global spend reporting

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  • 1. Global Spend Reporting Amsterdam, May 2012 Michael Url,Manager Procurement Process & Technologies,1 Sappi Fine Paper EuropeCorporate Overview May 2011

2. Agenda: Global Spend Reporting Introducing Sappi Why Spend Analysis Getting the Master Data right Applying best suited Technology Measuring the speed and effectiveness of Operational Procurement Summary & Take Aways ...2 3. Sappi Limited - who are we today? We are the worlds leading producer of high quality coated fine paper used in printing everything from art books to quality magazines to wine labels. (USA, Europe, South Africa, China JV) We also produce a range of business paper, coated and uncoated speciality paper and casting release paper (USA, Europe, SA) We are the largest and lowest cost producer of the chemical cellulose pulp used to produce viscose fiber (SA 100% export) We employ over 15,600 people and achieved an annual turnover of US$6,572 million (2010) We are listed on the stock exchanges of Johannesburg and New York.3 4. Geographic diversificationGlobal presence enables Sappi to take advantage of opportunities where markets are strong 3 Paper Mills 4 Sales Offices 8 Paper Mills 16 Sales Offices 1 Fine Paper Mill (JV) 4 Sales Offices 1 Sales Office 1 Sales Office 6 Pulp and Paper Mills 1 Chemical Cellulose Mill 10 Sales Offices 541,000ha Forests 1 Sales Office 1 Sales Office 13% Europe55% 48% 24% North America17% Southern Africa 21%22%Asia & other Sales By Source1 (US$)Sales By Destination1 (US$)4 5. Fine paper mills in Europe Nijmegen Mill The Netherlands240,000 tons coated Maastricht Mill fine paperThe Netherlands 280,000 tons coated Kirkniemi Millfine paperFinland 730,000 tons coatedfine paper and330,000 tons pulp Lanaken Mill BelgiumAlfeld Mill500,000 tons coated Germanymechanical paper and 330,000 tons coated 180,000 tons pulpwoodfree anduncoated specialityand 125,000 tons pulpStockstadt Mill GermanyGratkorn Mill430,000 tons coatedEhingen Mill Austria and uncoated fine Germany 950,000 tons coated paper and 250,000 tons coatedfine paper and 150,000 tons pulpfine paper and255,000 tons pulpBiberist Mill 135,000 tons pulpSwitzerland 500,000 tons coated and uncoated fine paperTotal fine paper capacity in EU4,210,000 tons/yearin 20105 6. Spend Analysis - what surveys say Almost 60% of study Only 29% of all enterprisesrespondents said that spendhave enterprise-level visibilityanalysis was crucial for into spend despite theeffective impact that spend visibility can have.A.T. Kearney: European Indirect Spend Management Study2011 (survey base: 162 large and mid-sized companies)Ardent Partners: CPO Rising 2011 The State of SpendAnalysis (survey base: 250 companies) 80% of procurement Organisations have poor spendprofessionals agree that the visibility and accuracy toquality of masterdata is the key support effective sourcing: onlyfactor for spend transparency. one in three organisations captures the item levelDun&Bradstreet Germany: Survey at BME-Symposium 2010(survey base: 200 participants) details that is required for effective procurement.same A.T. Kearney study6 7. Spend Analysis - why bother ? Not knowing what and where youre spending means not knowing where you can save. You cannot manage what you cannot see. Spend Analysis enables Spend Management: Increased visibility into spend levels across the entire enterprise Faster identification of sourcing opportunities and negotiating leveragewith suppliers Enhanced monitoring of contract leakage and maverick buying Enhanced benchmarking and performance capabilitiesROI ? According to a US-survey: new cost savings on an annual basis of 0,25% -1,00% of total spend Its hard to proof which part of a new saving is due to enhanced visibility7 8. The classical 5 steps for Spend Analysis8 9. Special Guest at Procurement Strategy Meeting ?9 10. Dont ignore the Data Elephant in the room !10 11. How big is the Data Elephant ? Annually for Sappi Europe (2010): 212.000 invoices (including credit / debit notes)76.000 without purchase order reference 136.000 with purchase order reference 87.000 purchase orders with 183.000 purchase order items and 308.000 related goods receipt items (delivery items) 13.000 vendor masters used as Invoicing partner (of possible 42.000) 37.000 material masters referenced to in Invoices (of possible 310.000)11 12. Why do we need to eat the Data Elephant ? Benefits trustworthy segmentation and accuracy of spend analysis better material / vendor search possibility ( less search time) elimination of known duplicates opportunity to share strategic spares between mills Steps taken at Sappi seek senior management buy-in and get the resources make allies: accounting/finance as well as IT department establish central function Master Data Management cleanse efficiently with own people (our choice) or with external dataservices keep clean with master data workflow (material, vendor)12 13. How do