Spend Management Case Study

Kennametal 150% ROI Within One Year

Situation
With four business units and more than twenty-five manufacturing plants, Kennametal is
a highly distributed organization. Kennametal executives realized that significant savings
could be made by centralizing contracts with suppliers, reducing maverick spend and
streamlining the source to pay process across the organization. Before Ketera,
Annual Sales exceed $1.8B with annual
the following applied: spend of more $200 million.
> Four global business units through numerous offices sourced non-material
goods & services directly from local suppliers
> Fragmented supply base and lack of standards systems resulted in
KENNAMETAL is a global manufacturer and
20% to 25% maverick spend
distributor of a broad range of cutting tools,
> Wide variability in prices paid by business units
tooling systems, supplies and technical
> The procure-to-pay cycle was paper-intensive and costly services. The company operates four global
> Had completed analysis of historical spend and were now looking for solutions business units, and operates more 50
to enable company to achieve compliance across the company with manufacturing plants globally, of which
rationalized supplier base and company-wide contracts 25 are in north America.

Spend Management Results SPEND MANAGEMENT OBJECTIVES

Kennametal went live with Ketera Spend Management in August 2002. The following > Eliminate maverick spend and capture
results have been achieved in the first year of deployment: corporate discounts

> Quick cash payback and high ROI

> 150% Return on investment (ROI) generated after one year. Achieved payback
on solution investment within six months. On track to achieve 500% ROI within > Guarantee savings by minimizing
three years. Maverick spend has been reduced by 90% on-going system costs
> 10% to 15% cost savings were achieved as business units shifted spending > Automate procure-to-pay cycle and
to preferred suppliers standardize corporate procurement
> Live with Ketera within 45 days. 360+ users and 10 suppliers enabled process

> Minimal resources required for project. 1 FTE required during deployment

Why Ketera? “ After searching for 18 months,

Kennametal spent nearly two years looking at different solution models and vendors in and reviewing over 40
the spend management space. Kennametal selected Ketera because: e-procurement solutions,
we selected Ketera
> Over six times lower total cost of ownership (TCO) than software-based systems because their solution
> Rapid time to value. Ketera met Kennametal needs to achieve ROI within a year provides the best
> Intuitive user interface enabled rapid deployment and user acceptance overall value."

JIM CEBULA
K E T E R A T E CH N O L O G I E S I N C. Director of Global Purchasing
Kennametal
Telephone: 650/903-5600 e-mail: info@ketera.com www.ketera.com