Supplier Relationship Management

mySAP SRM

Thomas Depeweg SAP AG, Product Management SRM

Contents

Supplier Relationship Management Motivation mySAP SRM Overview mySAP SRM Components

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Supplier Relationship Management

The bulk of your spend is with a few key suppliers

But non-strategic suppliers pose a higher risk

with relationships that change more frequently

and drive the total cost of sourcing higher

THE MYTHS
Only the top 10% of the suppliers are really important Only these supplier relationships are worth being optimized

THE FACTS
The total cost of procurement increases sharply in the extended supply base (Lower compliance increases risk of supply while higher turnover hinders supplier selection) Supply-base optimization is the fastest way to lower costs and increase profits (Purchased goods and services can represent over 60% of sales for a company. A 4% reduction in this cost can create as much profit as a 10% increase in sales.)

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Why SRM matters: Cost of Goods Compared to Revenue

Industry
Metals Chemicals Engineering, Construction Beverages Computers, Office Equipment Motor Vehicle and Parts Electronics, Electrical Equip. Railroads Aerospace Airlines Scientific, Photo, Control Equip. Forest and Paper Products Telecommunications Mining, Crude Oil Production Pharmaceuticals Food Petroleum Refining Utilities, Gas and Electric
Source: Gartner Research
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1999 Fortune 500 Sales ($ in Millions) 113,910 257,477 153,831 85,629 281,740 1,109,949 778,602 102,437 184,426 119,800 39,676 85,800 520,961 53,665 204,400
217,739

Purch. $ % of Sales 64,60 61,30 58,60 51,70 50,80 47,20 45,60 42,20 42,10 40,00 40,00 36,20 35,60 34,30 34,00
33,80

Highest Impact

Medium Impact

748,439 337,707

25,50 18,49

Lower Impact

Contents

Supplier Relationship Management Introduction mySAP SRM Overview mySAP SRM Components

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How E-Procurement Evolves into SRM

mySAP E-Procurement E
Spend reporting Tendering

mySAP Supplier Relationship Management EVALUATE

YOUR SUPPLY AND SOURCING STRATEGY Supply strategy development Supplier qualification Supplier selection Contract negotiation and management

E
Catalog content management

ENABLE
YOUR SUPPLY BASE Supplier self service Content management

E
Indirect procurement Direct procurement

ENGAGE
YOUR SUPPLY RELATIONSHIPS Operational sourcing Self service procurement Plan driven procurement Relationship monitoring

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mySAP SRM: Integration & Collaboration

AUTOMATION OF CROSS COMPANY PROCESSES
Suppliers
coll. planning, inventory mgmt selling payments, fulfillment

The Corporation

Customers

SCM ERP PLM CRM

CRM

SRM
coll. design

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SRM in the Supply-Net

E-Marketplace

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Contents

Supplier Relationship Management Introduction mySAP SRM Overview mySAP SRM Components

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Supplier Relationship Management Portal

Portal

PORTAL
Portal functionality like Portal Customization Personalization Single Sign On is achieved by running all the SRM application components in the SAP Portals Enterprise Portal. The portal provides an inter-enterprise focussed view for the employees as well as an external facing portal for suppliers.

Application Components

Framework Services

Technology Infrastructure

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SRM Applications are tightly integrated in the SAP Portals Enterprise Portal

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SRM Application Components

Portal
APPLICATION COMPONENTS
SAPM SAPM SAPM SAPM SAPM Enterprise Buyer (Prof.) Dynamic Bidding Supplier Self Services Decision Support Supplier Collaboration Services

Application Components

Framework Services

(for use in SAPM C-ROOM)

Requisite eMerge 3.5

Technology Infrastructure

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SRM Component Enterprise Buyer Pro. (EBP)

SAPM ENTERPRISE BUYER PRO. The procurement and sourcing system that is the central piece for any SRM solution. It empowers employees with self service procurement, enables centralized direct procurement and provides the professional purchaser with tools to make the right sourcing decisions. KEY CAPABILITIES
Indirect Procurement Employee self service procurement Workflow Sourcing Cockpit Aggregation of multiple requirements Selection of source of supply by assignment or RFQ Approved vendor list

Direct Procurement (planned materials) Integration with Planning & Execution systems (e.g. MRP) Integration with Maintenance Systems Integration with Project Management Systems Contract Management
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Procurement of Services
Procurement / Confirmation with Limits Integration to Supplier Portal for supplier self service

SRM Component Dynamic Bidding

SAPM DYNAMIC BIDDING Supports sourcing needs through RFP, RFQ, and Reverse Auction capabilities. Helps to turn planned, unplanned and strategic demand into contracts and purchase orders. Automated decision support to determine winning suppliers and stipulate follow-on processes.

KEY CAPABILITIES
Sourcing Capabilities RFP/RFQ Reverse Auction Flexibility Rules definition Dynamic attributes Control Distribution lists Workflow Decision Support Bid analysis Single- and Multi-parameter matching Ranking & winner determination Monitoring Business Tracker Integration Contract creation in EBp Purchase order creation in EBp Analytics

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SRM Component Supplier Self Service

SAPM SUPPLIER SELF SERVICE A web based application which gives suppliers access to hosted order and content management functionality. This drives participation within the supplier community, reduces costs and increases speed across the value chain.

KEY CAPABILITIES
Supplier Homepage
Complete Process Sales Order, Service Entry, and Invoice Process without Service Entry ERS Procedure Invoice entry without PO reference

Master data management

Business Partners Catalog (Products and Prices) Contracts

Reporting
Web reports accessible to suppliers keeping them up-to-date on their transactions and performance.

