20120329 egp general presentation

Erste Group Procurement (EGP)

The Procurement Company of Erste Group (EG)

EGP – Member of EG © 2012All rights reserved

� Erste Group went public in 1997

with a strategy to expand its retail

business model into CEE

� Acquisition of more than 10

banks between 1997 and 2008

� Erste Group now runs market

leading retail banking operations

in the new EU member states,

which remain underpenetrated

compared to their Western

European markets

2000

2001

2005

2006

2007

1997

2004

2003

New holding structure improving

Group Governance

2008

History: Austria’s first savings bank: Founded in 1819

� Erste Group’s customer base

grew from 600 000 in 1997 to

17,3 million in 2011


Erste Group in Central and Eastern Europe


Czech Rep

Procurement

Dept. Serbia

Procurement

Dept. Montenegro

Int. & Austria

Slovakia

Hungary

Croatia

Romania

Procurement Dept.

Ukraine

Erste Group Procurement: Procurement of the Erste Group

Functio

nal

Leade

rship

by E

GP

Erste Group Bank AG - Holding Board

CEO CFO COO CRO Group Markets Group Retail

Group Property

Group Org/IT

Erste Group Procurement(Procurement Services GmbH)

Operations/Processing

EGP AT(incl. Centre Functions, as Finance,

HRM, Org/IT)

EGP RO

EGP CZ

EGP SK

EGP HU

EGP HR

Procurement RS

Procurement ME

Procurement UA

SPV DRUCK

Finance

Sourcing AT

Sourcing CZ

Sourcing SK

Sourcing HU

Sourcing HR

Sourcing RO Erste Group Procurement RO

Erste Group Procurement SK

Erste Group Procurement HU

Erste Group Procurement AT

Erste Group Procurement CZ

Erste Group Procurement HR

RS2)

1) Department of Erste Bank AD Podgorica - Montenegro

2) Department of Erste Bank Novi Sad3) Department of Erste Bank Ukraine

SPV – DRUCK

EBSPK

Sourcing RS

Sourcing

Sourcing UA

Board Division Team in Matrix

UA3)

Org/ITHRM

ME1)

Management Board

Erste Group Procurement – (Procurement Services GmbH)

Established 2006

Erste Group Procurement Facts & Figures:

� Central procurement function within Erste Group

� Headcount approximately 180 employees

� Process owner for group-wide S2P process

� AT: Warehouse with more than 3 000 sqm

GCIB


EGP in Erste Group

EGP Cooperation with clients based on:

� Contract (SLAs)

� Responsibility (NDAs)

� Code of conduct

� Purchasing Policy & Handbook

Aligned priniciples within Erste Group:

…The central and single competence for procurement activities within Erste Group lies in Erste Group Procurement (EGP)…

…EGP has to be involved in any external spend of any Erste Group majority owned entity. Any exception has to be agreed between EGP and the respective Erste Group entity…

…All external spend should follow the principle of Total Cost of Ownership (TCO) and Quality, Cost and Delivery. In balance with socio-economic, ecological and customer relationship factors the assignment of a contract has to follow the highest added value for Erste Group principle…

…EGP owns, defines and aligns with the local entities the purchasing processes within Erste Group...


EGP Focus

Before

RFxP/RFQ

RFx

Supplier Relation Management

Contract Management

Category Management

After

Foundation andCore

Supplier Relation Management

Contract Management

Category Management

Implemen-tation


Our Way to World Class Procurement

Financial Perspective:

- COA < 1%

- CR/CA > 4,4%

- 20 mio av. spend by buyers

Financial Perspective:

- COA < 1%

- CR/CA > 4,4%

- 20 mio av. spend by buyers

Learning Perspective:

- A team of good purchasers

- Pro-active working

- Willingness of responsibility

- Good working atmosphere

Learning Perspective:

- A team of good purchasers

- Pro-active working

- Willingness of responsibility

- Good working atmosphere

Vision: World Class Procurement

organisation in the financial area

Vision: World Class Procurement

organisation in the financial area

Customer Perspective:

