How H.J. Heinz Uses SAP Sourcing 7.0 and SRM 7 for Procurement Excellence. Christopher Yope
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1 How H.J. Heinz Uses SAP Sourcing 7.0 and SRM 7 for Procurement Excellence Christopher Yope
2 Background Global SRM & esourcing Lead at H.J. Heinz 8+ Years SAP Experience SRM ECC SNC esourcing Leveraged diverse experience and deep functional knowledge to help drive business transformation for Heinz Successfully helped roll out many implementations across the global Heinz organization - 2-2
3 Introduction to Heinz Founded in 1869 in Pittsburgh, PA by Henry John Heinz Today, headquartered in Pittsburgh and famous on six continents for its iconic brands With products in more than 200 countries around the world, Heinz is the most global U.S.-based food company The Heinz brand is a $4+ billion global icon Record Sales of $11.6B+ In FY12 Global Spend of $4.5B+ Key Heinz markets North America Europe Asia Pacific Rest of World - 3 -
4 Leading Heinz Brands Around The World - 4 -
5 In This Session Understand how SAP SRM and SAP Sourcing fits into Heinz s Global Procurement Strategy Hear results delivered and benefits obtained by implementing SAP SRM and SAP Sourcing Global Business Transformation, Not Systems Implementation Spend Visibility Metrics and Compliance Project Savings Management and Reporting in the tool Improved contract authoring, management, and reporting Learn best practices when it comes to leveraging Key Users, global standardized processes, and accelerated timelines - 5 -
6 Heinz s Path to World Class Procurement Developed our Strategy Invested in our People & Processes Implementing the System Backbone - 6 -
7 What is Keystone? Establish the Foundation Get Capabilities Current with Competition Globally Upgrade & Integrate Business Processes Standardize IS Platform in SAP Drive Visibility, Productivity and Efficiency Platform for Future Growth - 7 -
8 How SAP Supports the Procure to Pay Process Establish Business Requirement Develop Sourcing Strategy Negotiations / Contracting Place Orders Receive Goods / Services Pay Supplier Keystone Procure to Pay Benefits Full visibility of spend Manage / Continuously Improve Supplier Relationship Proactive compliance via effective workflow and improved buying tools Increased buyer effectiveness through touch less PtP transactions Common and measurable global PtP process Platform to enable global sourcing Standard global metrics and reporting - 8 -
9 Keystone Global Implementations SRM Indirect Procurement US, Europe ECC Direct Procurement Continental Europe E-Sourcing Sourcing, Projects and Contracting North America, Europe, India Indonesia, China, Australia, New Zealand - 9 -
10 How SAP Enables Savings At Heinz Non-negotiated Spend Little procurement involvement SRM improves spend visibility Procurement negotiates to shift Negotiated Spend Full use of 7 step process Highly utilizes catalogs (65%) Focus on demand management Tailwind savings $ 5-20% Savings Sourcing/ Compliance Negotiated Savings Key Drivers Proactive compliance Greater spend visibility Catalogs (target 80%) Significantly improved reporting Maverick Spend Should be negotiated Leverage SRM to shift Catalogs Process control team Reporting
11 The SRM Value Proposition Easier shopping experience Online, catalog driven shopping Better reporting and visibility Spend by individual / cost center / stakeholder Compliant / non compliant spend, opportunities Enables indirect procurement to identify opportunity by stakeholder, category, vendor Improving compliance proactively through completion workflow
12 Success To Date Stable solution, scaling globally while increasing capabilities Creating visibility and opportunity ~3 Years since 1 st go live 40+ sites, 9 countries requesters, 800+ approvers $1B+ in spend annually ~65% transactions on catalogs
13 Global Functionality Benefits Global System, Global Processes Resources can focus on delivering incremental capabilities for the business Enhancements impact all regions - do it once, get it globally Learning around training and change management carry forward UKI Catalogs, Standardized Workflow, BI Reporting, Blackberry Approval US Standalone Implementation, Reporting Improvements CE (Continuous) Plant Maintenance Integration, Supplier Transactional Portal Italy Support Pack Upgrade, Deployed In Italian
14 External / Internal Catalog Benefits and Drivers Internal Catalogs using SRM MDM Increases transaction efficiency Fully populates shopping cart with required data Streamlines the end user experience Drives the spend with strategic suppliers Guarantees Heinz contracted price External (Punch Out) Catalogs Web enabled buying experience Highly enabled shopping list Supplier managed Elevated shopping experience More complex catalogs, quoting and functionality
15 Workflow / Blackberry Approval Completion workflows enables the procurement organizational to be involved in non-strategic spend After completion workflow, routes via the HR hierarchy Simplified 6 level globally standard approval process Eliminating non value added approval levels No exceptions Nominal self approval for all users Allows the use of Blackberry approval for shopping carts
16 Usage of BI and Reporting Full spend visibility and segmentation into what we spend, with who, and how Easy compliance tracking Enables significant standardization Improves financial forecasting and planning Available to all users Ease of use Fully exportable to Excel Highly customizable Standardized spend classification, descriptions
17 Plant Maintenance Integration Utilizes a robust workflow platform built and leveraged in previous roll outs Enables maintenance in one global system versus multiple regional instances Simplifies the reporting metrics as they have already been delivered Leverages some standard and some previously built custom solutions for a robust integration Enhanced buying experience through the use of catalogs enabling further sourcing from strategic suppliers
