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Tech Mahindra’s Sourcing and Procurement Solutions. Leveraging Ariba On Demand Spend Management Suite. 1. Agenda. Challenges, Trends and Business Imperatives driving Sourcing Transformations. Our Solution. Sourcing Investments. Our Capabilities and Experience. Our Value Proposition.

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slide1

Tech Mahindra’s Sourcing and Procurement Solutions

Leveraging Ariba On Demand Spend Management Suite

1

agenda
Agenda

Challenges, Trends and Business Imperatives driving Sourcing Transformations

Our Solution

  • Sourcing Investments
  • Our Capabilities and Experience

Our Value Proposition

slide4

Objectives of the Sourcing and Procurement Organization

To be successful, Procurement organizations must develop capabilities and allocate resources effectively to manage across a wide range of critical processes

  • Focused on reducing non personnel cost base
  • Periodic – typically every 1-5 years
  • Selects supplier solutions and negotiates contract terms and conditions

Analyze Demand

Analyze Supply Market

Develop Sourcing Strategy

Select Supplier(s)

Negotiate Terms and Conditions

Execute Supplier Contracts

Strategic Sourcing

  • Contract commitments
  • Service level agreements
  • Process changes
  • Policy changes
  • Sourcing process feedback and improvements
  • Sourcing opportunities
  • Performance management requirements
  • Ensures contract compliance
  • Manages integration of new supplier solutions and purchasing processes
  • Identifies sourcing opportunities
  • Supports continuous improvement focus

Monitor Contract Compliance

Track Savings Capture

Evaluate Supplier Performance

Measure Customer Satisfaction

Identify and Address Leakage

Evolve Supplier Relationships

Supplier Management

  • Price data
  • Service performance data
  • Off-contract spend data
  • Customer satisfaction levels
  • Process cost and compliance data
  • Purchasing trend data
  • Performance management process
  • Standard metrics
  • Issue escalation support
  • Ensures purchasing process transaction efficiency
  • Manages day-to-day supplier relationship
  • Addresses customer satisfaction issues
  • Captures/reports transaction and process information to support Strategic Sourcing and Supplier Management activities

Request

Order

Purchase

Service

Track

Report

Transaction Management

market trends the new normal in spend spend in cloud vs spend under management
Market Trends: The New Normal in SpendSpend in Cloud Vs Spend under Management

You will operate with:

  • Fewer people,
  • Less infrastructure
  • Lower cost structure
  • Higher volatility & risks

Success will require:

  • More agility
  • Variable & flexible operating models
  • Greater responsiveness and collaboration across your value chain

Technology platform for automating and optimizing commerce processes shared among trading partners

Communityof pre-enabled trading partners to quickly discover, connect, and collaborate

Capabilitiesto augment internal resources with always-on category expertise and commerce services

Companies will increasingly rely on a technology-enabled business process where technology and capabilities are managed outside their enterprise and where collaboration between various parts of the value chain will become even more important.

forces driving business voice of customer what are customers demanding and business drivers

Improved operational efficiencies

  • Enhanced business value
  • Reduce sourcing and procurement costs
  • Increase spend under management
  • Procurement Landscape rationalization
  • Rationalize vendor base
  • Address unconventional spend categories Viz. Services, Packaging and Marketing, Fuel and Energy, Logistics and Travel
  • Improve Contract Compliance
  • Normalize and Improve Spend Visibility
Forces Driving Business: Voice of CustomerWhat are customers demanding and business drivers

Rapid, low-cost; low-risk deployment of supply management solutions and services

Significantly Cheaper Pay as you go model compared to behind the firewall solutions

spend management in cloud tech mahindra s sourcing solution
Spend Management in Cloud Tech Mahindra’s Sourcing Solution

Technology platform for automating and optimizing commerce processes shared among trading partners

Communityof pre-enabled trading partners to quickly discover, connect, and collaborate

Capabilitiesto augment internal resources with always-on expertise and commerce services

Tech Mahindra a leading provider of Spend Management Solutions brings in capabilities and experience in Sourcing, Contract Management, Procurement, Invoice Management and Spend Analytics services

Ariba a leading provider of collaborative business commerce solutions and provides the technology and community platform for business-to-business commerce, delivering the most efficient and effective way for

slide9

Tech Mahindra’s Sourcing SolutionVirtual Center of Sourcing and Procurement Excellence – How it Works?

