Procurement Roadmap

Business Case for Change

Table of Contents
WHAT IS A SPEND MANAGEMENT ROADMAP? ................................................................................................... 3
ORGANIZATION .................................................................................................................................................. 3
STAKEHOLDERS .............................................................................................................................................................................. 4
GOVERNANCE (SAMPLE)................................................................................................................................................................... 4
SERVICES INVENTORY ....................................................................................................................................................................... 5
INITIATIVES PORTFOLIO - CAPABILITY MATURITY MAP ............................................................................................................................. 6

ROADMAP ENGAGEMENT, ADOPTION & PROGRESS MEASURES ......................................................................... 7

ENGAGEMENT & ADOPTION .............................................................................................................................................................. 7
BENEFIT MEASURES ........................................................................................................................................................................ 8
ADOPTION MEASURES ..................................................................................................................................................................... 8

DOCUMENT VERSION CONTROL.......................................................................................................................... 9

APPENDIX 1 – VISUAL FOR OPERATIONS ........................................................................................................... 10
APPENDIX 2 – SERVICE INVENTORY................................................................................................................... 11
APPENDIX 3 – INITIATIVE PORTFOLIO ............................................................................................................... 11
APPENDIX 4 – BUSINESS CASE MEASURES......................................................................................................... 12

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What is a Procurement Roadmap?
A Procurement Roadmap is a communication toolkit that bridges the gap between strategy and operational execution.

The document is used to engage senior leadership, the business and solution partners to:

• communicate baseline and progress milestones for capability maturity

• establish current and future scope of services at an operational delivery level of detail
• prioritize and sequence initiatives to elevate capabilities
• align enterprise governance and policy to support operational change
• realign operational focus quickly in response to new organizational drivers (e.g., M&A)

The roadmap scope includes the following functions:

• Sourcing • Accounts Payable • Supplier Risk Management

• Purchasing • Spend Analysis • Supplier Performance Management
• Travel & Expense • Payment Register Oversight • Global COE for Spend Management

Organization
The Procurement Roadmap is organized around three types of work:

1) Governance – the prioritization and oversight of Spend Management maturity development

2) Services – customer facing delivery of repeatable steady state activities (e.g., Purchasing request, Invoice submission)
3) Initiatives – building new capabilities through the development or improvement of new services

The Governance calendar, Services inventory and Initiative portfolio are contained in the appendix of this document.

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Stakeholders
Successful engagement and adoption of the roadmap requires awareness and active support by key stakeholders.

Roles to Consider (Sample) Name Title

CFO <<Insert>> <<Insert>>
Controller <<Insert>> <<Insert>>
Lead for Sourcing <<Insert>> <<Insert>>
Lead for Purchasing <<Insert>> <<Insert>>
Lead for Accounts Payable <<Insert>> <<Insert>>
Lead for Travel & Expense <<Insert>> <<Insert>>
Lead for Supplier Management <<Insert>> <<Insert>>
Lead for S2P Systems Management <<Insert>> <<Insert>>
Business Unit Representative #1 <<Insert>> <<Insert>>
Business Unit Representative #2 <<Insert>> <<Insert>>

Governance (Sample)
A calendar of predefined topics is scheduled to provide alignment of Policy and Operations. The key is to ensure that desired
behavior is reinforced through Policy. Keeping the rules simplified can be accomplished by communicating Policy adoption as
engagement is services and embedding the compliance rules into the services.

• Q1 2013 – Sourcing Engagement Policy

• Q2 2013 – PO Adoption Policy
• Q3 2013 – Centralized Invoice Receipt Policy
• Q4 2013 – Supplier Management Attestation Policy
• Q1 2014 – Contract Archival Policy

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Services Inventory
Below is sample inventory of steady state services. This allows the organization to answer ‘what do we do?’.

In addition, the inventory allows the organization to be nimble in adjusting to strategic shifts in focus (e.g., using the inventory to
map two organizations during an M&A event).

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Initiatives Portfolio - Capability Maturity Map
Over the past ten years, Source to Pay has gone through three major shifts:

• Sourcing waves – typically one time efforts to analyze and negotiate supplier spend
• P2P automation – implementing solutions to automate Purchase Request, Purchase Order and Invoice processing
• Workforce optimization – eliminating item processing and optimizing labor costs related to repeat functions

More recently, two trends have emerged to elevate Spend Management performance:

• Shared Service mindset – simplifying engagement in services through shared service portals for business and suppliers
• Supplier management – extending value into the business through the development of a Center of Excellence for supplier
management

The below graph maps the sequence of initiatives for capability maturity:

Capability Maturity Map

7.00
6.00
5.00
4.00
3.00
2.00
1.00
-

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Roadmap Engagement, Adoption & Progress Measures
Scaling and elevating Procurement performance for today’s workforce requires a strategy that assumes 24/7 global access to
services that are offered in a simplified web portal with mobile service updates. Without these toolkits, it is not possible to introduce
and updates services in a scalable manner without excess investment in ‘how to’ and ‘where do I go’ training.

