Professional Documents
Culture Documents
4 E Sourcing
4 E Sourcing
4 E Sourcing
TASKCO Corporation
Info@taskco.com
886-2-8772-2583
2002/03/16
June 1, 2001
CONFIDENTIAL
CONFIDENTIAL
Agenda
e-Sourcing
e-Sourcing Solution
Integration: Putting it all together
IT e-Sourcing
CONFIDENTIAL
CONFIDENTIAL
73% of potential
purchasing savings are
in sourcing.
Resulting in savings of 2-4%
overall going right to the bottom
line
Some commodity areas can save
more than 20%
CONFIDENTIAL
Sophistication of Enterprise
Large enterprise,
sophisticated
purchasing group
Large enterprise,
unsophisticated
purchasing group
Small and
medium sized
business
Sourcing
Sourcing
Specialists
Specialists
Point
Point
Solution
Solution
Vendors
Vendors
Basic, hosted
software
No consultants
Solution Capability
Limited
software
Many
consultants
Enterpriseclass
software
No consultants
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CONFIDENTIAL
e-Purchasing
Design
Collaboration
e-Sourcing
e-Procurement
Contract
Negotiate
Buy Off Of
CONFIDENTIAL
ys
Build RFP
& Analyze
Responses
Supplier Selection
Processing
1. Issue PO
2. Receive and Verify
3. Approve Invoice
4. Payment Settlement
ERP
is
Ve
al
or
An
Select
Strategy
e-Procurement
Assess
Marketplace
re
1. Requisition
2. Approval
3. Order
itu
Spot Purchasing
Ordering
nd
Analyze
Orders/Spend
pe
Sourcing Project
Transaction
Execution
Ex
Demand
Generation
Negotiate with
Suppliers
e-Sourcing
CONFIDENTIAL
SFA / CRM
ERP
e-Procurement
e-Sourcing
Top-line Sales
Revenue
Operating Costs
& Efficiency
Bottom-line
Cost Savings
SFA / CRM
ERP
e-Procurement
e-Sourcing
Percent of
Transactions
90%
10%
Percent of
Spend
20%
80%
Usual Order of
Implementation
Nature of
Automation
Big Technical
Challenges
Big Business
Challenges
SFA / CRM
ERP
e-Procurement
e-Sourcing
paper catalogs
and requisitions
negotiations and
decisions
e-catalog
normalization,
B2Bi standards
decision support,
spend data
acquisition
info consolidation
accounting and
and customer
order processing
communication
systems
integration,
personalization
EAI, reliability
and scalability
Agenda
e-Sourcing
e-Sourcing Solution
Integration: Putting it all together
IT e-Sourcing
CONFIDENTIAL
A Process Viewpoint
Sourcing, then
Requisition to Pay Process
Inventory
Sourcing
Requisitioning
Buying
Delivery
Warehousing
Payables
Traffic
Logistics
CONFIDENTIAL
What is e-Sourcing?
Sourcing is the identification, evaluation,
negotiation, and configuration of new
products/suppliers.
Typically used for the negotiation of blanket
contracts, strategic goods.
CONFIDENTIAL
e-Sourcing Process
Execution &
Compliance
Sourcing-Ready
Suppliers
Needs Definition
& Aggregation
Enterprise
Compliance &
Analysis
Supplier
Management
RFx &
Contract
Market discovery EstablishmentNegotiation
RFI / RFP
RFQ, Reverse Auction
Negotiation
Decision Support Tools
CONFIDENTIAL
Maverick
buying
8%
Procurement
operating
costs
1%
Addressable
sourcing
spend
73%
Inventory
17%
CONFIDENTIAL
e-Marketplaces
BizBuyer, Chemconnect, e-Steel, National Transportation
Exchange, PlasticsNet, PartMiner, Ariba (SupplierMarket.com),
etc.
Auction/exchange software
Commerce One (CommerceBid), Moai, OpenSite, Ariba
(TradingDynamics), etc.
Aggregation/outsourced purchasing
AlphaDog, Demandline, EDS/CoNext, ICG Commerce, etc.
Sourcing solutions/services
Agile, eBreviate, Emptoris, FreeMarkets, Mindflow Technologies,
ShareMax, Webango, etc.
