Si Mposium 2006 Speaker Power Point Dr Graham R Smith

September 17-20, 2006 ● The Fairmont Dallas ● Dallas, Texas ● simposium.simnet.orgSeptember 17-20, 2006 ● The Fairmont Dallas ● Dallas, Texas ● simposium.simnet.org

e-Procurement through Supply Chain IntegrationReaching out to the SMB’s

Dr. Graham R SmithSAP Supply Chain Superintendent

Sohar Aluminium, Sultanate of Oman

Driving BUSINESS VALUE on the Technology Frontier


Introduction to the teamIntroduction to the team

Dr Maha ShakirDr Maha ShakirAssistant Professor, Assistant Professor,

College of Information Technology, College of Information Technology, Zayed University, UAEZayed University, UAE

BSc Eng, MEMgt, DipInfSc PhD Information Systems

PO Box 4783 Abu Dhabi, UAEPhone: +971-2-4079693

GSM: +971-50-3272748

E-mail: [email protected]

Dr Graham R SmithSAP Supply Chain Superintendent,

Sohar Aluminium LLC,Sultanate of Oman

BSc, MSc, PhD Computer Science MBA, MBCS, FIAP, MCIPs

PO Box 111, PC 118 Al Harthy Complex, Oman

Phone: +968-24660578GSM: +968-92815137


Mr. Erkan GulecPre Sales DirectorSAP Arabia, UAE

BSc Industrial Engineering MBA Supply Chain Management

SAP Certified Consultant

PO Box 53188, Dubai, UAEPhone: +971-4-3301777

GSM: +971-50-4517941



OilGas

People

Community

Introducing Petroleum Development OmanIntroducing Petroleum Development OmanResponsible forResponsible for


2,500 wells100 fields7 airstrips2700 kms of pipelines527 kms of hard-topped roads6013 kms of graded road

Introducing Petroleum Development OmanIntroducing Petroleum Development OmanThe InfrastructureThe Infrastructure

The oil industry alone accounts for 40% of Oman’sGross Domestic Product - GDP


EPCRIS(GL:M)EMAEPMARS

CABCARS

DODGE(EPCOMS)

EMS

HOUSING

OPFS

AP:M

CRAMS &Drill

Down

BudgetDollar

FixedAssets

CashForecast

CERES

Trust1(Air)

Trust2(Land)

EstateServices

SABRIBCAR

ProjectBuilder

EZ

TiQas

EWMS

PS6/7Flowlines

EPROMS

EPFAU

Payroll

PaymentsCharges

ChargeOut

TelBilling

FTR

EPDORIS

PACERCorrosion

SPIR

SaPhire

WEB

SActionList

ProjectExtracts

AP:MDuplicates

LNGCashCall

LowStock

Warning

SupplierMasterData

DIMS

DutyDrawback

PANAccountRecon

PurchaseEnquiry

TransportCharges

ScheduledRequire'ts

EPCON

Eng. TagNumberSystem

EngineerEstimation

System

TimesheetRecording

System

PDO Systems MAPshowing EMA Interfaces

DataWarehouse

AccessData

Bases

CESPARAPP

IAP

PermitTo Work

Hisprod

RegeoNT

WellSketch

““To Support The Strategic Direction of Exploration & Production wTo Support The Strategic Direction of Exploration & Production we need to Strengthen e need to Strengthen and Enhance the Companies Core Management Information.and Enhance the Companies Core Management Information.””

To Achieve Measurable Quality and Efficiency Gains we will have To Achieve Measurable Quality and Efficiency Gains we will have to rethink our Business to rethink our Business Processes, Organizational Design, Jobs & Roles, Corporate PoliciProcesses, Organizational Design, Jobs & Roles, Corporate Policies and Culture.es and Culture.


CMFICMFI

Financial Financial TransparencyTransparency

Process Visibility Process Visibility (end to end)(end to end)

AutomationAutomation(Time Liberation)(Time Liberation)

Process Process SimplificationSimplification

Competent Competent WorkforceWorkforce StandardisationStandardisation

Six Main Elements of CMFI identified as Key DriversSix Main Elements of CMFI identified as Key Drivers

Process Automation is linked to the six main key drivers of Process Automation is linked to the six main key drivers of business process improvement within PDObusiness process improvement within PDO


End to End Process in PDOEnd to End Process in PDO

Work Work OrderOrder MRPMRP Purch.Purch.

ReqReq RFQRFQ POPO ReceiptReceipt IssueIssue InvoiceInvoice PayPay

Single Integrated end to end process for goods and servicesSingle Integrated end to end process for goods and services

Integrated Supply Chain ManagementIntegrated Supply Chain Management

SAP R/3 for Transactional Processing.

SAP Business Warehouse as reporting Toolkit

IX2 Digital Processing of all Documents throughout

the Supply Chain





Two Extremes !Two Extremes !