Engagement can be greatly clarified by creating a shared services portal which treats all employee and supplier requests with
consistent response and resolution times. This shared service mindset is successful in meeting today’s workforce expectations.

A sound Policy and Process adoption strategy is to embed controls and rules into the services so that employees and suppliers need
only to engage in the services to drive compliance and efficiency.

Below are sample visuals of how employee engagement and adoption are simplified and scaled through shared service approach.

Engagement & Adoption

Visuals for web portal for Suppliers and Employees – a single destination for all things supplier related.

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Benefit Measures
With a Procurement Roadmap strategy that is hinged on shared services mindset – engagement and adoption are the key measures
that will drive desired outcomes. For example, PO adoption will drive price compliance. Below is a list of sample measures. A more
comprehensive list is in the attached appendix.

Measures Related Service Adoption Outcome

Savings Sourcing engagement 2-6% annual savings by category
Early Payment Discounts
Compliance Supplier onboarding portal Ability to demonstrate SOX compliance in
Supplier risk attestation with confidence in a timely manner
Cost Avoidance PO adoption Decrease price variance from target price
Central invoice submission Decrease duplicate invoices

Adoption Measures
While these are good measures for service delivery and adoption. Holistic roadmap view should track:

• % and Amount of Spend on PO

• % and Amount of Spend on PO that was competitively sourced
• % and Amount of Spend on PO ‘Flip’ invoice
• % of Amount of Spend with ACH and Early Payment Discount terms
• % spend mapping to supplier manager roles

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Document Version Control
Owner: Name, Sourcing & Procurement Lead
Last Updated: 1/1/2014
Update Comments: Updated initiative portfolio and service inventory
Next Review: 6/1/2013

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Appendix 1 – Visual for Operations

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Appendix 2 – S2P Shared Service Inventory (SAMPLE)
Delivery Made Simple DMS Service Inventory Roadmap Modeling Resource Allocation Planning

# Function Sub-Function Service Name Service Type Value Driver Benefit Category Q1' 2012 Q2' 2012 Q3' 2012 Q4' 2012 2013
1 Sourcing Enable Business Request RFP services Customer Facing Bus. Partnership Business Enablement 1 1 4 6 8
2 Sourcing Enable Business Request Contract negotiation Customer Facing Bus. Partnership Business Enablement 1 1 4 6 8
3 Sourcing Enable Business Request Spend by Category or Business Unit Customer Facing Bus. Partnership Drive Savings 1 1 4 6 8
4 Sourcing Contract Mgmt. Archive contract for pipeline reporting Internal Info Mgmt Drive Savings 1 1 0 0 0
5 Procurement Purchase Order Request for Quick Bid (auction) Customer Facing Bus. Partnership Drive Savings 0 0 1 2 2
6 Procurement Purchase Order Request for PO Customer Facing Control Oversight Service Satisfaction 0 0 0 1 1
7 Procurement Purchase Order PO setup (blanket) Customer Facing Control Oversight Service Satisfaction 0 0 1 1 1
8 Procurement Purchase Order PO Catalog Customer Facing Info Mgmt Service Satisfaction 1 1 0 0 0
9 Procurement Purchase Order Request to add/change catalog Internal Info Mgmt Business Enablement 1 1 0 0 0
10 Procurement Purchase Order Project PO (Legal, Real Estate, IT Projects( Customer Facing Info Mgmt Drive Savings 0 0 1 1 1
11 Supplier Management Segmentation Perform quarterly supplier segmentation and Vendor
NotMgr
applicable
assignments Info Mgmt Drive Savings 1 1 1 1 1
12 Supplier Management Risk Mgmt Maintain Supplier Certification and Capture Risk Measures
Not applicable Control Oversight Compliance 1 1 1 1 1
13 Supplier Management Performance Mgmt Capture & Manage Supplier Performance MeasuresNot applicable Info Mgmt Drive Savings 1 1 1 1 1
14 AP Supplier Services On-board supplier for AP Supplier Facing Control Oversight Compliance 1 1 1 1 1
15 AP Supplier Services Change supplier profile for AP Supplier Facing Control Oversight Compliance 1 1 1 1 1
16 AP Supplier Services Capture Supplier W9 Supplier Facing Control Oversight Compliance 1 1 1 1 1
17 AP Supplier Services Enroll supplier in ACH processing Supplier Facing Control Oversight Drive Efficiency 1 1 1 1 1
18 AP Supplier Services Provide supplier payment status Supplier Facing Control Oversight Service Satisfaction 1 1 1 1 1
19 AP Supplier Services Enroll and manage Supplier in early payment discount
Supplier Facing Info Mgmt Drive Savings 1 1 1 1 1
20 AP Supplier Services Manage supplier duplicate payments Supplier Facing Info Mgmt Drive Efficiency 1 1 1 1 1
21 P2P Enablement Supplier Services Enable electronic self PO submission (non-catalog) Supplier Facing Info Mgmt Price Compliance 1 1 1 1 1
22 P2P Enablement Supplier Services Enable electronic Invoice (PO based) Supplier Facing Info Mgmt Price Compliance 1 1 1 1 1
23 P2P Enablement Supplier Services Enable electronic Invoice (Non-PO) Supplier Facing Info Mgmt Drive Efficiency 1 1 1 1 1
24 Shared Info Mgmt Analysis & Reporting Publish compliance reporting for all Functions Customer Facing Info Mgmt Compliance 1 1 1 1 1
25 Shared Info Mgmt Analysis & Reporting Publish Metrics for all Functions Customer Facing Info Mgmt Drive Efficiency 1 1 1 1 1