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Multi-stage negotiations
RFI RFP RFQ Award
Multi-threaded negotiations
CONFIDENTIAL
Company: mid-size
Strategy: outsource sourcing of particular products to
procurement service provider.
Company: small
Strategy: leverage dynamic trading platform and
supply network of e-Market/exchange.
CONFIDENTIAL
Strategic Sourcing
Categorization
HIGH Leverage Purchases
Capital Plant
Strategic Purchases
Direct Materials
Dollar Value
Marginal Purchases
Tactical Purchases
Indirect Materials
Indirect Materials
LOW
LOW
HIGH
Transactional Volume
CONFIDENTIAL
Low
Contract
Value
- Compressors
- Motors
- Process Equipment
- Construction Contracts
- Environmental Contracts
- Local Services
- Emergency Purchases
- Incidental Materials
- Chemical Feedstocks
- Utilities
- Valves/Instruments
- Office Supplies
- Computer Supplies
- Office Furniture
- Lab/Safety Supplies
- Electrical Supplies
- Distribution Chemicals
High Transactional Volume
CONFIDENTIAL
HIGH
Capital Purchases
ERP
Procurement
Dollar Value
LOW
Transactional Volume
CONFIDENTIAL
HIGH
Direct Purchases
ERP+
Connection
Dollar Value
HIGH
Transactional Volume
CONFIDENTIAL
Dollar Value
Marginal Purchases
LOW
LOW
Transactional Volume
CONFIDENTIAL
Dollar Value
Tactical Purchases
LOW
Web Buyer
Transactional Volume
HIGH
CONFIDENTIAL
CONFIDENTIAL
Agenda
e-Sourcing
e-Sourcing Solution
Integration: Putting it all together
IT e-Sourcing
CONFIDENTIAL
Expenditure Analysis
Project Management
RFP / RFQ
Reverse Auctions
Contract Management
Vendor Management
Sourcing Workbench
CONFIDENTIAL
Expenditure
Project,
Collaborative,
Contract,
Analysis
online
and Vendor
supplier
Management
negotiations
CONFIDENTIAL
CONFIDENTIAL
E-Sourcing Software
QuickSource
QuickSource is the only e-sourcing solution
designed for sourcing professionals by
sourcing professionals. This comprehensive
full-featured e-sourcing platform is local for
automating, streamlining and providing
visibility into the sourcing processes. Based
on the industry leading e-sourcing
technologies developed by FreeMarkets,
QuickSource contains a robust set of
features that allow buyers to create and
conduct online auctions right from their
desktops
CONFIDENTIAL
E-Sourcing Software
QuickSource
Create re-usable templates for
Requests for Information and
Quotations (RFxs)
Collaborate with and manage suppliers
Create and run a wide variety of realtime, competitive bidding and
negotiation activities
Conduct offline negotiations
CONFIDENTIAL
E-Sourcing Software
QuickSource Add on Services
Market Operations Services
E-Sourcing Support Desk
QuickSource Supplier Training
E-Sourcing Services
FullSource
(E-Sourcing Acceleration Program)
19% average savings per contract for
direct and indirect goods and services
30-50% cycle time reduction in the
sourcing decision process
Average return on investment of more
than 20 to 1
An average of nine more suppliers per
negotiation for greater pricing
competition
CONFIDENTIAL
FullSource
FullSource
(E-Sourcing Software )
Transformation bidding
Index bidding
Net Present Value (NPV) bidding
Multiple Offering bidding
Rank-Only bidding
FreeMarkets is the only e-sourcing solution
provider willing to share responsibility with
an organization to meet its strategic
sourcing objectives.
CONFIDENTIAL
FullSource
Market Operations
Global
Asset Management
Fast, market-based pricing when selling surplus
assets
Quick, easy access to needed assets for buyers
A variety of sales venues, including Online Asset
Auctions and Onsite Asset Auctions
Support by dedicated customer service teams
Ability to create a fair, neutral marketplace with
equal access for all participants
Public or private access to a global asset
database and trading environment
FreeMarkets Online Asset Auctions
FreeMarkets Onsite Asset Auctions
CONFIDENTIAL
Future Functions
FreeMarkets continues to develop end-to-end enterprise esourcing platform code named Sierra Nevada
o Functions of Sierra Nevada
o 1) Collecting and analyzing data
o 2) Developing sourcing strategies
o 3) Locating, managing, and evaluating suppliers
o 4) Creating requests for information, proposals, and
quotations
o 5) Selecting price discovery methods and executing
negotiations
o 6) Analyzing price discovery responses
o 7) Awarding contracts and tracking implementation
o 8) Managing awarded contracts and supplier performance
Release of Sierra Nevada in summer of 2002
CONFIDENTIAL
CONFIDENTIAL
Background:
#1 automobile manufacturer
Expenditures = $87 billion/yr.