18 Enabled Electronic Transactions Investing in XML communication for high transaction volume suppliers 3 rd Party hosted portal for mid tier suppliers Integrated transaction include: PO PO Confirmation (converts to requisitioner) Invoice
19 SAP Sourcing Scenarios and Landscape Business Scenarios Implemented: RFI RFP RFQ Auctions Project Management Savings Tracking Contract Lifecycle Management Supplier Self Registration Single Global Application SAP Sourcing On Premise (Ramp Up) Better Heinz Infrastructure Fit
20 Integration Strategy SAP ECC Replication Standard Materials, Vendors, Currencies, UOMs, Company Codes, Plants, Payment Terms, Incoterms, Purchasing Organizations, Purchasing Groups Custom Adaptor Exchange Rates Worked with SAP to develop Now standard to work with PI SAP SRM Replication Custom program to get vendor master from the SRM standalone locations
21 Global Roll Out Timing Accelerated Rolled Out Ahead of Global ECC Initial Go Live: July 18 th US and Europe Further successful rollouts: Canada September 2011 Indonesia October 2011 India October 2011 China December 2011 Australia December
22 Metrics 350+ people trained 100+ Strategy projects being managed in the tool 350+ Sourcing Projects $1.5+ Billion tendered High level of adoption globally
23 Project Management Design Stage 1 Portfolio Analysis Create understanding of the portfolio Stage Business Needs 2 Establish Business Needs: short, med and long term (5 yrs) Stage 3 Market Analysis Understand supply market Stage Gate Review 1 Gate Review 2 Gate Review 3 Gate Review 4 4 Strategy Development Agree the appropriate strategy Stage 5 6 Strategy Execution Secure agreement and contract Stage Stage7 Strategy Implement n Effect delivery of the strategy Continuous Portfolio Improvement Ongoing delivery against business needs and our Procurement goals Used the Heinz Global 7 Step Sourcing Process as our Framework Built into the Schedule Tab Templates, Attachments, etc
24 Project Management Details Two types of projects: Strategy At the portfolio level - tomatoes, dairy, resin, energy, etc. Leveraging tool to track compliance Approvals by procurement leadership Sourcing At the market basket level Tie into strategic projects Level at which financial savings are tracked Approvals by procurement finance to ensure integrity of numbers Savings details can be linked to various profit and loss (P&L) buckets
25 Project Management Workflow Strategy Project Workflow Sourcing Project Workflow
26 Project Management Financials Financials Tab the bottom portion of the tab allows the entry of the one-time savings, ongoing savings, and brand allocation
27 RFx Design and Details Simplified the RFxs down to 4 options: RFI (General) RFP (General) RFQ (General) RFX with Collaborative Scoring Consolidated our spend categories so that they represent our material groups Enabled us to streamline our reporting / drill down Information / Questions Library Pre-populated with content in order for the buyers to quickly and easily bring in value-added material for their suppliers Able to utilize the daily synced exchange rates for global events in multiple currencies
28 Auctions Design and Details Leveraged standard SAP configuration for auctions types Created variants when it comes to anonymous or leading bidding Made adjustments to what fields are on the schedule area for simplicity Still allow for flexibility around auction closes Trained out best practice of going from a project into an auction to carry over the relevant data Efficiency in setup
29 Contract Lifecycle Management Design/ Details Enabled 4 types of contracts: Indirect Master Agreement Direct Master Agreement Master Service Agreement Confidentiality/NDA Agreement Sub-agreement usage is highly utilized (with subsidiaries) Currently not using the line item functionality Will start when fully integrated with SAP ECC Clauses and templates were loaded prior to go live Workflow Approval is triggered by agreement maximum value
30 Contract Lifecycle Management Benefits Legacy No Electronic Storage Paper Based Approvals Labor Intensive Audit Process SAP Sourcing Global Repository Electronic Approvals System Generated Audit reports Facilitates Global Master Agreement with a supplier Link in multiple regional sub-contracts With Integration to ECC (future release) One stop shop for authoring, editing, and approvals
31 Global Reporting Previously, Heinz did not have an ability to report out data consistently Disparate legacy systems or no system Key metrics are now the same across the globe No longer decided by the region or business unit Single source of truth Key reports include - Stages / Linkages of Strategy and Sourcing projects Procurement Negotiated Savings Sourced spend by supplier / category (based on events) Visibility to sourcing opportunities both regionally and globally
32 Bolstering Adoption Strong Executive support Usage / training mandates essential One set of globally consistent process The whole Heinz procurement world on same tool / same metrics Regional Administrators Onsite or at least in same time zone Key users Engage early Give them additional training Training Instructor led Simulations
33 Lessons Learned Enroll executive support and make sure your program is driven from the top Establish Key User network early Metrics and reporting are big value drivers for the business Ensure users are trained before go live Communicate, over communicate, then communicate some more Value comes from increased visibility of global projects and savings Global Template Build it once, get it globally
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