- Our customers adhere to our vision and support it

- Our customers see high value added

in EGP services and are ready to pay for this

- Our strategy supports customers targets

Customer Perspective:

- Our customers adhere to our vision and support it

- Our customers see high value added

in EGP services and are ready to pay for this

- Our strategy supports customers targets

Processes Perspective:

- Paying PO’s only

- Maverick spend < 10%

- Spend coverage > 90%

- Delivering core processes

- Fully integrated AR/CM/CR-CA/PM/eSourcing

- Mature Category Mgmt and SRM

Processes Perspective:

- Paying PO’s only

- Maverick spend < 10%

- Spend coverage > 90%

- Delivering core processes

- Fully integrated AR/CM/CR-CA/PM/eSourcing

- Mature Category Mgmt and SRM

Move away from

`Tender Factory´


EGP Services in Scope

Sourcing

International/Local

Tactical

PurchasingOrder

Management

Business

ProcessOutsourcing

Operations of support

processes for the local entities, i.e.

• Travel Depart.• Print Shop• Warehouse

Provide cost-efficient

services

Purchasing Project

Contract Creation

Category MgmtVendor MgmtContract Mgmt

Requisition

&Ordering

Documentation

&CR/CA Calculation

Receipting&

Evaluating

InvoiceProcessing

Erste Group Procurement

Purchasing Project

Contract Creation

Category MgmtVendor Mgmt

Contract Mgmt

Requisition

&Ordering

Documentation

&CR/CA Calculation

Receipting

&Evaluating

InvoiceProcessing

Purchasing Project

Contract Creation

Category MgmtVendor Mgmt

Contract Mgmt

Requisition

&Ordering

Documentation&

CR/CA Calculation

Receipting&

Evaluating

InvoiceProcessing

CustomisedProcurement

Services

Additional requirements

requested by customer

and are not in the scope ofpurchasing

Customer Satisfaction

Compliance with Outsourcing

Policy Provisionof Outsourcing

Project Documentation

Compliance to regulatory

and internal

requirements

OutsourcingCompetence

Center

Strategic, monitored purchasing in a team

approach

Ensure fast, easy and efficient execution

By EGP By EGP or Customer

On Customer’sDemand

Additional Servicesfor the customer’s benefit

Invoicing as a % of 3rd party spend Invoicing in a separate fee (SLA)


Sourcing

• Analysing the spend of

entity/supplier/category

• Strategic basis for the

purchasing project

Reporting Package(SAP FI / QLIKVIEW)

• Allows the linking of information

to a 360°view of projects,

contracts, product categories

and suppliers.

• “In-house” development

Vendor / Country / Project Management tool (“CAP”)

• Live eAuctions

• Collecting of informationen (RfI*)

and offers (RfQ*) in a defined

specification form

eAuction, RFx(Electool)

Sourcing is the strategic process of identifying potential suppliers, conducting

negotiations, and agreeing on supply contracts in order to achieve a sustainable cost

reduction and meet the customer’s expectations.

Supporting tools

*RfI = Request for Information*RfQ = Request for Quotation

Demand analysis

based on

Category ManagementVendor Management

Contract Management

Identificaton of potential suppliersto conclude a GMA

support through

eAuction / RFx / negotiation

GMA


Sourcing International/Local

Category Management/Matrixorganisation

Sourcing Specialist, the first contact for the customer and groupwide Category Manager and Supplier Relationship

Manager.

145 categories divided according to local and international opportunities.

Find opportunities, create & implement a strategy in a team approach with the Business Line.