30,000 suppliers worldwide
e-Sourcing strategy:
64 reverse auctions (Nov. 99 Sep. 00)
Representing $500 million-plus of transactions
Including $10 million via forward auctions
25 different commodity types
Primarily commodity/low-engineered parts
Events involved 470 suppliers
CONFIDENTIAL
Results:
Typical savings of 3% to 30%
Reduced process cycles to 3 to 4 weeks.
WARNING: Bid transparency is not always to
buyers benefit
Future plans:
Multi-variable RFQ/evaluations
Multi-currency
Extend to more complex products
CONFIDENTIAL
Agenda
e-Sourcing
e-Sourcing Solution
Integration: Putting it all together
IT e-Sourcing
CONFIDENTIAL
Systems Integration
Many e-Sourcing modules can add
immediate value without any enterprise
systems integration.
However, large incremental value is
realized with each integration including
your ERP, e-Procurement, e-Catalog, data
warehouse, and other enterprise
systems.
CONFIDENTIAL
Contract
Terms
MRP
RFI,
Sourcing Analysis
DW
AP
Vendors
Requisitions
Scorecard
Data
Vendor XML
RFPs/RFQs,
Reverse
Auctions
News,
Content,
Events
Commodity
Info
Platform
XML,
HTML
HTTP
Vendor
Spot Pricing,
Commodity
Pricing
Vendor
RFQ XML
Sourcing
Sourcing
DB
Data
Net
Markets
B2Bi
AR, Vendor
Performance Data
Spend
Data
EAI
Purchasing
Material
Master
XML
Sourcing
Workbench
Requisitions
ERP System
Third-party
Content
Providers
e-Sourcing
System
Vendor
Sales System
Catalog
Quote XML
SOAP
Catalog
UDDI
Registry
UDDI Server
CONFIDENTIAL
Agenda
e-Sourcing
e-Sourcing Solution
Integration: Putting it all together
IT e-Sourcing
CONFIDENTIAL
CONFIDENTIAL
Business Drivers
Technical Drivers
Faster time-to-market
High-bandwidth Internet
connectivity
Enhanced security
Enhanced reliability
Reduced risk
Choose
Hosting Over
In-House
Source: Forrester
Research, May 2000
Performance optimisation
Lack of Expertise
Reliability
Responsiveness
Time Savings
9%
Lack of Technology
9%
Cost Savings
18%
18%
45%
36%
27%
CONFIDENTIAL
Level of Service
Complex
Basic
Low
Level of Integration
High
CONFIDENTIAL
Hosting Services
Challengers
3.0%
3.7%
11.1%
15.1%
4.2%
Exodus
AT&T
UUNet
UUNet
Digex
Genuity Digex
Data
Return
EDS
EDS
Navisite
Digital Island
Intira
Cable
Cable &
& Wireless
Wireless
Rackspace
Rackspace
PSINet
PSINet
Globix
Source: IDC,
4/2001
IBM
Qwest
Qwest
Execute
Ability
15.1%
to
Ability to execute
34.4%
Verio
Next 10
Qwest
Digex
Global Center
PSI Net
1.4%
Genuity
3.8%
2.3%
WorldCom
2.7%
EarthLink
3.1%
Other
Leaders
As
As of
of 12/00
12/00
Niche Players
Visionaries
Completeness of Vision
Financial Services
Industrial
Wingspan Bank
ICSA T
iStarXchange
Citigroup, Inc.
Allied Holdings
JP Morgan
Danone
Calberson
Retail/Services
Thomson Multimedia
NYSE
TAHO Commerce
Group, LLC
Cahoot
Communications
GRAMMY Awards
Energy Argus
Telecom Italia
Travel/Transportation
Bouygues
ISP/ASP
Scoot
Aventis
Wimbledon
Kellogg
Roland Garros
BP
Telemarine
Infrascope
Macy's
US Navy
GovernmentJobs.com
Victoria's Secret
American School
Directory
Tinde
Alerio
ASP-One, Inc.