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Appendix 3 – Initiative Portfolio
# Initiatives Maturity Level Capability
1 sourcing waves 1.00
One Time Savings
2 RFx events 1.25
3 electronic Purchase Order 2.00
4 purchasing catalog management 2.25
5 electronic Invoicing 2.50 P2P Automation
6 electronic 'PO flip' 2.75
7 paper invoice conversation 2.75
8 supplier onboarding compliance 3.00
9 duplicate invoice prevention 3.25
10 pCARD 3.50 Supplier Engagement
11 ACH enrollment 3.75
12 early payment discounts 3.75
13 contract archive 4.00
14 spend analysis reporting 4.25
15 simplify sourcing engagement 4.50 Customer Engagement
16 simplify purchasing engagement 4.75
17 customer request desk 4.75
18 supplier portal 5.00
19 supplier segmentation 5.25
20 supplier role mapping 5.25
Supplier Value Optimization
21 supplier risk attestation 5.50
22 supplier performance tracking 5.75
23 supplier manager training 5.75
24 Global source to pay COE 6.00
Scalable Best Practices
25 Global supplier management COE 6.50

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Appendix 4 – Business Case Measures (SAMPLE)
Business Case Spend Profile Baseline < 9 Months Year One Year Two Target
Total Annual Supplier Spend $ 3,000,000,000 $ 3,000,000,000 $ 3,000,000,000 $ 3,000,000,000 $ 3,000,000,000
Total Annual Supplier Invoices (estimate, validated with business case) 400,000 400,000 400,000 400,000 400,000

Spend Channel Optimization (% volume)

Shift from manual to more efficient and controlled spend channels. (Baseline can be validated with business case)
60 (us ma i l ) 68% 25% 20% 5% 5%
manual transactions
45 (fa x/ema i l ) 17% 15% 10% 5% 5%
10 (eInvoi ce) 5% 50% 55% 60% 60%
electronic transactions
3 (PO eInvoi ce) 10% 10% 15% 30% 30%

HARD SAVINGS: Operational & Cash Management Benefits Summary

Detail provided in Benefit Sections 1 & 2 (below)
Current Operational Costs $ 8,000,000 $ 8,000,000 $ 8,000,000 $ 8,000,000 $ 8,000,000
S2P operational costs $ - $ 4,880,000 $ 5,040,000 $ 5,280,000 $ 5,280,000
OPERATIONAL COST SAVINGS $ - $ 3,120,000 $ 2,960,000 $ 2,720,000 $ 2,720,000
Early Payment Discounts (Standard) $ 450,000 $ 1,800,000 $ 2,100,000 $ 2,700,000 $ 2,700,000
Shared Revenue Program $ - $ 720,000 $ 1,050,000 $ 2,700,000 $ 2,700,000
CASH MANAGEMENT REVENUE $ 450,000 $ 2,520,000 $ 3,150,000 $ 5,400,000 $ 5,400,000
TOTAL HARD SAVINGS $ 450,000 $ 5,640,000 $ 6,110,000 $ 8,120,000 $ 8,120,000

COST AVOIDANCE: Price Compliance Benefits Summary

Detail provided in Benefit Section 3 (below)
Contract Price Compliance $ - $ 900,000 $ 900,000 $ 3,375,000 $ 8,100,000 $ 8,100,000
Catalog Price Compliance $ - $ 3,750,000 $ 3,750,000 $ 9,562,500 $ 20,250,000 $ 20,250,000
TOTAL COST AVOIDANCE $ - $ 4,650,000 $ 4,650,000 $ 12,937,500 $ 28,350,000 $ 28,350,000

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