Supplier Lifecycle Management Product Overview Stefan Freund Senior Product Manager Supplier Lifecycle Management

Emptoris Strategic Supply Management

Supplier Management, Risk and Compliance

Effectively manage supplier information, relationships and processes to ensure compliance and mitigate risk

Source to Contract

Maximize and lock in savings with advanced sourcing and enterprise contract management capabilities

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Enterprise and Category Spend Management

Analyze enterprise spend across systems and effectively source and manage complex categories

Emptoris Supplier Lifecycle Management

IBM Emptoris Supplier Lifecycle Management Supplier Qualification Supplier Evaluation

Supplier Risk Supplier Classification Supplier Development

Comprehensive support for end-to-end supplier management needs; delivering full transparency to all relevant aspects of strategic relationships with suppliers and enables to on-board new suppliers, minimize risk and optimize the performance of the supply base. 3

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Reasons for Supplier Lifecycle Management Past

Ensure compliance across all suppliers

Understand strength & weaknesses of each supplier

Discover demand bundeling & saving potentials

Actively drive supplier improvement & development

Segment supply base & build supplier portfolio

Manage and mitigate supplier risks

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Reasons for Supplier Lifecycle Management Present

Ensure compliance across all suppliers Discover demand bundeling & saving potentials

Understand strength & weaknesses of each supplier

Goal is to have the best possible supply base Actively drive supplier improvement & development

Segment supply base & build supplier portfolio

Manage and mitigate supplier risks 5

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Supplier Lifecycle Management (SLM) Who uses SLM? Companies with large and distributed supply bases, that need to really know their suppliers and need ensure the business is made with the right suppliers. What are they doing with SLM?  On-boarding, qualification and approval of suppliers  Evaluation of supplier performance  Monitoring of supplier risk  Classification and segmentation of suppliers  Supplier development projects

Brand Protection

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Missed Revenue Opportunities

Increased Reliance on Supply Chain

Why are they doing this?  Ensure suppliers are compliant to business and legal requirements  Identify strength and weaknesses of each supplier  Early identification of potential threats  Roll-out company-wide purchasing strategies  Continuously improve the supply base

Commodity Price Volatility

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Regulatory Pressures

Customer Demands Good Corporate Citizenship

Supplier Lifecycle Management (SLM) Module 1 of 5: Supplier Qualification Actively manage suppliers with a complete solution for supplier on-boarding, supplier information management and supplier approval.

Feature

Benefit

Registration

One channel for on-boarding of new suppliers

Assessment

Questionnaire-based supplier self- assessment Up to date supplier information Reduction of administration efforts through high process automation

Approval

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Approval process to ensure that suppliers meet your business requirements: capability, compliance, corporate responsibility, financial security, etc.

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Existing and Potential Suppliers

Supplier Registration (generic) Supplier Assessment (generic) Supplier Qualification (categ. Spec.)

Approved/Qualified Suppliers in one common database

Consumer products company assesses suppliers and improves regulatory compliance

Challenge High need to control vendor compliance due to industry regulations and consumer pressure Solution In order to be certified, all suppliers in scope are requested to complete an online self assessment and attach electronic documents to support the statements made in the assessment. Results • Enhances the controls surrounding the acceptance, monitoring and reporting of vendors • Ensures compliance with regulatory and contractual obligations • Ensures suppliers’ adherence to company’s code of conduct, company guidelines and ethical requirements

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Customer Profile A global consumer products company with over 25,000 employees, operations in 120 countries and headquartered in Geneva, Switzerland

SLM Product Line Overview

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Supplier Lifecycle Management (SLM) Module 2 of 5: Supplier Evaluation Proactively evaluate suppliers with a comprehensive and flexible solution to support your entire supplier performance management process. Feature

Commercial

Benefit

Evaluations

Cross-functional evaluation process to track performance of suppliers

Flexible scorecards

Freely definable evaluation scorecards with key performance indicators and weights

Performance analysis

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0%

Quality

Logistics

Technology

Identify strengths and weaknesses of you suppliers. Transparency on performance help to ensure working with the best suppliers. Identify where improvement is needed and give suppliers objective feedback . © 2012 IBM Corporation

…

50%

100%

European power and gas corporation improves supplier selection and development

Challenge Company needed to ensure that none of its suppliers were engaged in un-ethical behavior, including human rights violations, bad working conditions or environmental exploitation Solution Implemented supplier management solution in order to improve the selection, evaluation, classification and development of suppliers

Customer Profile

Results • Two thirds of suppliers being monitored by 2010 • The company is on track to have coverage of 95% of its suppliers by 2013

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A major European power and gas corporation and international operator in the field of exploration and production of natural gas and crude oil

SLM Product Line Overview

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Supplier Lifecycle Management (SLM) Module 3 of 5: Supplier Risk Mitigate supplier risk on your own terms with risk definition and modeling capabilities that delivers the knowledge you need to proactively manage risk scenarios. Feature Risk assessment

Categories Categories

Regions Regions

KPIs

Benefit Defines risk indicators for suppliers, material groups and regions Continuous process for identifying, evaluating and controlling risks Flexible definable risk indicators for automatic input from 3rd party information providers, SLM information or internal specialists.