Matrixorganisation Category Classification

Category Management

FM Facility Management (FM) IT Informationstechnology (IT) S&O&M Service & Operations & Marketing (S&O&M)

FM FM Maintenancerelated Services/Work IT Personal and Office Computing S&O&M Car Fleet

FM FM Investmentrelated Services/Work IT Telephony and Communication S&O&M Cards

FM Goods IT Networks S&O&M Consulting

FM Energy IT Branch Equipment S&O&M Logistic

FM Security Equipment IT Servers/Storage/Host Components S&O&M Marketing

FM Property Management IT Infrastructure Software S&O&M Office Equipment & Office Operation

IT Direct Application Software S&O&M Personnel Management

IT IT Services S&O&M Travel

IT Indirect Application Software S&O&M Security Service

Sourcing Categories

EGP – Member of EG © 2012All rights reserved Page 11


Contract Management/Spend Data Analysis/Data Reporting

Structure spend by vendors, categories, countries and entities

Real-time Business Intelligence Tool for management

Define Spend categories, analyse it (spend & vendors)

In a team approach with the Business Line.

Budget and Category Analysis Tool Data Reporting

Integrate all vendor contracts in Contract management solution and establish proactive & timely contract activity plan

Contract Management



Supplier Relationship Management Tools

• Standardised Questionnaire for Assessment and Self Assessment

• Document Management System, Reminders periodically and automatically

• Scoring through Business Line

• Risk Management

• Ethics

Supplier

Audits

• Similar to Category Management

• Long Lists and Short Lists

Supplier

Strategies

• Escalation management

• Single Point of Contact and coordination of all participants (Business Line, Legal, Countries, Suppliers)

• Identification of disqualified suppliers

Escalation

Identify and focus on key suppliers. Implement supplier relationship model in cooperation with Business Line.

• HYR/QBR

• Standardised presentations

• Participants: Business Line, Supplier and EGP

• Measuring the cooperation

• Search out further cooperation/collaboration

Business Reviews


Tactical Purchasing (TP) and Order Management (OM)

Purchasing Project

• In 3 countries available

• Integration with MM / Accounting

• Covering about 55% of the spend

SAP SRM

The fast, easy and efficient execution of routine administrative tasks. These are day-to-day buying activities, which are low volume with no strategic importance or based

on agreements that have been set in place.

Supporting tools

Demand(online or catalogue) Offer

Purchase requisitionthrough GMA or catalogue(OM)

Tender Project (TP)

Agreement or

• In all EGP countries available

• Efficient eAuction through webbased

forms

• Supplier’s self registration for saving

resources

eAuction(Electool)

• Standardised articles

• Order Processing for low purchases

• Integration in Warehouse Management System

Catalogue / OM Software(ITAM – Office Asset)


KPIs


The Measures of Success

Key Achievements Q3 Missed Achievements Q3

• XXX% of contracts in the system for

the Top 50 vendors (achieved: XX%)

• On time delivery of projects: XX%

(achieved XX%)

� Lean Management workshop for all 2nd liners

� Business reviews with XX major vendors

� Purchasing policy approved by X local boards

Status: XXX out of XXXX weight points were to be achieved (due) by end of October

Overall achievement� XX% fully achieved� XX% closed late� XX% open and late� XX% missed

Not achieved

Open and lat e

Achieved lat e

Not yet approved

Achieved

Objectives/Strategies/Tactics (OST)


The Key Messages for a successful Procurement Organisation

Organisation & Structure

� Centralized procurement in one seperate company with clear groupwide organisation structure and an agreed and

approved Power of Attorney (PoA)

� Unique systems and tools applied in all subsidiaries in all countries

� Unified processes with locally optimised deployment

� Service Agreement structure and hierarchy applied in all countries

Transparency & Communication

� Full costs transparency through analytic tools and reporting

� Quarterly Business Reviews with clients and suppliers

� Defined communication and escalation process

SustainableRelationship

� By using spend analysis tool the bypassing/‘maverick spend‘ procurement activities are identified and tracked

� High compliance through common cooperation with budget owners on the product groups strategies and/or

supplier strategies

Procurement Process

� Through active management of product groups and suppliers EGP creates a bond between suppliers and budget

owners

� EGP is involved in the whole procurement process with clear tasks and responsibilities

� Educated procurement specialists (Sourcing Matrix)

Goals & Incentives

� Transparency in the level of achieved goals of the cost reduction through one clear methodology and tool-based

measurement


Thank you!

Erste Group Procurement(Procurement Services GmbH)

Email: [email protected]

20120329 egp general presentation

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