Herbert Brecheis ABB Case Study

Vice President
SCM Processes & Tools High Tech Summit
San Jose, CA
October 25th , 2007
© Copyright 2007 ABB - 1 -

CD – Supply Chain Management

 Facts about ABB
n Headquarters: Zurich, Switzerland
n About 111,000 employees in
around 100 countries
n Orders in 2006: $28.4 billion
n Revenues in 2006: $24.4 billion
n Listed on Stockholm, Swiss & New
York exchanges; traded on virt-x
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n A leading power and automation
technology company with strong
market positions in its core
businesses
n Core business organized into 5
divisions; Power Products, Power
Systems, Automation Products,
Process Automation, and Robotics
 What we offer

Power Power Automation Process Robotics

Products Systems Products Automation
Sales: $7.4 billion Sales: $4.5 billion Sales: $6.8 billion Sales: $5.4 billion Sales: $1.3 billion

Transformers, high- Substations, FACTS, Low-voltage products, Control systems and Robots, peripheral
and medium-voltage HVDC, HVDC Light, drives, motors, power application-specific devices and modular
switchgear, breakers, power plant & network electronics, and automation solutions manufacturing
automation relays automation instrumentation for process industries solutions for industry

nMarket-leading positions in most key product areas

nIntegrated solutions for grid reliability, productivity and energy efficiency
nRobust global value chain to serve established and emerging markets
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nExtensive global network of value-added channel partners

n

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 2007 SCM Objectives

n Completion of spend transparency: >95% of all external spend

visible ‘on-line’
n Enhance ABB external supply base leverage
n Ensure achievement of aggressive cost savings
n Grow external LCC sourcing, balancing service and quality
n Improve supplier quality to reduce COPQ
n Drive SCM transformation of processes, competencies and
capabilities, develop to ‘next level’ industry-best for excellence
in procurement
n Continue deployment of user-friendly tools and processes
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 SCM applications support Sourcing and Procurement
eProcurement
(Catalog ER
Spend Transparency Buyer) P
(eSMART)

In PO
Purchase Goods Manage
Requisitioning Approval
ApprovalManagement AP
Portfolio Receipt Invoice

Procurement
8 1
Master Data Management Segment
Manage
Commodities Supplier Collaboration
Content
(ASCC)
7 2
Analyze
Supply
Contract Implement
Market
Management Contract Sourci
ng
Direct /
eSourcing Indirect Identify
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(eRFx) Negotiate Leverage

Contract
3
6
Target Build
Supply Base Strategy

5 4
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 SCM Business Process Map (SCM CORE)
Manage User Manage Manage
Manage Manage Manage Manage Manage Manage Receive Manage Financial SCM
& Material Supplier
Contracts Requisition Rfx & Auction Approval PO Reminder Good/Service Invoice Instruments Analytics
Organisation Master Data Master Data

Manage Create Match by Supplier

Manage Manage Initiate Create PR Contract Create Create Performance
User & Create Rfx Reminder for Invoice Performance
Global Codes Supplier Master Contract automatically Approval Purchase Order Good Receipt guaranty
Authorization (RFX-01) PO Confirmation 1-way Measurement
(MDM-01) (MDM-05) (CM-01) (PR-01) (AP-01) (PO-01) (GS-01) (FI-01)
(UO-01) (RM-01) (MI-01) (AL-01)

Create
Maintain Manage Purchase Match by
Manage Create Create PR Create Reminder Create Hedging foreign eSmart
Organisational Supplier Execute Rfx Requisition PO & Invoice
Material Master Contract manually Blanket Order for Service Entry currency integration
Structure qualification (RFX-02) Approval 2-way
(MDM-02) (CM-02) (PR-02) (PO-02) Shipment Advice (GS-02) (FI-02) (AL-02)
(UO-02) (MDM-10) (AP-02) (MI-02)
(RM-02)

