Case Study

Spend VisibilityEnables Orkla to

Save $100 Million

Spend Visibility Enables Orkla to Save
$100 Million
Zycus’ solution is an enabler for Orkla to identify savings
opportunities.
Edgar Heitmann
Sr. Project Manager,
Orkla ASA

HQ: Norway
Solution: Spend Analysis
Number of languages: 17
“
Spend Transparency: 40+ ERP

Challenge:
Orkla ASA required accurate granular level visibility into globally dispersed multi-
lingual data within a short timeframe.

Goal:
Orkla's goal was to create a spend analysis infrastructure that delivered superior,
innovative, sustainable and long-term business benefits with measurable results.

Results:
Zycus implemented the solution under extreme time pressures to meet Orkla’s overall
plan of reducing spend by approximately 850 M NOK

Company Profile
Orkla ASA, which commenced operations in 1654 with pyrite mining operations, has
rapidly expanded in the past few decades into new business areas through mergers &
acquisitions — its core businesses are Orkla Brands, Orkla Aluminum Solutions, Orkla
Materials, Orkla Associates, and Orkla Financial Investments. Today Orkla is one of the
largest companies in Norway with 35,000 employees, operations in more than 40
countries, and revenues exceeding NOK 70 billion (10 billion USD).

Orkla sought to achieve growth and sustainable value creation in its industrial
activities by creating a competitive advantage based upon a competent organization
with a sound corporate culture. Their objectives focused on constant innovation,
operational improvements and structural development.

ORKLA ASA IS A 350-YEAR-OLD CONGLOMERATE AND ONE OF THE LARGEST

COMPANIES ON THE NORWEGIAN STOCK EXCHANGE.
Business Challenges
With operations in countries as dispersed and linguistically diverse as Norway, Sweden,
Denmark, Finland, Russia, Poland, Germany, Switzerland, France, England, USA, India,

“
Austria, Baltic, Czech Republic, Romania and Portugal, Orkla predicted severe
challenges to the profitability of its businesses. The key issues included global
competition, the emergence of private labels, and stagnating market development.

At the supply end of the spectrum, Orkla’s competitors were rapidly increasing their
supplier radius, introducing new suppliers from low cost areas. In addition, the general
upward trend on raw material prices was beginning to have an impact on the
company’s balance sheet.

Orkla selected Zycus Spend Management Solutions as one of the enablers to

overcome these business challenge
”
GREATER SALES AND SUPPLY MARKET CHALLENGES LED ORKLA TO
INITIATE THE LEADING EDGE APPROACH TO PURCHASING (LEAP)
PROGRAM TO REALIZE THE SAVINGS POTENTIAL IN SPEND MANAGEMENT.

Continous Improvemnet
Enablement Organizational
Enhanced sustainability
capability
of savings enhancement

Cost
savings
realization Project-based
strategic
sourcing

Phase 1 Phase 2 Timeline

Zycus Spend Management solutions deliver superior innovative, sustainable

and long-term business benefits and measurable results.
The Solution
There was significant overlap in the sourcing groups across several of Orkla

organizations, which led to the strategic direction of capture the intercompany

synergies.

Preparation
& arrangement

SMART Implementation

Oppurtunity Assessment

Organizational Development

Sourcing Waves

Wave 1

Wave 2

Wave 3

The strategic sourcing program was executed in

phases. In Wave 1, 20 sourcing groups were addressed
in parallel, Wave 2 had 35, and Wave 3 as many as 45
sourcing groups were addressed.

Zycus provided industry thought leadership and critical insights using Zycus’ artificial
intelligence based Spend Analysis solution. Reveal and exploit the benefits of scale
and facilitate the optimization of resources and knowledge across the organization.

Prior to the solution, local spend analysis was performed at the category level in each
company, global spend analysis at supplier level and ad-hoc spend analysis was
initiated by category leads prior to a category initiative. Spend analysis was initiated

from time-to-time across all companies.