Review Demand andSupply Strategy

Procure -2-Pay Process Outsourcing

Client Sourcing & Procurement Mgr

Data Services

Develop specifications and Conduct Market Analysis

TechMConsultant – Client Location

Develop RFP and Solicit Bids

Evaluate Bids and Conduct Negotiations

China supply base

Transactional Procurement

Global supply base

Implement, Savings and continuous improvement

TechMBPO

TechM– Technology + In direct

IPO India

- Direct

TechMIPO China

Direct

India Supply Base - Direct

Global Supply Base - Indirect

slide10

Our Solution - Approach

Tech Mahindra team will utilize its proven Strategic Sourcing approach to address your sourcing requirements

4 weeks

4 weeks

8 weeks

6 weeks

2 weeks

Review Demand andSupply Strategy

DevelopSpecifications andConduct MarketAnalysis

DevelopRFP andSolicit Bids

Evaluate Bidsand ConductNegotiations

Implementand AchieveSavings

  • Create spec sheet

Draft RFI/RFP

  • Analyze responses

Gather current category spend

and volume

Identify potentialopportunities

Distribute andsupport supplierquestions andresponses

  • Vendornegotiating/feedback
  • Develop industry and vendor overview

Implementation

and Roll Out

Review forecasts or major future changes

Review contractsand commitments

Draft Contract

Usually multiple rounds

  • Develop target and vendor list

Develop scoring

and analyticaltemplates

  • Develop targetSLAs

Identify demandmanagementopportunities

Vendor

selected?

The timelines presented above are indicative . We would need insights into the commodities being sourced, current stage of vendor development, technologies being used to source etc

Recommend sourcing/

negotiatingstrategy

key definitions understanding
Key Definitions & Understanding
      • “Project” means a specific sourcing project in a particular services or commodity category initiated by Subscriber for Subscriber’s internal use and benefit, and can consist of any one event or more related events
      • An “Event” include: (a) on-line auction, (b) sealed bid, (c) e-negotiation, (d) a RFQ, RFI, or RFP, or (e) Quick Survey. 
      • A Project will be counted for purposes of Usage Limits only in the Month in which the Project is created within the Solution
      • A monthly Project cap is assumed and calculated at 5X the licensed User count.
  • “User” means an individual Subscriber employee or contractor who is provided with access to the Ariba Sourcing solution which permits the User to perform any activities and access any functionality available to Subscribers on the Solution, and permits the User to receive Enablement Services as described in the applicable Documentation.
  • “Team Member” means an individual Subscriber employee or contractor who is provided access to the Ariba Sourcing Professional solution to perform limited activities on the Solution (contrasted with Users who are provided with access to additional functionality). Team Members do not include suppliers or other third parties (other than Subscriber’s contractors) interacting with Subscriber via the Ariba Sourcing Solution.
  • The minimum Subscription Term for this package is three years.
slide13

TechMcan bring together procurement and supply chain competencies of multiple groups to maximize impact of Client’s procurement transformation

  • Operations and Supply Chain Strategy
  • Belgium-based management consultancy specializing in Supply Chain and Logistics
  • Experience in Supply Chain planning, network design and performance improvement
  • Around 65 Consultants
  • Business and Procurement Strategy
  • A Chicago based Business Consulting Group Company
  • Deep expertise in category management, strategic sourcing and Procurement organization transformation
  • Around 50 Consultants

Procurement Center of Excellence

  • Procurement Operations Group
  • India-based group providing outsourced Procurement, Customer Support, FAO and other services to customers worldwide
  • Expertise in Managed Procurement Services
  • 10000 + member group
  • Sourcing Group
  • 120 Procurement specialists based primarily in China and India
  • Multi-industry Procurement expertise in Engineered Products and Manufacturing Services
  • Network of 300+ pre-qualified suppliers
  • Procurement Technology Services Group
  • Over 10 years experience and more than 150 associates
  • More than 5 million person hours of experience
  • Partnered with best of breed spend management application providers like Ariba, SAP SRM, Oracle, BasWare, Zycus
sourcing group expertise techm s international sourcing and procurement offices in china and india