you eat an elephant standing in your path ? Remember that Sappi is an acronym for South African Pulp and Paper Industries.An old African proverb says: The only way to eat an elephant is one bite at a time.13 14. Master data cleansing: one bite at a time OnlineWorkflowfor new MasterRestrictDatasystem authorisations for create/changeMaster Data Mandatory bites for Spend Analysis14 15. How is Spend without PO assigned to Material Groups and Parent Material Groups 142 Sappi Material Groups the determination sequence is as follows: 1. from Material Master, if there is none then 2. from Purchase Order, if there is none then 3. from a mapping table GL-Account ( /Vendor ) to Material Group 17 Sappi Parent Material Groupseach Material Group is assigned to one Parent Material Group:1 Wood and Chips2 Pulp3 Non-Fibre Rawmaterials4 Logistics, Warehouse, Transport5 Energy, Utilities, Water6 Industrial Services7 MRO Spares8 Capital Equipment9 Machine Clothing 10 Consumables 11 Packaging, Shipping Supplies 12 G&A, Insurance, HR 13 Marketing, Rebates, Trials 14 IT, Telcom 15 Travel 16 Non net-spend (VAT, Taxes, Intercompany, Grants, Suspense, Interest) 17 Release Paper15 16. Material Master Cleansing: the 2 phases at Sappi Commercial Cleansing (this phase 1 completed in Mar 2011) Sappi Material Number5051280 Short Text in language English BEARING:BALL;ANNULAR GE40KRRB YEL208 eOTD Concept Identifier0161-1-01-006687 UNSPSC codeUNSP-31171504 Ball Bearings Commodity Code (Intrastat Nr)84828000 Balls, needles and rollers for bearings Sappi Product Hierarchy010991-01 Ball Bearings Sappi Material Group 010991 Bearings & Supplies Sappi Parent Material Group7 MRO Spares Enrichment with Technical Attributes (phase 2 not started in EU ) Deliverable (example):Bearing: Ball; AnnularProperty Description Value UOMInner Diameter85 mmFrom these attributes, aOuter Diameter180mmMaterial Master LongtextWidth 41 mmis generatedNumber of Rows 1Sealing Type OpenLoad Rating 3.5 KNSoftware used:Speed Rating 5000rpmRefresh by Fresh International16 17. Material Master Cleansing at Sappi: 284.000 records cleansed (phase 1)Average speed:Cleansing 335 material masters /6 old mills manday completed byNov 2009 (except for producthierarchy) Cleansing 3 new millsAcquisition( another 99.000 of 4 mills Materials) from completed byM-RealMar 2011 (including product hierarchy)17 18. Vendor Master Cleansing at Sappi business information was bought from Dun&Bradstreet for 71% of records (agreed hit-rate): - ownership structure, DUNS-Nr, out-of-business, duplicates rework / completion was done by Sappi no annual updates bought Parent Vendor grouping introduced for top 1.000 supplier covering 97% of total spend and now containing 6.199 single vendor records parents shared between Sappi Europe, Sappi North America, Sappi South Africa blocking of vendor records (minus 17%) out of business not used for 7 years elimination of duplicates 42.000 records remain18 19. Technology Approaches for Spend Analysis19 20. Approaches for Spend Analysis Manual - useful as proof of concept or due to lack of budget - issues: lack of scale, not easy to repeat, inconsistent Outsourced Service:- Software Provider: typically self-service with customer categorizes (effort!)- Procurement Service Provider: buy categorization expertize and sourcingexpertize In-house Software: - Packaged Solution for Spend Reportinge.g. SAP Business Objects Spend Performance Management (BO SPM)- Adjust a Visualisation Software to the needs of Spend Reportinge.g. SAP Business Objects Explorer20 21. Suppliers of Business Intelligence Plattforms2005 2010: large brands acquirebest-of-breed products- Oracle: Siebel and Hyperion- IBM: Cognos- SAP: Business Objects2011: trend continues to strategicpurchases that expand marketopportunity21 22. BI Platforms include various Tools for Specific Purposes Example: SAP Business Objects22 23. Sappi Global Spend Reporting:Data collection and Reporting Software All invoices/supplier payments are covered by 2 ERP systems Data is extracted daily from 2 ERP systems (Europe/North America, SouthAfrica, both SAP ERP 6.0) into one BI system (SAP BW 7.0) SAP Business Objects Explorer is used as interactive visualisation tool foranalysis. all European buyers and some finance managers have access user-friendly, fast and very good user acceptance SAP BEx Analyser (MS Excel integrated) remains available for use bysystem experts (with same data content + some more fields)23 24. Sappi Global Spend Reporting: Content allows for spend reporting and analysis at a Sappi global level, as well as forlocal ad-hoc analysis based on invoiced values includes invoices with PO and without PO, but singles-out the non-net-spend (VAT, taxes, intercompany, suspense, interest...) also includes all debit and credit notes, as well as credit card spend net value (cash discount is deducted) at invoice date with currency conversion at that dates rate


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