Enhancing Supplier Relationship Management for Optimal Procurement Processes

1. Unit 4Logistics Dr. Supakorn Kungpisdan supakorn@mut.ac.th Unit 4: Logistics

2. Supplier Relationship Management • Business Example • Effectiveness of procurement processes can have a large influence on cost within a company • IDES wants to relieve the strain placed on purchasing by more closely integrating suppliers in procurement transactions Unit 4: Logistics

3. Managing Costs for Continuous Profitability • Materials and services received from suppliers are so important • But when reducing procurement costs, the company treats suppliers as adversary • Collaboration with suppliers is far more profitable that pressuring suppliers for marginal cost reductions • Need a way to effectively manage the entire supply base in a way that streamlines procurement and souring processes, maintains supply quality, and increases profits, supplier collaboration, and innovation Unit 4: Logistics

4. mySAP SRM Unit 4: Logistics

5. Managing Costs for Continuous Profitability(cont’d) Unit 4: Logistics

6. Business Benefits • Improved sourcing strategy • Rationalization and optimization of the supply base • Better access to data on supplier performance • Improved quality of supply and reduced risk • Compressed cycle times • Automation of request-for-proposal (RFP) and request-for-quotation (RFQ) cycles • Faster procurement execution through online approval • Faster acknowledgement and response from suppliers Unit 4: Logistics

7. Business Benefits (cont’d) • Reduced process costs • Increased compliance through reduced maverick buying • Reduced complexity through content consolidation • Increased efficiency through procurement automation • Lower unit prices • Demand consolidation across multiple business units • Lower inventory carrying costs • Better prices through competitive bidding Unit 4: Logistics

8. Strategic Purchasing and Sourcing • A process of • Developing a sound supply strategy • Executing the strategy by finding qualified sources to • fulfill supply needs, • negotiate purchase agreements, • manage contracts, and • evaluate supplier performance Unit 4: Logistics

9. Strategic Purchasing and Sourcing (cont’d) Unit 4: Logistics

10. Strategic Purchasing and Sourcing (cont’d) • Supply Strategy Development • Develop supply strategies that fit the needs of business units and are in line with overall corporate goals • The strategy provides specific details, e.g. recommended suppliers, length and type of contract, local or global suppliers • Spend Analysis • Improve visibility into global spend and supply-base data by mapping and cleansing commodity and vendor information and distributing it to internet systems electronic catalogs, and data warehouses • Supplier Selection • Minimize purchase risk, improve system-base monitoring, and more easily assess supplier performance Unit 4: Logistics

11. Strategic Purchasing and Sourcing (cont’d) • Contract Management • Centralized contract management ensures compliance with negotiated terms and conditions • Different purchasing departments in business units can reuse preexisting contracts for specific product categories throughout the company • Catalog Management • Create and manage a unified e-commerce catalog, using tools that import data from external sources, maintain consistent schemes, and index items for faster search capabilities Unit 4: Logistics

12. Operational Procurement • Process of buying direct materials and services (those used in production) or indirect material and services (those used in maintenance, repair, and operations) Unit 4: Logistics

13. Operational Procurement (cont’d) Unit 4: Logistics

14. Operational Procurement • Self-Service procurement • Use web-based shopping cart that enforces compliance with corporate purchasing policies to enable employees to procure materials • Plan-Driven Procurement • Streamline and automate the procurement of materials used in core business processes by integrate purchasing with any supply chain management system • Service procurement • Reduce administration and processing costs associated with procuring a wide range of services, e.g. consulting and contract labor Unit 4: Logistics

15. Supplier Collaboration • Use web to provide a cost-effective way for suppliers to connect to a number of processes among the supplier relationship life cycle Unit 4: Logistics

16. Supplier Collaboration (cont’d) Unit 4: Logistics

17. Supplier Collaboration (cont’d) • Supplier registration • Purchaser has access to supplier-managed information for better sourcing decisions • Order collaboration • Provide supplier access to internal order management systems for processing orders and delivery schedules, managing invoices, and updating specifications electronically • Design collaboration • Permit employees from partners to share relevant product and project information to shorten product development cycles and keep supporting and detailed information within enterprise Unit 4: Logistics

18. Supplier Collaboration (cont’d) • Collaborative replenishment • Enable supplier to access to customer inventory data and make them responsible for maintaining inventory level • Reduce cost and increase overall velocity and accuracy of the supply network • Supplier connectivity • Connect with suppliers of different sizes and capabilities using XML-based document exchange Unit 4: Logistics

19. Integration • Require mySAP SRM, SAP ECC, • Also require SAP Exchange Infrastructure (SAP XI) delivered as part of SAP Netweaver • For connectivity and sending XML-based messages • Purchasers and users work in SAP SRMthrough a web browser. Then the POs created are then posted in the ERP back end for follow-up processes Unit 4: Logistics

20. Integration (cont’d) Unit 4: Logistics

21. Product Life Cycle Management • Business Example • IDES must respond quickly to market and customer demands within a heterogeneous corporate system landscape. • Intracompany mapping allow management to track changes within process departments Unit 4: Logistics