Monitoring

Early identification of risk exposure incl. alerts Basis for risk prevention or mitigation activities

Purchasing Risks Financials Financials

Supply Supply

häufig

wahrscheinlich

gelegentlich

unwahrscheinlich

unwesentlich

geringfügig

kritisch

Schadensausmaß

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Quality Quality

Analysis Analysis Eintrittswahrscheinlichkeit

Flexible risk model

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Suppliers Suppliers

katastrophal

… …

Global automotive supplier gains visibility into supplier financial status and reduces supply risk

Challenge Concerned about risk of disruption of supply to customers due to failure of supplier Solution Developed supplier monitoring system to provide visibility of supplier status and early warning of financial difficulty Results • Significantly reduced the number of vulnerable suppliers in supply base • Had first right to buy critical insolvent supplier due to early visibility of status • Supplier spend being monitored increased by >340% • Number of suppliers at status “insolvency” decreased by 35%

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Customer Profile A global tier 1 automotive supplier operating in 25 countries with 60,000 employees and generating revenues in excess of $16 billion annually

SLM Product Line Overview

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Supplier Lifecycle Management (SLM) Module 4 of 5: Supplier Classification Define and analyze the nature (e.g. preferred, alternate, phase-out, unapproved) of your relationships with suppliers at both the organization and category level.

high Feature

Benefit

Supply base segmentation

Segments the supply base per categories and/or organizations Sustainable design of supplier portfolio.

Standard strategies

Standardized strategies are utilized, e.g. for supplier reduction, risk minimization

Central strategies

Classification results available in operational systems (sourcing, ERP, etc.) to ensure working with the right suppliers according strategy Guidance for collaboration, decisions and re-negotiations.

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low

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poor

good

Global financial institution screens suppliers and optimizes supplier base

Challenge This organization is dependent on a large number of external suppliers and needs to ensure that they are stable and can perform well before engaging with them Solution Implemented a supplier qualification and “health check” system, identified alternate suppliers and analyzed and optimized their supplier base Results • • • •

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Customer Profile

Supplier screening on pre-defined criteria Comprehensive supplier base analysis Identification of alternate suppliers Development of optimal supplier portfolio

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A global financial institution offering banking, investments, a variety of life insurance, non-life insurance and retirement services to meet the needs of a broad customer base

SLM Product Line Overview

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Supplier Lifecycle Management (SLM) Module 5 of 5: Supplier Development Define and manage remediation programs to bring your suppliers to expected levels of compliance and performance.

0% Commercial

Feature Action process

Benefit Supports processes for defining, managing of projects, actions and monitoring progress

Target tracking

Structured development to identify cause and target

Supplier collaboration

Platform for supplier management activities just like: Supplier performance improvement (e.g. quality, logistics, cost, etc.), Supply base rationalization or risk mitigation activities High efficiency because supplier can get access to participate.

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Quality

Logistics

Technology

…

50%

100%

SLM Product Line Overview

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Complete SLM process

Leading Companies Maximize their Supply Base By:  Ensuring compliance with corporate policies & standards

On Boarding

 Establishing properly constructed contracts  Providing 360°supplier visibility on a global level  Driving sourcing strategies and decisions

Supplier Rationalization

 Tracking supplier capabilities, performance and risk  Initiating remediation activities with prospective & existing suppliers

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Supplier Lifecycle Management (SLM) How is SLM sold? How do we sell SLM?  All SLM modules, a single module as well as any combination of SLM modules can be purchased  We offer SLM as SAAS on cloud or premise (BTF) as well as hosted  Licensing is per module and user accounts Are services involved?  We usually sell additional consultant workshops to help the client develop the supplier management strategies and to show how to map and run these processes on the SLM  We sometimes sell technical services for the integration of internal legacy systems or 3rd party data providers.

