Debriefing Case 4 : Supplier & procurement analysis Business Process and Information systems Autumn 2016 Group C : Nicolas Etienne, Estelle Geneux, Ramy Fouda, Aloïs Borgogno & Ophélie Héral

Procure-to-pay : operational procurement Goal : Analyze the supply process with analytical tools (KPIs, reports and dashboards). More precisely, we analyze the work related to inventories, purchase orders, contracts and supplier invoices, but also we define a new KPI with thresholds in order to monitor our sourcing strategy. Inputs : Contracts, Suppliers, Products, Outputs : Reports KPIs Detailed analysis Inventories, Purchases, …

Procure-to-pay : operational procurement

Analysis : Rolling Inventory Comparison (1) Tasks : Analyze inventories from different views and using filters Compare different elements Identify trends and outlying events Data used : Master data : Inventories. Transactional data : Supplier invoices and sales. Analytical data : Rolling Inventory. Rolling Inventory Comparison in 2016

Analysis : Rolling Inventory Comparison (2) Rolling Inventory Comparison in 2016 per Product Category Task : Add a dimension to the graph : “Product Category” Select all the categories you want to be analyzed. Analysis : One category appears to be pulling the inventory up : “Boiler, Heater, Assemblies”.

Analysis : Purchase Order History (1) Tasks : Analyze purchase orders. Change views to ease understanding. Data used : Master data : Suppliers. Transactional data : Purchase orders. Analytical data : Invoice Value. Invoice to the Company per supplier within the last 14 days

Analysis : Contract spend (1) Tasks : Analyzing the use of contracts for the different categories products during the period of 2015 and 2016 (in terms of spend) , Find who are our majors suppliers. And compare contract spend per month to total spend. Data used : Master data : Products and Suppliers. Transactional data : Contracts and Supplier invoices. Analytical data : Contract spend. Contract spend per product categories between 2015 and 2016

Analysis : Contract spend (2) Most important suppliers that worked with contract between 2015 and 2016 Comparison of contract spend to total spend save as “Contract ratio [student ID]”

Analysis : Contract spend ratio Task : Monitor contract spend ratio (KPI). Data used : Analytical data : Contract spend ratio (KPI). Calculation formula of this KPI : (Value of invoices with reference to a contract and no reference to a purchase order + value of invoices with reference to a purchase order and a contract) / Total value of all invoices.

Analysis : New Evaluation (1) Tasks : Create a new Evaluation based on an existing KPI. Data used : Master data : Products. Transactional data : Contracts and Supplier invoices. Analytical data : Contract spend ratio (KPI) as a base. Base for the Evaluation Which existing KPI will be the base for the new evaluation ? What to evaluate ? Dimensions : Product Category Evaluate : 191 Boilers How to evaluate ? Condition : higher than Target Value : 80% If it doesn’t meet conditions ? Critical Threshold : 72% Medium Threshold : 76%

Analysis : New Evaluation (2) Additional Dimensions - What dimensions are mandatory ? e.G : time, currency, VS suppliers What to evaluate ? Dimensions : Product Category Evaluate : 191 Boilers Global Properties The new evaluation is all set. The only thing left to do is name it so it’s easy to find and maybe let a comment to explain what it does.

Analysis : Contract Life-cycle (1) Tasks : Find a report. Display relevant information. Analyze a report. Data used : Master data : Employee, Suppliers. Transactional data : Contracts. Analytical data : Target and Released quantity. Find Contract tracking report Work Center > Sourcing and Contracting > Reports > list > Select “Contract Tracking” Change Characteristic Settings Select : Contract ID Change Key Figure Settings Select only Target Quantity and Releasd Quantity Key Figure Settings for Contract Tracking Report

Analysis : Contract Life-cycle (2) Display only your contracts Edit filter > Contract ID > Created by > You Contract Tracking Report Target Quantity VS Released Quantity Released Quantity : comes from the system calculation, quantity we needed to purchase now. Target Quantity : Total quantity indicated in the global contract with the supplier.

Analysis : Supplier invoices (optional) Task : Analyze the invoice development over time (last 14 days). Data used : Master data : Suppliers. Transactional data : Supplier invoices. Master data : Monitoring supplier invoices (invoice value per supplier and total net value of invoices). Total net volume of the last 14 days’ invoices Supplier invoice (net) of the last 14 days per supplier

Difficulties encounters & solutions Research a report Find the right report. Confusion with an other one.

Resolution – research a report Difficulties encounters & solutions Resolution – research a report Work Center Home => Reports => Show : All Reports. Know exactly which reports you want (Right title, description). Check details. Type the right title.

Confusion Rows-Columns (Dimension) Difficulties encounters & solutions Confusion Rows-Columns (Dimension) Make an incomprehensible graph. Categories Names which overlap.

Resolution – confusion Rows-Columns Difficulties encounters & solutions Resolution – confusion Rows-Columns Go to the dimension which is disturbing and click on « Move to Columns/Rows ». Try until you’re satisfied. =>

Difficulties encounters & solutions Change years Find the right tab. Configure correctly.

Resolution - change years Difficulties encounters & solutions Resolution - change years Delete the limitation in the tab « Edit Selection » (Last 12 months) Go to « Edit Filter » and select years which you want in « Invoice Year/Month »

Difficulties encounters & solutions Legends Not easy to find.

Difficulties encounters & solutions Resolution – legends Go to the icon and choose Legends and « check » show Legends

Difficulties encounters & solutions Settings Key Figure Confusion with Dimensions. Difficult to find it.

Resolution – setting key figure Difficulties encounters & solutions Resolution – setting key figure Go to Settings and Select Key figure Select which Key figures you want to keep

KPI (= Key Performance Indicators) Difficulties encounters & solutions KPI (= Key Performance Indicators) How to find it ?

Difficulties encounters & solutions Resolution – KPI Go to Corporate Performance (Work Center) , Key Performance Indicators, open Evaluation Catalog : Select the right evaluation catalog : And select the KPI Definition :

Question 18 : Formula for thresholds Difficulties encounters & solutions Question 18 : Formula for thresholds Hurry up and arrive at the wrong conclusion Be careful ! It is not correct.

Difficulties encounters & solutions Resolution – question 18 Make the right Calculation : It means : 80% - (10%*80%) = 72% (Critical Threshold) 80% - (5%*80%) = 76% (Medium Threshold)

Real-life example: KPMG One of the BIG FOUR auditors.

Entreprise Performance Management (EPM)

What is KMPG’s mission? Define the controls in an ERP. Test the controls and results. Analyse the results and deduce the improvements. Build a strategic plan to implement improvements.

Examples

Why?

Summary Resources used : Data created and used : ERP system (SAP) Human resources. Analytical tools (reports, KPIs, dashboards). Data created and used : Master data : - Products list. - Suppliers. Transactional data : - Contracts - Purchase orders (and inventory). - Supplier invoices. Analytical data : Report : Material inventories – rolling inventory comparison (inventory evaluation over time). Report : Purchase order history (invoiced value per supplier) KPI : Contract spend ratio (% of contract spend) Report : Contract life cycle (target and releases quantity per contract). Report : Monitoring invoices (invoice development over time). Organizational unit affected and roles involved : Purchasing department (employee and manager) Key performance indicators (KPIs) : Contract spend ratio Total spend per contracts Released quantity (%) … Value created : The supply situation is better known and controlled. We know what to improve, what are our strength and weaknesses.

Do you have some questions ??