22. Product Life Cycle Management • Product life cycle: product development, procurement, production through to service • The aim of PLM is to support the entire product life cycle • PLM allows an organization to quickly react to changes according to market and customer demands Unit 4: Logistics

23. mySAP PLM Unit 4: Logistics

24. Product Life Cycle Management (cont’d) Unit 4: Logistics

25. Benefits of mySAP PLM • Reduce cost • Effective cost control in projects • Minimizing maintenance costs of a piece of equipment • Collaborate with partners at early stages to keep down the cost of changes • Increase productivity • Pooling information and sharing it with partners and customers • Quickly introducing new products to the market • Increase customer satisfaction – involve with customers at early stages of product development • Integrated solutions • Product development, quality management, asset management, maintenance, and service management Unit 4: Logistics

26. Key Functional Areas of mySAP PLM Unit 4: Logistics

27. Program and Project Management (cont’d) • Successful project management: planning, controlling, and executing the essential project elements in accordance with the aims of the project • Rely on determining all processes necessary for the project and the ability to represent these in the form of a structure and process • Project System • Makes available basic data, standard structures, and templates that assist in the creation of plans for different projects • The project is structured in the project system either by • Using the project structure plan (PSP) or • Operations that can be linked to a network plan through relationships Unit 4: Logistics

28. Program and Project Management Unit 4: Logistics

29. Project Management Structure Unit 4: Logistics

30. Program and Project Management (cont’d) • Project Planning Board provides a graphical interface for planning and controlling projects efficiently • Plan, check, and change schedules • Plan, schedule, and check resources • Determine and assign work • Compare capacities • Calculate costs • The central element of the project planning board is Gantt chart • Used to carry out work on the project • Costs, resources, and schedules have to be monitored closely so that you can identify any deviation from the project plan at an early stage Unit 4: Logistics

31. Program and Project Management (cont’d) • cProjects (SAP Collaborative Project Management) • Handle the entire range of project activities, from concept and planning through execution and the closing of a project, covering all project types, from development to service projects. • Enable companies to comply with industry standards by implementing project methodologies e.g. advanced product quality planning (APQP) • cProjects uses cFolders to offer tightly integrated scenarios to jointly work on documents and tasks with external partners • Share information with partners Unit 4: Logistics

32. cProjects and Project System Unit 4: Logistics

33. Life-Cycle Data Management • Life-cycle data management is process engineering and logistics data within a company and across company boundaries • Staff need up-to-date and relevant information to complete day-to-day tasks • mySAP PLM offers the entire spectrum of tools for evaluating and distributing product and project data • Manage specifications, BOMs, routing and resource data, project structures, technical documentation Unit 4: Logistics

34. Life-Cycle Data Management (cont’d) Unit 4: Logistics

35. Life-Cycle Data Management (cont’d) • Document Management • Manage how to store and make use of data in various formats e.g. paper, audio, or visual media • Recipe Management • Facilitate daily management of R&D departments, supports efficient knowledge-sharing, and leaves time or more creative and experimental work • Integration • mySAP PLM CAD and conversion interface makes design data available to employees outside the design process at an early stage • At the same time, designers have access to the most up-to-date product data Unit 4: Logistics

36. Life-Cycle Data Management (cont’d) • Change and Configuration Management • Give flexibility to design change processes and ensures that changes are an integral part of operational processes • Product quality is constant in every phase of product’s life cycle • Product Structure Management • Product structure browser is the central navigation tool in the product structure. It provides: • The material master • Documents • Bills of materials (BOM) • Routings • Information from classification Unit 4: Logistics

37. Life-Cycle Collaboration • Collaboration lends itself naturally to an exchange environment by permitting employees from different trading partners to effectively share relevant product and project information Unit 4: Logistics

38. Life-Cycle Collaboration (cont’d) Unit 4: Logistics

39. Life-Cycle Collaboration (cont’d) • Design Collaboration • cFolders enable SAP customers to communicate with their partners and suppliers over back-end objects (e.g. documents, materials, and BOMs in SAP PLM) without exposing their ERP system to them • Partners and suppliers can change objects and back-end users can integrate changes from cFolders to the ERP system • Collaborative Project Management • cProjects Unit 4: Logistics

40. Life-Cycle Collaboration (cont’d) • Quality Management • A comprehensive solution that meets all quality management needs throughout the product life cycle and along the supply chain • Offer a wide range of integrated functions, collaborative services, and mobile solutions to ensure and manage the quality of products and services • Support not only inspection and processing, but also prevention and continuous process improvement through collaboration Unit 4: Logistics

41. Quality Management Unit 4: Logistics

42. Quality Management • Quality Engineering • Offers a number of proper quality tools and implement appropriate quality planning strategies • Quality Assurance and Control • Involve inspections at all stages, continuous monitoring, and intervening quickly to deal with unexpected events • Quality Improvement • Provides necessary tools to improve the quality of products though prevention, efficient problem management and evaluations • Audit Management • Support audit processes, from planning through audit execution and valuation to the evaluation phase Unit 4: Logistics