Match by
Manage Transfer Create
Manage Distribute Purchase Order Approve PO & GR & Ad-Hoc
InfoRecord Budget Control Execute Auction Documents Reminder for
Service Master Contract Approval GR/SE Invoice Down payment Reporting
T&C (PR-03) (RFX-03) to Supplier Delivery
(MDM-03) (CM-03) (AP-03) (GS-03) 3-way (FI-03) (AL-03)
(MDM-06) (PO-03) (RM-03)
(MI-03)

Manage
Rejection
Manage Manage Utilize PO Confirmation Credit
Awarding Delegation Reverse Receipt Payment Plan Reporting
Catalogs Source List Contract & Status Assessment
(RFX-04) Escalation (GS-04) (MI-04) (AL-04)
(MDM-04) (MDM-08) (CM-04) Updates (FI-04)
(AP-04)
(PO-04)

Manage Manage
Batch
Documents Quota Foreign Trade
Management
(MDM-07) Arrangement (AL-05)
(GS-05)
(MDM-09)
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Forms
(AL-06)

Process Cluster

Macro Process
(BPD)

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 Business Requirements defined on micro level

Business
Process Map

Business
Requirements
Repository
- 672
requirements
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 SCM Tools Architecture
Knowledg
ABB Buyers e
e.g. Freight Managem
ABB
local Calculator ent
ERP
A/P

ABB Sales
Local eProcure-
ABB ABB EAI 1 ... n ment BI
ABB
ERP ERP Sales
Local Unit
Suppl
ier
ERP Customer
Facing
Applications
Ware
Group SCM hous
EAI Warehouse Management e

Globa Globa
Collaboratio l l
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SCM Tool
n Suppl Suppl
ier ier
ERP ERP
Link exists
Link has to be built

Suppliers
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 eSMART (BI) is providing spend transparency

Who
Who purchases
purchases (Business
(Business
Unit)
Unit) ??

What
What is
is bought
bought (commodity)
(commodity) ??

From
From whom
whom (supplier)
(supplier) ??
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How
How much
much ??

CD – Supply Chain Management Strictly Confidential

 eSMART – Excel Pivot interface

q
q
q
q
q
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1. q and Drop the Dimension fields in the „Rows“, „Columns“ or the in the „Page“ Area
Drag
q 2. Drag and Drop the Value fields in the “Data Items” Area
3.

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 eSMART– features and next steps

Present features:
nSpend Transparency
nCost Saving Reporting
nData feed to SCM Dashboard

Next steps:
nImproved data gathering from ERP systems:
nRejections and OTD, to calculate supplier quality
nPayments without ERP PO, to capture total spend of ABB
nPower User capabilities to create own reports, on the fly
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nCost Saving Planning (Score Card)

n

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 Spend transparency has significantly improved

100%

90%
85%

80%

60%
57%

40%
33%
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20%

0%

Dec 2004 Dec 2005 Dec 2006 Sep 2007

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 ASCC (Collaboration) – features and benefits

Transactions
via Web or B2B
Reduced Cycle Times
Orders
Order Change
Order Confirmation
Shipment Advise Process Cost Savings
Invoice through
Elimination & Automation
of manual process steps

Collaboration Improved
Supplier Performance
Forecast Report
Performance Reports
Material Cost Savings
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through
improved Ease of Doing
Information Business
for Suppliers with ABB
Non ERP content
PDM Integrations
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 ASCC Utilization 2007

2
A
50000 120000

45000
Total amount of registered suppliers: 2292 40000
100000

35000
80000
30000
Reports Usage meaning all requests for reports.

Report Usage
25000 60000
Transactions meaning the Web and B2B 20000
transactions (as order, order confirmation, 15000
40000
Shipment advice and invoicing) per line item. 10000
20000

Transaction
5000

0 0
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Reports Usage
Transaction volume (Line items)

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 ABB Revenue and EBIT margin 1988 – H1/2007
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 Your questions
please
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© Copyright 2007 ABB - 17 -

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