TechM

Program management

Product sourcing

Component / subsystem sourcing

Raw Material

sourcing

Engineering

Change

Management

Labs

Qualification

Sourcing Group Expertise: TechM’sInternational Sourcing and Procurement offices in China and India
  • 120 + Sourcing Engineers with Technology & Quality Background - China and India
  • Sourcing worth > US $ 300 Mn / yr
  • 20-25% savings on sourcing from China
  • Average of 6+ years experience from different industry verticals
  • 100% localization of resources with Bilingual skills
  • 300+ qualified suppliers
slide15

Tech Mahindra’s broad range of categories expertise

Sample Areas of Competence

Corporate & Overhead

Direct Materials

Indirect Materials

  • Metals and Plastics
    • Steel
    • Aluminum
    • Rare Metals
    • Machined Components
    • Castings
    • Extrusions
    • Stampings
    • Forgings
    • Roll-forming
    • Plastics
    • Polyethylene
    • Polystyrene
    • Plastic Components
    • Injection Molding
    • Compression Molding
    • Plastic Extrusion
    • Other
    • Electronics/Embedded Design
    • Motors
    • Pumps
    • Tires
    • Glass
    • Gases and Chemicals
    • Heat Treatment
    • Paint

MRO

Pallets

Packaging

Utilities

Cleaning Supplies

Chemicals

Safety Supplies

Fasteners

  • Telecomm-Related
    • Long-Distance / Local
    • Cellular
  • IT-Related
    • LAN/Desktop
    • Data Centers
    • PCs and Peripherals
    • Media/PR-Related
    • Media Buying
    • Public Relations
  • Overhead and Administrative
    • Office Supplies
    • Furniture & Fixtures
    • Temp Services
  • Facilities-Related
    • Security
    • Signage
    • Property Management
  • Professional Services
    • Consulting
    • Legal
  • HR and Benefits
    • Pension
    • Relocation
slide16

Tech Mahindra’s experience across Strategic Sourcing, Technology and Procurement operations

slide18

Our Value PropositionWe work closely with our clients and leverage internal staff and build internal skills

Key Tech Mahindra Differentiators

  • Structure work and relationships around how clients want to be served. We almost always have a client team who works alongside of us in order to build client experience. We firmly believe the clients must own the sourcing process and lead all negotiations. We support the sourcing group and use our expertise and tools to shorten the time to vendor negotiation and selection.
  • Leverage a repository of tools and methodologies that can help speed the process. These include:
  • - Category overviews and vendor profiles that can be used with clients
  • - Category sourcing strategies that can be used as a foundation for client specific opportunities
  • - Standard RFIs and RFPs for all the direct commodities (Auto Components, Metal Sheets, Castings, Forgins, Fuel Cells, Wafers, Electrodes, Indirect goods and services categories etc that will provide the baseline for Client’s RFPs
  • Employ seasoned professionals with a unique blend of sourcing and technical skills from across the Mahindra family of companies. We can call upon our technical experts as necessary to speed the RFP development process.
  • Provide the experience of blue-chip firms, but more flexibly and cost-effectively and deploy smaller, more experienced teams than do other top-tier firms. The team serving customers has sourced these services multiple times before and can shorten the time to RFP and to contracting
a case in example strategic sourcing @ global soft drink and beverage company
A Case in Example- Strategic Sourcing @ Global Soft drink and Beverage Company
  • e-Sourcing
    • Strategic sourcing process using an electronic tool
    • Execute, expedite, support & optimize sourcing
  • TCCC eSourcing Center of Excellence (CoE)
    • Established in 2003
    • Part of the Global Procurement Best Practices initiatives
    • Implement best practices of eSourcing and
    • Gain Total Cost of Ownership benefits using eSourcing
  • eSourcing imperative at TCCC
    • Develop procurement process efficiencies
    • Produce tangible cost savings
    • Build a world class procurement organization by 2006
    • Implement best practices
a case in example tech mahindra s role
A Case in Example: Tech Mahindra’s Role
  • Part of The Client Company’s e-Sourcing CoE team
  • Consulting around MindfloweSourcing suite & Sourcing process
  • Requirements gathering in consultation with Category managers
  • Mapping the requirements in Sourcing tool
  • Suggesting suitable sourcing strategies, if needed
  • Training Category managers and Suppliers in Sourcing
  • End to End Event management (RFI / RFQ / RFP / RA)
  • Run what-if optimization scenarios (Business Constraints) as needed by category managers
  • Testing Sourcing application and suggesting suitable enhancements
  • Managed 150 events per year both on direct & indirect
a case in example event snapshot
A Case in Example: EVENT SNAPSHOT
  • Juices
  • USD 500 mn
  • Apple,
  • Orange,
  • Pineapple, etc