Eli Lilly
Catapulse
I-TRAX.com
Expansionet
CareTouch
Pragmatix
Health Care
Public Sector
Foundation for
Economic Development
CONFIDENTIAL
Multi-layered firewalls
Consistent architecture
worldwide
Enhanced scalability,
rapid change
Internet
User
Internet
Switch
Switch and
and Firewall
Firewall
Web
Web Layer
Data Layer
Switch
Switch and
and Firewall
Firewall
Switch
Switch and Firewall
Firewall
Private
Networks
Customer
Premise
CONFIDENTIAL
WebSphere
Domino
Microsoft IIS
Netscape
Dual site
Firewall
Firewall
Firewall
Firewall
Firewall
Firewall
Load
Load
Balancing
Balancing
Web
Web
Server
Web
Web
Server
Server
Load
Load
Balancing
Balancing
Web
Web
Server
Server
Web
Web
Server
Server
Web
Web
Server
Server
Load
Load
Balancing
Balancing
Web
Web
Server
Server
Web
Web
Server
Server
Firewall
Firewall
Firewall
Firewall
Application
Application
Server
Server
Application
Application
Server
Server
Database
Database
Server
Server
Web
Web
Server
Server
Firewall
Firewall
Application
Application
Server
Server
Database
Database
Server
Server
Database
Database
Server
Server
SAN
SAN
SAN
SAN
Firewall
Firewall
Firewall
Firewall
SAN
Web
Web
Server
Server
Data Centre
Load
Load
Balancing
Balancing
Data Centre
Firewall
Firewall
CONFIDENTIAL
ISP 1
IBM NOC
ISP 2
ISP 3
ROUTER
ROUTER
ISP 4
ROUTER
ROUTER
IbmAdministration
Administration &&
Ibm
Management
Services
Management Services
SWITCH
SWITCH
CUSTOMER
CUSTOMERWEB
WEB
ENVIRONMENT
ENVIRONMENT
SWITCH
SWITCH
Optional
Cross
Connect
POTS
CUSTOMER
CUSTOMERWEB
WEB
ENVIRONMENT
ENVIRONMENT
Bandwidth
Control
DOS Attack
Monitor
Level 3 VLAN
Architecture
Optional Redundant
Connections
e-business
e-business
Hosting
Hosting Center
Center
WAN
RTR
RTR
Customer
Customer
Premise
Premise
CONFIDENTIAL
Enterprise
Data Center
THE INTERNET
Private
Enterprise
Network
CSR
CSR
CSR
Branch
Branch Offices
Offices
CSR
Public
Public IP
IP
Network
Network Services
Services
THE INTERNET
GPRS
UMTS
ADSL
CSR
CSR
Branch
Branch Offices
CSR
Cable
CSR
CSR
SMB // SOHO
SOHO
CONFIDENTIAL
System integration
Custom applications
and services
Advanced monitoring
Plan
Design
Build
Manage
Run
Test
CONFIDENTIAL
Hosted Applications
World-class support
IBM's Websphere
Ariba Technologies
i2 Technologies
CONFIDENTIAL
Capacity On
Demand
Applications
Infrastructure
Storage on Demand
e-markets
EDI
ASPs
Ariba / i2
MIPS on Demand
Customer Apps
WebSphere
Wir
e
Acc less
ess
Management Services
Bandwidth on Demand
Hosting Center Architecture
Hosting Facilities
CONFIDENTIAL
Advantage in Hosting
Provide your clients with the safest, most secure
and complete application hosting offering
Enhance your chances of Winning
Deliver a better service to your client
Secure the on-going business
CONFIDENTIAL
Expenditure/Bid Analysis
CONFIDENTIAL
Conclusion
73% of the potential cost savings are in
sourcing yet today, sourcing is done
completely manually.
If youre a large enterprise with a
sophisticated purchasing group, enterprise
software is the right choice.
If youre choosing enterprise software, you
need a holistic solution that addresses the
entire sourcing process.
CONFIDENTIAL
CONFIDENTIAL