan
 Developing SRM Plan

 SAP AG 2002, mySAP SRM, 33

 SRM - Business Case

I. Strategic Sourcing II. Procurement Transformation III. SRM

Objective:
High-impact spend reduction
Sponsor: CEO and CFO/CPO
Delivery focus:
Spend visibility
Identify savings opportunities
Sourcing strategy definition
Execution leading to new contracts
Potential savings: 1 to 10%
Objective: Objective:
Realisation of Strategic Sourcing Phase Sustainable effective process
Sponsor: CFO/CPO and CEO Sponsor: CFO/CPO and CIO
Delivery focus: Delivery focus:
Focus on spend reduction Closed Loop SRM Process
IT infrastructure development Innovation
Support transactional processes Cost Leadership
Develop procurement competence, content Supply & Value Chain Optimisation
Savings: 1 to 5% + Strategic Sourcing ROI: TBA

1 2 3 4 5 6

Transaction Commercial Purchasing Process Supply Chain Value Chain

 SAP AG 2002, mySAP SRM, 34

 Example – Procurement / SRM Development Plan

Easy Extensions Longer Term

Purchasing
Operational Contract Management Controlling
Procurement (Category Management)
(Buyers Workplace) Range
Reporting Management
(Range Performance)
Forecasting
Catalogue Supplier Enablement
and
Management
Planning
(eProcurement)

Standalone Quick Wins Strategic Global Trade

Supplier Portal Services
(Supplier Evaluation) RFx ‘ Portal
& Auctions (Category Management)
Document Repository
‘ BW ‘
(Category Management)
(Reporting)
ASP
Operational
RFx & Auctions
Time

Procurement
(eNegotiation
Platform
& Supplier Selection)

Complexity

 SAP AG 2002, mySAP SRM, 35

 mySAP SRM – ‘Statement of Direction’ 2004

mySAP
mySAPSupplier
SupplierRelationship
RelationshipManagement
Management

Strategic
Strategic Spend Analysis Purchasing
Purchasing
Forecasting
Forecasting&&Planning
Planning Spend Analysis PurchasingPortfolio
PortfolioMgt
Mgt Purchasing
PurchasingControlling
Controlling
Purchasing

Sourcing Supplier
SupplierEvaluation
Evaluation RFQ & Auction Contract Management Catalog Management
Sourcing RFQ & Auction Contract Management Catalog Management

Operational
Operational Self-Service
Procurement Self-ServiceProcurement
ProcurementPlan-Driven
Plan-DrivenProcurement
Procurement Services
ServicesProcurement
Procurement
Procurement

Supplier Collaborative
Supplier Supplier Self Registration Collaborative
Registration Order
XIManagement Supplier
SupplierPortal
See also:
Collaboration
Collaboration
Master Data
Supplier SelfManagement, Order Management Replenishment
Replenishment
Portal

 SAP AG 2002, mySAP SRM, 36

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 SAP AG 2002, mySAP SRM, 37