Recruitment Agency

(Reduced Cycle time 30%)

Meeting and Events Planning

(Spend approx USD 25 mn)

  • Freight
  • Spend approx USD 40mn
  • Savings USD 4.8 mn
  • Sales & Marketing Equipment
  • Spend approx USD 1bn
  • Savings USD 50mn)

Direct Spend

Indirect Spend

Indirect Spend

Cycle time

pressure

Client Corporate

Consumers

Customers

Bottlers and Mfg Plant

Service DCs

Indirect Spend

Indirect Spend

Indirect Spend

Cycle Time

Pressures

Direct Spend

  • Ingredients-
  • Caramel,
  • Ascorbic,
  • Salt, etc
  • Coolers,
  • Vending Machines,
  • Fountain,
  • Payment Systems
  • Small Package Dist
  • Spend approx USD 13 mn
  • Savings USD 1.2 mn)

Custom Specialty Merchandise

(Reduced cycle time

by 30%)

  • Truck,
  • Ocean Freight
strategic sourcing framework
Strategic Sourcing Framework

Define User

Requirements/ Specifications

“Profile” the

Commodity

Develop the Sourcing Strategy

Select Suppliers

Negotiate &

Contract

Implement

& Monitor

Performance

Steady-State Agreements

and Supplier Management

Supply Agreements

Transition

Monitor Supplier Performance

Collaborate with Supplier on Perf. Mgt

Execute Supplier Relationship Mgt.

Define Supplier Metrics

Develop Metric Tracking Process

workshop strategic sourcing process
Workshop-Strategic Sourcing Process

Define User

Requirements/ Specifications

Identify

Stake holders

Identify

Requirements

Analyze

Requirements

Validate with

Stake holders

Profile the

Commodity

Spend

Analysis

Demand

Management

Build Total Cost

Model

Analyze Supply

Market

Develop the Sourcing Strategy

Identify

SourcingObjectives

Analyze

Supplier

Perspectives

Develop

Sourcing

Strategies

Build a

Business Case

Validate/Gain

Approval

Select Suppliers

Identify all

potential

suppliers

Develop

Evaluation

approach

Develop

Supplier

shortlist

Engage

Supplier

Evaluate

Responses

Negotiate &

Contract

Negotiate

Supplier

Contract

Sign

Agreements

Implement

& Monitor

Performance

Sign

Agreements

slide26

1

Define User Requirements & Specifications

Define User

Requirements/ Specifications

Profile the

Commodity

Develop the Sourcing Strategy

Select Suppliers

Negotiate &

Contract

Implement

Identify

Stake holders

Identify

Requirements

Analyze

Requirements

Validate with

Stake holders

  • Identify internal Stake holders
  • Identify who determines the buying criteria and specifications.
  • Identify who makes the buying decisions.
  • Interview stake holders to collect purchase requirements, criteria, and specifications.
  • Consolidate all stake holder requirements.
  • Prioritize requirements.
  • Evaluate customer requirements
  • Assess criticality and risks to business in meeting the requirements
  • Challenge customers to determine “needs”, “wants” and “nice to haves”
  • Check findings with relevant stakeholders
  • Agree on priorities