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Supplier Lifecycle Management (SLM) ROIs Increased realization of negotiated savings

Financial Benefits • Purchases go to the right suppliers • Cost reduction

Improvement in materials and service pricing Improvement in on-time delivery Improvement in lead-time Improvement in quality

Productivity • Assure synergies between different lines of business • Develop a high-performing supply base • Reduce complexity and number of suppliers

Improvement in service level compliance Duplicate suppliers across the company Supply base coverage in performance program Productivity improvement Frequency of supply base communication

Manage Supplier Risk • Compliance of corporate policies and standards • Manage cross-organizational risk exposure • Avoid & reduce the impact of disruptive events

Reduction in supplier crises Suppliers with catastrophic failures Average cost of a data breach

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Analyst notes IBM ranked as leader in Forrester Wave Sourcing Vendor Management Tool Set Q1 2013 “IBM Emptoris delivers deep SVM functionality with an intriguing supply master strategy. IBM Emptoris’ substantial capabilities in strategic sourcing are continuing to broaden under a strong, overarching IBM road map. IBM Emptoris’ V10 highlights virtual supply master (VSM) technology that unifies supplier records across the SVM life cycle, enabling strong performance for workflow management and integration. IBM Emptoris’ 12- to 18-month strategy focuses on driving VSM to be the primary collaboration and analytics integration point across IBM’s portfolio of Smarter Commerce solution” – Lutz Peichert and Mark Grannan for Forrester (http://www.forrester.com/pimages/rws/reprints/document/86841/oid /1-LTEQDR)

Spend Matters The market has yet to be able to support a strong best-of-breed vendor to enable a true supplier portal platform, but there could be many contenders. IBM has all the piece parts here in terms of supplier connectivity, technical infrastructure, analytics, professional services, and an application suite in Emptoris as its ‘guinea pig’ to begin using some of these various components.” – Jason Busch for Spend Matters (http://spendmatters.com/2013/03/04/sourcing-and-procurement-information-data-and-analytics-architecture-part-2/)

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Supplier Lifecycle Management (SLM) Strategic Supply Management Suite

Program Management

Supplier Lifecycle Management

Spend Analysis

Sourcing

Contract Management

Virtual Supply Master Technology Categories

Suppliers

Organizations

IBM Integration Solutions

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Regions

IBM Emptoris Strategic Supply Management Virtual Supply Master Integration 3rd party system Data Service

VSM (Virtual Supply Master) Local data source

3rd party system

Local data source

Internal system

Local data source

Local data source

Local data source

Contracts

Sourcing

Spend

Supplier List

Supplier List

Supplier List

Supplier List

Contracts

Sourcing

Spend

SLM

Internal system

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Clearing

Supplier Master

Local data source

Supplier List

Registration

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SLM

Assessments

IBM Emptoris Strategic Supply Management Virtual Supply Master Integration 3rd party system Data Service

VSM (Virtual Supply Master) Local data source

Local data source

Internal system

Supplier Master

Local data source

Local data source

Local data source

Contracts

Sourcing

Spend

Supplier List

Supplier List

Supplier List

Supplier List

Contracts

Sourcing

Spend

SLM

Local data source

Internal system

Supplier List

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Registration

3rd party system

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SLM

Clearing

IBM Emptoris Strategic Supply Management Virtual Supply Master Integration 3rd party system Data Service

VSM (Virtual Supply Master) Local data source

Local data source

Internal system

Supplier Master

Local data source

Local data source

Local data source

Contracts

Sourcing

Spend

Supplier List

Supplier List

Supplier List

Supplier List

Contracts

Sourcing

Spend

SLM

Local data source

Internal system

Supplier List

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Registration

3rd party system

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SLM

Clearing

Supplier Lifecycle Management (SLM) Strategic Supply Management Suite Strategy Cockpit Supplier Lifecycle Management

KPIs Strategic systems

Spend Analysis

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Sourcing

3rd party

Contract Management

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Transactional systems

Supplier Lifecycle Management (SLM) Strategic Supply Management Suite Strategy Cockpit Supplier Lifecycle Management

Strategic information on the supplier Qualification, Performance, Classification, Risk

Strategic systems

Spend Analysis

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Sourcing

3rd party

Contract Management

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Transactional systems

Supplier Lifecycle Management (SLM)

4 take aways #1 SLM helps even largest organizations to ensure that all suppliers are compliant #3 SLM gives transparency into the current risk exposure e of the suppl base

#2 SLM provides continuous processes to monitor and improve supplier performance #4 SLM allows the procurement departmant to drive central supply base strategies

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Supplier Lifecycle Management (SLM)

Thank you Partner contacts North America Phil Sasso - [email protected] EMEA Kieran McLoughlin - [email protected] Asia Kevin D‘Souza – [email protected]

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