CABCARS

DODGE(EPCOMS)

EMS

HOUSING

OPFS

AP:M

CRAMS &Drill

Down

BudgetDollar

FixedAssets

CashForecast

CERES

Trust1(Air)

Trust2(Land)

EstateServices

SABRIBCAR

ProjectBuilder

EZ

TiQas

EWMS

PS6/7Flowlines

EPROMS

EPFAU

Payroll

PaymentsCharges

ChargeOut

TelBilling

FTR

EPDORIS

PACERCorrosion

SPIR

SaPhire

WEB

SActionList

ProjectExtracts

AP:MDuplicates

LNGCashCall

LowStock

Warning

SupplierMasterData

DIMS

DutyDrawback

PANAccountRecon

PurchaseEnquiry

TransportCharges

ScheduledRequire'ts

EPCON


EngineerEstimation

System

TimesheetRecording

System


DataWarehouse

AccessData

Bases

CESPARAPP

IAP

PermitTo Work

Hisprod

RegeoNT

WellSketch

•• Traditional Purchase Order Traditional Purchase Order (Goods only) US$ 103(Goods only) US$ 103

•• Traditional Request for Traditional Request for Quotation US$ 103 x 3 vendors Quotation US$ 103 x 3 vendors = US$309= US$309

•• Purchase Order (Goods or Purchase Order (Goods or Services) Services) Cost Reduced toCost Reduced toUS$ 18US$ 18

•• Request for Quotation Request for Quotation Cost Cost Reduced toReduced to US$ 18 x 3 US$ 18 x 3 vendors = US$54vendors = US$54

+




CABCARS

DODGE(EPCOMS)

EMS

HOUSING

OPFS

AP:M

CRAMS &Drill

Down

BudgetDollar

FixedAssets

CashForecast

CERES

Trust1(Air)

Trust2(Land)

EstateServices

SABRIBCAR

ProjectBuilder

EZ

TiQas

EWMS

PS6/7Flowlines

EPROMS

EPFAU

Payroll

PaymentsCharges

ChargeOut

TelBilling

FTR

EPDORIS

PACERCorrosion

SPIR

SaPhire

WEB

SActionList

ProjectExtracts

AP:MDuplicates

LNGCashCall

LowStock

Warning

SupplierMasterData

DIMS

DutyDrawback

PANAccountRecon

PurchaseEnquiry

TransportCharges

ScheduledRequire'ts

EPCON


EngineerEstimation

System

TimesheetRecording

System


DataWarehouse

AccessData

Bases

CESPARAPP

IAP

PermitTo Work

Hisprod

RegeoNT

WellSketch

•• Invoices Processing done Invoices Processing done Manually 6000 x 12 x US$34* = Manually 6000 x 12 x US$34* = US$ 2,448,000.00 US$ 2,448,000.00

•• EIPP implemented via IX2 EIPP implemented via IX2 Reducing cost of Invoice Reducing cost of Invoice Processing toProcessing to US$12.50 per US$12.50 per invoice (6000 x 12 x US$ invoice (6000 x 12 x US$ 12.50* = US$ 900,000.00) 12.50* = US$ 900,000.00)

* Aberdeen Group, Invoice Reconciliation & Payment * Aberdeen Group, Invoice Reconciliation & Payment Benchmark Report, June 2004Benchmark Report, June 2004

+




CABCARS

DODGE(EPCOMS)

EMS

HOUSING

OPFS

AP:M

CRAMS &Drill

Down

BudgetDollar

FixedAssets

CashForecast

CERES

Trust1(Air)

Trust2(Land)

EstateServices

SABRIBCAR

ProjectBuilder

EZ

TiQas

EWMS

PS6/7Flowlines

EPROMS

EPFAU

Payroll

PaymentsCharges

ChargeOut

TelBilling

FTR

EPDORIS

PACERCorrosion

SPIR

SaPhire

WEB

SActionList

ProjectExtracts

AP:MDuplicates

LNGCashCall

LowStock

Warning

SupplierMasterData

DIMS

DutyDrawback

PANAccountRecon

PurchaseEnquiry

TransportCharges

ScheduledRequire'ts

EPCON


EngineerEstimation

System

TimesheetRecording

System


DataWarehouse

AccessData

Bases

CESPARAPP

IAP

PermitTo Work

Hisprod

RegeoNT

WellSketch

•• Output by Printed Medium Output by Printed Medium US$3 per DocumentUS$3 per Document

•• Output by Fax per Document Output by Fax per Document Omani Riyals 1.025 (US$ 2.67)Omani Riyals 1.025 (US$ 2.67)

•• Output by Email per Document Output by Email per Document Omani Riyals 0.625 Baisa (US$ Omani Riyals 0.625 Baisa (US$ 1.63) 1.63)

•• Output by Printed Medium Output by Printed Medium Removed CompletelyRemoved Completely

•• Output by Fax Output by Fax Removed Removed CompletelyCompletely

•• Output by Email Output by Email Removed Removed CompletelyCompletely

•• Output of all Documents Output of all Documents to one or many Vendors to one or many Vendors Electronically (large or Electronically (large or small) via IX2 @ 0.550 small) via IX2 @ 0.550 Baisa** (US$ 1.43)Baisa** (US$ 1.43)

** Includes Outsourced Vendor Management** Includes Outsourced Vendor Management

+


Achieved Business Benefits from Process Automation !Achieved Business Benefits from Process Automation !

