02 SRM Overview

mySAP™ SRMSupplier Relationship Management

Overview

SAP AG 2005, mySAP SRM Overview / 2

Agenda

Trends Driving Changes in Purchasing

mySAP SRM Vision

Delivering Value with SRM

mySAP SRM Road map


GlobalizationWorldwide reach is not a competitive advantage but a necessity

Forces Driving the Evolution of Purchasing…

Cost LeadershipContinue to set new lower-cost targets

InnovationSuppliers need to be involved earlier in product development

Forces of Change


Emerging Trends in Purchasing ….

Expanding Scope of Supply ManagementIncreased amount of spend managed and influenced

Supplier Relationships will DeepenShifting from price driven to interwoven supply networks

Technology will be Central to ChangeFully integrated networks of suppliers available to customers

Trends Driving Changes

The CPO will Become a Strategic Partner to the BoardPromoting creative, cross-functional and risk management skills

How important a role do procurement executives currently play in establishing your company’s overall strategic objectives?

6

TODAY IN 10 YEARS

28

38

40

Very importantVital role


Agenda


mySAP SRM Vision


mySAP SRM Road Map


…andVALUE GENERATION

…for world-classSUPPLY MANAGEMENT

mySAP SRM is a PURCHASING PLATFORM

…that deliversSUSTAINABLE SAVINGS

SAP Vision for Purchasing

ERP PLM SRM GTS ERP CRM

SRMSRMmySAP™SRM

mySAP™SRM


Automate and accelerate processes

mySAP SRM is a Purchasing Platform …

Fully integrated system for all purchasing processesEnterprise platform for center-led purchasingBuilt-in performance and knowledge managementComplete audit trails for regulatory complianceSupport for multi-channel supplier enablement


Sourcing events triggered by enterprise processes

Role-based dashboards for intuitive analytics

Contract distribution to multiple enterprise resource planning (ERP) systems

Automated purchasing and regulatory compliance

Better insight and discipline

… that Delivers Sustainable Savings …

Close the loop between sourcing and procurement


… and Value Generation …

Create a foundation for long-term results

Get involved in the design stageReward suppliers for innovationShift focus from price to performanceAssimilate all supply processesDrive efficiency beyond boundaries


Supply management is more than just purchasing

Requires strategic insight and category expertise

Ability to compose and extend “next practices” is key

A service-oriented architecture ensures flexibility

… for World-Class Supply Management

Enlarge the scope of supply management

ERP PLM SRM GTS ERP CRM

… to service-oriented applicationsFrom human-integrators …

PLM

SRM CRM

GTS

ERP


2004 2006

What next?

Guiding light CPO Advisory Board

1998 2000 2002

Aligning mySAP SRM Solution Map to the Vision

Shopping carts for “Employee Self-Service”

Plan- Driven ProcurementSelf- Service Procurement

E-Procurement as on-ramp to marketplaces

Supplier Collaboration

Design Collaboration

Order Collaboration

Supplier Connectivity

Collaborative Replenishment

SupplierRegistration

Strategic Purchasing& Sourcing

Spend Analysis Supplier Selection Contract ManagementSupply Strategy

Development

Operational Procurement Services Procurement Plan-Driven ProcurementSelf-Service Procurement