The implementation of Orkla’s Spend Management Analysis & Reporting Tool (SMART)
was enabled by Zycus’ Spend Analysis solution.
 SMART GROUP PARTNERED WITH ZYCUS TO CREATE A SOLUTION THAT
ENABLED ORKLA TO ANALYZE THIER SPEND DATA INTO ANY COMBINATION
OF HIERARCHIES

Orkla ASA Success Details Business Impact

Spend Visibility
All spend was harmonized in a
common sourcing hierarchy, providing
transparency across companies.
Details
Data was collected and centralized at
the transactional level, providing
granular details for analysis.
Solution Efficiency
Data extraction, delivery, classification,
and analysis were itemized for greater
efficiency.
Magnitude and Complexity of Data
+ 2 million transactions each year
+ 15,000 accounts
+ 50,000 articles
+ 40,000 suppliers
+ 15 languages using different
scripts
Diverse Data Sources and Formats
+ 50 Orkla ASA organizations
+ 37 ERP systems
+ 20 unique ERP platforms
+ Numerous “home-grown”
Inconsistent Interpretation of Classification
+ Non-standard category

Sustainability definitions across organizations

Zycus’ leading-edge solutions are
designed to achieve secure and
sustainable spend management
control
Continually Evolving Portfolio
Project Highlights
Orkla continues to realize sustainable
savings and continues to set ambitious
goals and objectives.
+ Lack of transparency across
enterprise
+ Product-driven categorization
rather than market-driven
+ Changes in supply base
+ Articles and specifications
changes
+ Variable prices and volumes

+ Orkla’s initiative provided spend visibility across 40+ ERP platforms and
systems in less than six months.
+ A customized taxonomy structure that reflects Orkla’s supplier market was
developed by Zycus to enable essential visibility and valuable supplier
insight.Zycus Spend Analysis was implemented under an aggressive timeline
to enable
+ Orkla to achieve their objective of reducing spend by approximately 850 M
NOK (approximately 100 M USD) by 2008.
 About Zycus

Zycus is dedicated to positioning procurement at the heart of business performance. With our spirit of
innovation and a passion to help procurement create even greater business advantages, we have
evolved our portfolio to a complete Source-to-Pay suite of procurement performance solutions which
includes - Spend Analysis, eSourcing, Contract Management, Supplier Management, Financial Savings
Management, and Procure-to-Pay.

Behind every Zycus solution stands an organization that possesses

deep, detailed procurement expertise and a sharp focus on
being responsive to customers. We are a large — 600+
and growing — company with a physical presence FINANCIAL
in virtually every major region of the globe. We
SAVINGS
MANAGEMENT
see each customer as a partner in innovation
and no client is too small to deserve our
PROCURE- SPEND
attention.
TO-PAY ANALYSIS
With more than 200 solution
ZYCUS
deployments among Global 1000 clients,
SOURCE-TO-PAY
we search the world continually for
SUITE
procurement practices proven to drive
competitive business performance. We CONTRACT E-SOURCING
incorporate these practices into easy-to- MANAGEMENT
use solutions that give procurement teams
the power to get moving quickly — from any
point of departure — and to continue innovating SUPPLIER
MANAGEMENT
and pushing business and procurement
performance to new heights.

NORTH Princeton: 103 Carnegie Center, Suite 201 Princeton, NJ 08540 Ph: 609-799-5664
AMERICA
Chicago: 5600 N River Road, Suite 800 Rosemont, IL 60018 Ph: 847-993-3180
Atlanta: 555 North Point Center East; 4th Floor, Alpharetta, GA 30022 Ph: 678-366-5000

EUROPE London: Office No 335,400 Thames Valley Park Drive, Thames Valley Park,
Reading, Berkshire, RG6 1PT Ph: +44 (0) 1189 637 493

ASIA Mumbai: Plot No. GJ – 07, Seepz++, Seepz SEZ, Andheri (East), Mumbai - 400 096 Ph: +91-22-66407676