Supplier Enablement - Best Practices

Session Goal Supplier enablement is the key to success on the Ariba Network. Join this session to discuss the best practices in supplier recruitment strategy and execution for programs in P2P e-invoicing dynamic discounting 2 2009. Ariba, Inc. All rights reserved.

What is Supplier Enablement Supplier Enablement is the process of electronically connecting suppliers to a company's back-office systems to exchange critical business documents such as purchase orders, invoices and other information using Electronic Data Interchange (EDI), Extensible Markup Language (XML), Web forms, supplier networks, etc. Benefits include reduced supply chain costs, improved invoice tracking, reduced procurement costs, reducing or eliminating non-value added or manual processes, and improved communications. Supplier enablement extends the value of a company's internal IT investments, such as ERP, into their trading communities--expanding the ROI on an initially internal investment. Source: Wikipedia ERP A/P Supplier Enablement XML EDI Web forms In addition to improvements in cycle time and the percentage of transactions conducted electronically, Best in Class enterprises also realize significantly lower costs. Aberdeen, Supplier Enablement: Connecting with Suppliers to Build Lasting Relationships drive down costs 71% enable 50% of suppliers realize 47% lower transaction costs 3 2009. Ariba, Inc. All rights reserved.

Sesson Overview Review best practice for key areas of supplier enablement Alignment between AP and Procurement Staffing on the customer side Supplier data quality and access Supplier Enablement Flight Plan Achieving Compliance Supplier Buy-in Keep customer s end user updated Professional buyer involvement Global e-invoicing rollouts 4 2009. Ariba, Inc. All rights reserved.

Alignment between AP and Procurement Goal Best practices Remove department oriented thinking Consistent message to suppliers and users Leverage full benefits for all departments Involve buying persona from both departments when planning a P2P rollout / get sponsors in both departments Align department goals into one consolidated MBO (e.g. 60% of all invoices are to be PO based) only end to end enablement will leverage the full potential Have all communication developed and approved by both departments Also involve legal and tax deportsments on-time 5 2009. Ariba, Inc. All rights reserved.

Staffing on the customer side Goal Best practices Assign and plan the right staffing throughout all phases Leverage SE services or Liaison Desk from Ariba where appropriate Customer roles Supplier Enablement lead (coordinate/fulfill the following roles) 1FTE (ongoing less) Supplier master data (collection and updates) -1FTE/500 Suppliers Supplier communication 0.2FTE (ongoing less) Internal communication on SE program/change management and compliance message 0.25FTE (ongoing less) Contract and catalogs: Professional Buyer for 5-10 hours/ contract or catalog Invoice related: AP Personal for - 0.5FTE for 4month per region cxml Integrated supplier contact + testing support 0.5FTE per suppliers 4 weeks Roles with outsourcing* potential Calling campaign Follow-ups Supplier training sessions Supplier support Progess tracking Technical contact person for catalogs questions *) includes shared service centers (benefits are: availibility, languages, tracking) 6 2009. Ariba, Inc. All rights reserved.

Supplier data quality and access Goal Best practices Clean-up incomplete & inaccurate supplier master data Gather the right contact details Access to supplier master data on a central place (DB) versus dispersed storage locations through out the organization Establish data baseline (vendor subset) Critical Supplier data Remit-To Address, Bank Details, Tax ID, Contact Information, Ariba Network ID for matched suppliers Special focus on supplier with multiple bank accounts / currencies Establish central source of truth for all supplier master data Leadership involvement and MBOs to align teams, e.g. for different departments (AP and procurement) or different business units or regions Define processes for Request new suppliers Maintenance of supplier data at all levels Common Supplier, Partitioned Supplier and Location Leverage Ariba s online data collection web-form (request send to email or fax) Supplier calls to validate and update the baseline data ERP Cleanup Projects (ideally the first step) Leverage contact information from paper invoice Dedicated staff for data collection - Consider Temps / Outside Assistance Consider that the right contact varies from ecommerce department in large corporation to bookkeeper in family owned business 7 2009. Ariba, Inc. All rights reserved.