SRM as platform for center-led purchasing

Receiving

Requisitioning

SupplierQualification

SupplierNegotiation

CategoryManagement

ContractManagement

OrderManagement

FinancialSettlement

Replenishment Acknowledgement &Delivery

Quality Assessment

ReturnsHandling

Contract Development

Contract Execution

Contract Monitoring


Contract Execution

Contract Monitoring

Invoice Verification

Evaluated Receipt Settlement

Invoice Payment

EventPreparation

Request for Quotation

Reverse Auction

Bid Evaluation & Awarding

Source of SupplyAssignment

RestrictionValidation

Order Generation & Tracking

SupplierEnablement

Requirement Definition

Requisition Approval

RequisitionAnalysis

Demand & Market Analysis

SpecificationDevelopment

SupplierIdentification

SupplierEvaluation

ApprovedVendor List

ProgramManagement

Spend & OpportunityAnalysis

SupplierDevelopment

PurchasingControlling

DataImprovement

PurchasingPlanning*

PurchasingGovernance

RiskManagement

Procurement OfficePlanning

StrategyDevelopment

DocumentExchange

SupplierNetwork

SupplierPortal

SupplierCollaboration


SRM Solution Map 2005

SupplierQualification

SupplierNegotiation

CategoryManagement

ContractManagement


Contract Execution

Contract Monitoring

EventPreparation

Request for Quotation

Reverse Auction

Bid Evaluation& Awarding

Demand & Market Analysis

SpecificationDevelopment

SupplierIdentification

SupplierEvaluation

ApprovedVendor List

ProgramManagement

Spend & OpportunityAnalysis

SupplierDevelopment

PurchasingControlling

DataImprovement

PurchasingPlanning*

PurchasingGovernance

RiskManagement

Procurement OfficePlanning

StrategyDevelopment

SupplierEnablement

DocumentExchange

SupplierNetwork

SupplierPortal

SupplierCollaboration

Receiving

Requisitioning

OrderManagement

FinancialSettlement

Invoice Verification

Evaluated Receipt Settlement

Invoice Payment

Source of SupplyAssignment

RestrictionValidation

Order Generation & Tracking

Requirement Definition

Requisition Approval

RequisitionAnalysis

Acknowledgement &Delivery

QualityAssessment

ReturnsHandling


mySAP SRM is Part of ERP


Agenda


mySAP SRM Vision


mySAP SRM Road Map


Prioritizing Value Delivery in Purchasing

Improve Strategy and Compliance

Optimize and Reduce Cost

$£ ¥€

Automate and Accelerate Processes


Automate and Accelerate Processes

Empower employees with intuitive systems for self-service procurement

Streamline purchasing with integrated workflow and business process management

Accelerate connectivity with the SAP® Supplier Network or with SAP Supplier Collaboration

Requisitioning Order Management Supplier Enablement

Simplify procurement Standardize global processes Automate supplier transactions


Optimize and Reduce Cost

Cleanse and classify data for spend analysis and opportunity identification

Capture, share, and improve sourcing knowledge with category management

Competitive online sourcing events and negotiations and contract monitoring

Data Improvement Category Management Supplier Negotiation

Improve spend visibility Capture innovation from supplier base Share knowledge Effective negotiation

$£ ¥€


Improve Strategy and Compliance

Translate projects into goals and tasks to align strategy with execution*

Maintain audit trails and ensure regulatory compliance (e.g. SOX)

Purchasing Planning Regulatory Compliance

Measure effectiveness of purchasing department and policies with embedded analytics and questionnaires

Purchasing Controlling

* Future focus area

Instill method into strategy development Measure savings and performance Ensure regulatory compliance


Agenda


mySAP SRM Vision


mySAP SRM Road map


SAP and SRM: The Road Ahead

FOCUS FOR SRM 5.0 – IMPROVE STRATEGIC SOURCING Enhanced sourcing execution

Category management*

Global contract compliance monitoring

Enhanced contract execution

PLANNED FOR SRM 6.0 – EXTEND SCOPE Complex service purchasing

Sourcing intelligence

Guided contract authoring

Advanced sourcing execution

PLANNED BEYOND SRM 6.0 – EMPOWER FOR INNOVATION Service-based architecture for faster and cheaper integration

New decision-support capabilities for sourcing management

Deeper category-specific functionality

Ecosystem for building new composite SRM applications

Note: This information represents SAP’s plan for SRM. No commitments have yet been made beyond SRM 5.0.*Initial release targeted for Q4 2005; available on limited project basis only.


Summary

EXECUTIONAccelerated customer adoption across geographies, industries, and spend categories

DIRECTIONA Solution map focused on delivering Value

Why SAP has the best approach

VISIONA purchasing platform that delivers sustainable savings and value generation for world-class supply management


600+ Organizations Run SRM


Customer Reference – Ericsson

Ericsson, the world’s leading supplier of mobile systems, generates revenues of €13.2 billion and employs approximately 51,600 people. Today, some 32,000 employees in 30 countries use a single worldwide purchasing system built around a mySAP SRM solution.

“Ericsson’s e-procurement activities enabled by mySAP SRM are reducing our costs, increasing productivity, and improving relationships with our suppliers.”Tomas Elken, Product Manager, Ericsson

80% reduction in purchasing cycle time (10 days to 24 hours)

Increased strategic insight with aggregated data and statistics

Effective spend control via automated authorization routines$

£ ¥€

75% reduction in cost of handling purchase orders (€88 to €22)

Story


Customer Reference – Pemex Gas

Pemex Gas and Basic Petrochemicals (“Pemex Gas”), a division of Mexico’s state oil company Petróleos Mexicanos, is the world’s ninth-largest processor of natural gas and liquids from gas. Pemex Gas implemented mySAP SRM and mySAP Enterprise Resource Planning (mySAP ERP) solutions in 2004.

“We […] decided that executing our new strategies could only happen through further implementation of SAP, because it’s an enabler of integrated processes.”Roberto Ramírez, VP of Planning, Pemex

72% reduction in decision process for order placement

ROI

6% drop in average one-year contract prices

70% reduction in cycle time for supplier sales processes

25% decrease in inventory of purchased items$

£ ¥€

9% decrease of maintenance inventory cost$

£ ¥€


Customer Reference – Steelcase

Standardized purchasing system to lower process costs

ROI

Long-term relationships and contracts for strategic suppliers

90% of North American spend will be captured by the end of 2005$

£ ¥€

Steelcase Inc. is one of the world’s largest office furnishing makers with 14,000 employees and 35 manufacturing facilities around the world. Over 700 internal and 1,000 external users rely on the SupplySync marketplace powered by a mySAP SRM solution and the SAP NetWeaver™ platform.

“In a make-to-order industry, giving suppliers access to real-time information makes a huge difference.”Jim Macaulay, VP of Supply Chain, Steelcase

Documents

02 SRM Overview