• Paying for the right things, at the right cost, to the right peoPaying for the right things, at the right cost, to the right people in the ple in the right time.right time.

•• Level and fair playing field for all to do businessLevel and fair playing field for all to do business

•• Information available to make informed planning decisionsInformation available to make informed planning decisions

•• Removal of Manual expediting effort from buyers desktopRemoval of Manual expediting effort from buyers desktop

•• 50% 50% –– 60% Reduction in Invoice Processing Cost via EIPP60% Reduction in Invoice Processing Cost via EIPP

•• Improved discounts for early paymentsImproved discounts for early payments

•• Spend VisibilitySpend Visibility

•• Empowerment of other processesEmpowerment of other processes

•• Vendor Performance DataVendor Performance Data

•• Complete removal of maverick procurementComplete removal of maverick procurement

•• Controls enabled to reduce procurement fraudControls enabled to reduce procurement fraud

•• Full end to end transparencyFull end to end transparency





The most The most ““EE”” enabled company with the Shell enabled company with the Shell Group:Group:

•• All SCM documents output All SCM documents output DigitallyDigitally

•• Reverse Auctions via Freemarkets Reverse Auctions via Freemarkets AribaAriba

•• Tenders via POTTenders via POT•• EIPP (Electronic Invoice EIPP (Electronic Invoice

Presentation & Process)Presentation & Process)•• Cost of Processing reducingCost of Processing reducing•• Payment Performance 98% ontimePayment Performance 98% ontime•• Integrated Logistics Process (I2)Integrated Logistics Process (I2)•• High E H & S impact (less vendors High E H & S impact (less vendors

on roads delivering sealed Bids)on roads delivering sealed Bids)•• ee--Centre key to Vendor Centre key to Vendor

EnablementEnablement•• Low Cost entry into the eLow Cost entry into the e--

Commerce world for trading Commerce world for trading community (sustainable community (sustainable development project for Oman)development project for Oman)

•• Messaging Model Messaging Model ““Only Sender Only Sender PaysPays””, No Bid No Pay, No Bid No Pay

•• No impact on Back office No impact on Back office environment (SAP)environment (SAP)

Highly Automated Requisition 2 Pay Highly Automated Requisition 2 Pay Process:Process:

•• Request For Quotation, Request For Quotation, Purchase Order and Purchase Order and Service Entry processed Service Entry processed via Digital Exchange (IX2)via Digital Exchange (IX2)

•• All Quotations Via Digital All Quotations Via Digital ExchangeExchange

•• 2500 Vendors Connect to 2500 Vendors Connect to IX2IX2

•• Invoices Processed from Invoices Processed from SE and GR Data Via IX2SE and GR Data Via IX2

•• 500 Contracts and 169 500 Contracts and 169 Price agreements Price agreements AutomatedAutomated

•• Payment Advise Payment Advise AutomatedAutomated

•• Expediting AutomatedExpediting Automated


• Challenge common assumptions about the competitive bidding model.

• Share the benefits, particularly with vendors.

• Customization may be an option, especially when requirements are not demanding.

• When public infrastructure is not effective, focus on service and substitute one technology with another.

• The Identification of the critical feature that makes or breaks the system is key to success.

• The collaboration between the big buyer and the independent e-procurement solution provider is important for the long term sustainability of the e-procurement exchange.

Key LearningsKey Learnings


Sohar Aluminium Company is undertaking a Sohar Aluminium Company is undertaking a landmark US$2.4 billion Greenfield Aluminium landmark US$2.4 billion Greenfield Aluminium Smelter project in the Sultanate of Oman. This Smelter project in the Sultanate of Oman. This project, which will contribute significantly to the project, which will contribute significantly to the GDP of Oman, will be developed in Sohar.GDP of Oman, will be developed in Sohar.

The company, as a first phase development, will The company, as a first phase development, will build a single AP35 potline, together with build a single AP35 potline, together with associated carbon and casting facilities and an associated carbon and casting facilities and an 1000 MW gas fired power station.1000 MW gas fired power station.

SAP ERP 2004 is being implemented within the SAP ERP 2004 is being implemented within the Company and will be utilizing eCompany and will be utilizing e--procurement procurement enabling technologies to reduce itenabling technologies to reduce it’’s overall s overall operating costs within the Supply Chain.operating costs within the Supply Chain.

For more information go to For more information go to www.soharwww.sohar--aluminium.comaluminium.com

Introducing Sohar Aluminium a new Business Development in OmanIntroducing Sohar Aluminium a new Business Development in Oman


Thank you for your attentionThank you for your attention

Just time for any questions Just time for any questions and answersand answers