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SRM Component Decision Support

SAPM DECISION SUPPORT
SAPM Decision Support provides analytics to support all SRM processes. Analytics are flexible predefined reports based on powerful state of the art data warehouse technology (SAP BW). SAPM Decision Support offers a 360 approach to SRM intelligence such as supplier strategy management, strategic sourcing, relationship monitoring, global spend analysis and document level procurement process monitoring.

KEY CAPABILITIES
Global Spend Analysis
Mapping via CI (SP1)

Supplier Relationship Monitoring

Performance and reliability KPI Quality monitoring with eg. R/3-QM Supplier Scorecards with SAP SEM

Supplier Base analysis

DUNS Number DUNS Family trees

Contract Analysis
Utilization in terms of time, value and volume Spend with and without contract Expiring Contracts

Sourcing Intelligence
External Market Data (eg. from data providers) Bid analysis for RFQ / Reverse Auction

External Categories
UNSPSC ecl@ss

Procurement History
Per supplier, material, requester, purchaser, cost center manager etc.
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Alerts

SRM Component Content Workbench

SAPM CONTENT WORKBENCH The content workbench supports content import processes. It acts as the staging interface helping during the schema mapping process suggesting you possible match.

KEY CAPABILITIES
Creation of a master schema for categorization (used for catalog searching, de-duplication and reporting) Import of a master schema
UNSPSC E-Class schema of a public marketplace

Import content
Product content Supplier Records From R/3, other ERP, SAPM EBP, various catalog formats XML File upload or XML message

Mapping content to schema

Mapping of incoming schema categories to master schema categories Restricted value help, if manual category assignment is necessary Reuse of assignemnt done previously

Maintenance of schema
Data storage of the schema UI for Maintenance APIs for Adding, Deleting, Modifying, and Reading (F4-Help) Schema information

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SRM Framework Services

Portal

Application Components
FRAMEWORK SERVICES

Framework Services

Technology Infrastructure

SAPM Collaborative Room SAP Business Information Warehouse Requisite Bugs Eye SAP Enterprise Portal SAPM User Management

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SRM Component Collaborative Room

SAPM COLLABORATIVE ROOM The Collaborative Room is an application for collaboration projects within and outside of your company. It offers a safe environment for structured and logically connected collaboration and project data. To work quickly and professionally in a business context, to process data in the various stages of a products life cycle, business applications can be integrated. KEY CAPABILITIES Communication Services
Threaded Discussion Calendar and Tasks Ad-hoc Notification Chat Alerts Poll Announcements

Business Services
Contract Services Shopping Cart Services Document Management
Folder structure Document upload/ download Flexible authorization on folder and document level Document versioning Status Subscription

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SRM Framework Services

Portal

Application Components

Framework Services
Technology Infrastructure
Application integration Business partner integration

Technology Infrastructure

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Scalable & Flexible Deployment

Suppliers
Web Browser

Asia R/3
3rd Party 3rd Party
Cat.

Corporate HQ
BW EBp Cat. SUS

Portal

EBP XI

DB CROOM

XI

SAP R/3

3rd Party Canada EBP

Cat.

Sierra Leone ERP

R/3

XI

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thank you
for your interest

Back Up Slides

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mySAP SRM for Business Process Efficiency

mySAP Supplier Relationship Management EVALUATE
YOUR SUPPLY AND SOURCING STRATEGY Supply strategy development Supplier qualification Supplier selection Contract negotiation and management

ENABLE
YOUR SUPPLY BASE Supplier self service Content management

ENGAGE
YOUR SUPPLY RELATIONSHIPS Operational sourcing Self service procurement Plan driven procurement Relationship monitoring

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EXAMPLES
An electronics manufacturer finds that certain components have become commodity and formulates a strategy to source them locally. A company opens a new facility in East Asia, and redefines the sourcing strategy for that region. Analysis of hidden procurement costs kicks off a supplier de-proliferation initiative.
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mySAP SRM COMPONENTS

SAP Enterprise Buyer (Prof. Ed.) SAP Business Information Warehouse SAP Collaborative Room SAP Content Integrator

EXAMPLES
CPG company certifies different raw material vendors. A company locating different suppliers for upcoming new product developments A financial institution maintains lists of suppliers for different MRO materials.

SRM COMPONENTS
SAP Enterprise Buyer Professional SAP Business Information Warehouse SAP Dynamic Bidding

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EXAMPLES
Consulting company reduces supplier base, by aggregating airline tickets to one airline. Bank aggregates paper demand to improve MRO pricing.

SRM COMPONENTS
SAP Enterprise Buyer Professional SAP Business Information Warehouse SAP Dynamic Bidding

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EXAMPLES
A professional purchaser negotiating a long term contract with a supplier to deliver goods of a specific commodity A professional purchaser and the IT department jointly negotiating a contract for an IT service project with the IT service provider

SRM COMPONENTS
SAP Enterprise Buyer Professional SAP Collaborative Room SAP Business Information Warehouse

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EXAMPLES
A professional purchaser creating a reverse auction to find a supplier for a specific non-standard engineering software not covered by the catalog. A professional purchaser manually assigning a contract to a demand for office furniture.
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SRM COMPONENTS
SAP Enterprise Buyer Professional SAP Business Information Warehouse SAP Dynamic Bidding

mySAP SRM: an Architectural view

Business Units
Employees Product Division 1
MM MM PM PM APO/APS APO/APS FI FI CO CO EBPro EBPro Catalogue Catalogue Business Business Warehouse Warehouse SUS SUS ERP System ERP System ERP System ERP System

mySAP SRM

Suppliers

@
Enterprise Portal Enterprise Portal

Small Suppliers

Product Division 1
MM MM PM PM APO/APS APO/APS FI FI CO CO

DAB DAB cRoom cRoom

ERP System ERP System

Content Content Integrator Integrator Exchange Infrastructure

Suppliers 1/2/3/4/...

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