Supplier Enablement Flight Plan Goal Best practices Assign suppliers to the right enablement type /segmentation Schedule Supplier on-boarding Base strategy and flight plan on buyer (customer) roll-out plan (i.e. regions, division, alignment with backend integration) Joined enablement of Purchase Orders and e-invoicing Run spend analysis / leverage Network Matching Enablement order* 1. Matched AN Suppliers (SMP) High volume suppliers Matched AN Suppliers (non SMP) 2. Catalog supplier 3. Mid/low volume suppliers Enablement type is driven by the throughput* of the supplier (for new enablements) Suppliers with < 3 transactions per year ICS invoice conversion (no active AN enablement) Suppliers with < 300 transactions per year PO Flip Suppliers with > 300 and < 1,000 per year CSV Invoice integration Suppliers with > 1,000 transactions per year EDI/cXML Suppliers with > 50 recurring items and >500 transactions per year - Catalog Depending on the enablement type the lead time differs between 2-90days Enable only suppliers you are doing business with Enable supplier just before or better with the transaction(s) PO Quick Enablement with e-invoicing (win-win: suppliers will see immediate value) Supplier will stay focused / feel the momentum and take account ownership quicker BUT important is that the suppliers understands the complete program upfront (e.g. SMP fees) Skip paper/fax transition phase Run Statistics monthly to adjust process and to support MBOs *) based on recent buyer spend data (last 12 month) 8 2009. Ariba, Inc. All rights reserved.

Achieving Compliance 1/2 Goal Get supplier buy-in / Provide Incentive to E-Invoice Reduce the amount of non compliant suppliers = suppliers not using the electronic channels even though they are enabled (continued receipt of paper from e-invoice Ready Suppliers) Establish a responsive exchange with suppliers Training / Information of suppliers Best practices Joined CFO / CPO Letters Campaigns (Company letter head, Notification of initiative, Firmness of customer intentions) with operational follow-up Explain win-win situation / outline benefits, e.g.: electronic visibility to invoice status or improved communication with the buying organization or stickiness of e-enabled suppliers Compliance enforcement, e.g. paper invoice rejection program / supplier compliance Flag in AP for paper invoice rejection (Vendor Master e-invoice Ready Flag ) Non-PO invoice rejection program: No Purchase Order, No Payment Require that ALL indirect purchasing suppliers join the Ariba Supplier Network, backup by customer s internal MBOs Heavy touch call plan - direct phone contact to begin developing the relationship 9 2009. Ariba, Inc. All rights reserved.

Achieving Compliance 1/2 Best practices New/Amended contract clauses / collaborative Drive with Sourcing Efforts = Partnership with Strategic Sourcing Collaborative support with procurement, Buyer Customer Training - Train customer s supplier enablement team, buyers, sourcing managers, etc. Use of e-invoice Portal & Webinars / Extensive training materials and welcome pack But don t overload the suppliers provide the right content at the right moment Involve marketing departments Use of any supplier communication to emphasize program importance Run reports on (non-)compliance to support follow-up (1. level reminders and 2. level professional buyer) Link MBOs to compliance success 10 2009. Ariba, Inc. All rights reserved.

Supplier Buy-in Goal Get imitate buy-in to the benefits and avoid resistance Best practices Don t hide supplier fees Explain Supplier advantages Live demo to show ease of use Engage marketing Hand-hold suppliers Discount terms can be offered to entice suppliers to join 11 2009. Ariba, Inc. All rights reserved.

Keep customer s end user updated Goal Keep end users up to date on enabled commodities and preferred suppliers Best practices Use catalogs to allow search for products and services Contracts to indicate preferred suppliers Monthly email notification with new/changed commodities or suppliers Enforce 100% compliance via single requestion platform with new vendor process 12 2009. Ariba, Inc. All rights reserved.

Professional buyer involvement Goal End to end Supplier Enablement incorporated to new contracts (or amendments) Alignment of decentralized and centralized buying activities Best practices Collaborative Drive with Sourcing Efforts = Partnership with Strategic Sourcing Sourcing must have the final e-enablement in mind New/Amended Contract Clauses Consider local requirements in global contracts 13 2009. Ariba, Inc. All rights reserved.

Global e-invoicing rollouts Goal Smooth transition from paper to e-invoicing Tax departement buy-in Best practices Involve tax department from day 1 Regional roll-outs leverage common requirements Only enable countries with min. amount of suppliers (>20) See best practices for achieving compliance 14 2009. Ariba, Inc. All rights reserved.

Follow-up Contact Take Action Visit us on the web at www.ariba.com Financial Solutions Register for Ariba Network & Financial Solutions webinar series at www.ariba.com/programs/invoicenow Request a demo Schedule a business case assessment Contact me Olaf Schrader Product Manager - Supplier Enablement Please Email me at oschrader@ariba.com Thanx You 15 2009. Ariba, Inc. All rights reserved.