Objective – Definition, Validation and Freezing of Stake Holders Requirement

slide27

2

Profile the Commodity

Define User

Requirements/ Specifications

Profile the

Commodity

Develop the Sourcing Strategy

Select Suppliers

Negotiate &

Contract

Implement

Spend

Analysis

Demand

Management

Build Total Cost

Model

Analyze Supply

Market

  • Define Data Elements
  • Develop a data collection process
  • Analyze data across supplier, category, customer and other dimensions
  • Define communication Process of key demand events to procurement
  • Consensus forecasting process between procurement and the customer
  • Monitor forecast against actual spend
  • Identify the different cost components – Product cost, acquisition cost, maintenance cost, inventory carrying cost, administrative costs etc
  • Conduct Market Research – key players, trends
  • Supplier’s value chain analysis
  • Analyze supplier – customer bargaining power. Apply frameworks like Porter’s 5 forces etc

Objective - Proactively develop global view of Demand & Supply Sources

slide28

3

Develop Sourcing Strategy

Define User

Requirements/ Specifications

Profile the

Commodity

Develop the Sourcing Strategy

Select Suppliers

Negotiate &

Contract

Implement

Identify

SourcingObjectives

Analyze

Supplier

Perspectives

Develop

Sourcing

Strategies

Build a

Business Case

Validate/Gain

Approval

  • Analyze attractiveness of the buyer account
  • Understand relative value of the buyer’s business
  • Validate strategies and business case with stakeholders
  • Gain approval from senior management and stakeholders on the chosen strategies & priorities
  • Review best practices
  • Evaluate applicability of each sourcing tactics
  • Select strategies for each category
  • Assess the baseline total cost of ownership
  • Estimate the improvement potential
  • Document sourcing opportunities
  • Assess category business impact – category sourcing matrix
  • Analyze sourcing objectives

Objective – Freeze on a Sourcing Strategy Plan for Optimum Benefits

slide29

4

Select Suppliers

Define User

Requirements/ Specifications

Profile the

Commodity

Develop the Sourcing Strategy

Select Suppliers

Negotiate &

Contract

Implement

Identify all

potential

suppliers

Develop

Evaluation

approach

Evaluate

Responses

Engage

Supplier

Develop

Supplier

shortlist

  • Develop framework
  • Determine evaluation & process criteria
  • Receive and compile supplier responses
  • Check responses for completeness
  • Organize data for analysis
  • Evaluate data
  • Summarize the results
  • Identify sources to locate suppliers
  • Obtain a list of all possible suppliers
  • Determine methods to engage suppliers
  • Draft the RFQ/RFP document to exchange information w/ suppliers
  • Issue RFQ/RFP
  • Research and obtain supplier capability data
  • Review supplier data & performance expectations
  • Evaluate capabilities & develop shortlist

Objective- Holistically Evaluate various suppliers

slide30

5

Negotiate & Contract

Define User

Requirements/ Specifications

Profile the

Commodity

Develop the Sourcing Strategy

Select Suppliers

Negotiate &

Contract

Implement

Negotiate

Supplier

Contract

Sign

Agreements

  • Develop negotiation strategies & plans
  • Form negotiation teams & schedule negotiations
  • Conduct negotiations (eSourcing, Reverse Auctions)
  • Develop Negotiation Feedback
  • Prepare for the agreement award meeting
  • Conduct meeting to make final decision
  • Gain relevant approvals
  • Notify suppliers of award decision
  • Sign agreement

Objective- Arrive at the best possible supply agreement

slide31

6

Implement

Define User

Requirements/ Specifications

Profile the

Commodity

Develop the Sourcing Strategy

Select Suppliers

Negotiate &

Contract

Implement

Sign

Agreements

  • Develop transition plan
  • Develop communication plan
  • Manage risk

Objective- Arrive at the best possible supply agreement

slide32

Typical Strategic Sourcing Diagnostic Exercise

High Level Project Plan Approach – detailing stages, t

asks, milestones, benefits

thank you
Thank you

Visit us at www.techmahindra.com