Scope conference 2010 in Florida, Bill Stankiewicz attended. www.shipperswarehouse.com

1. Beyond the Hype:
Building a Sustainable Supplier Risk Strategy
April 12, 2010
Michael Hartman
Director, Field Marketing

2. Agenda
 Industry Update
 A Solution for Today
 Customer Benefits
 Time to Value
© SAP 2010 / Page 2

3. Industry Update
 Industry Update
 A Solution for Today
 Customer Benefits
 Time to Value
© SAP 2010 / Page 3

4. Decreasing External Spend Contributes Significantly to
Change in Net Income
How?
Freight
Decreasing Increasing
Current External Revenues
Income Statement 9% Savings
($ Millions) Spend by 5% by 5%
($ Millions) ($ Millions)  Standardized policies
Revenues $1,000 $1,000 $1,050  Reduction of overnight usage
Cost Margin $700 $677.50 $735  Domestic vendor consolidation
Selling General $200 $178 $210
and Administrative Telecom
Operating Income $100 $145 $105 23% Savings
Taxes at 38% $38 $55 $40  Vendor consolidation
Net Income $62 $90 $65  Signing bonus
 Policy changes
Change in Net Income $28 $3
Utilities
Change in Net Income % 45% 5%
Vanessa C. Smith, Shruti Goel and Tushar Gulhane 12% Savings
“Enabling Profitable Growth through Procurement:
Transforming the Sourcing and Procurement  Spend consolidation
Organization” (ASUG/SAP Benchmarking and Best
 Renegotiated rates
Practices Program, 2007).
 Cogeneration

5. Suppliers Facing Business Challenges

6. So Mr. CEO, what exactly do you mean by price?
Crude Oil
$144
$125
$100
$70
$55
$25
2003 2004 2005 2006 2007 2008 2009

7. Sunflower Oil: No longer a stable staple

8. CPO’s Top Priorities Impact Financial Bottom-line
Source: SAP CPO Roundtable
© SAP 2009 / Page 8

9. Methods Used To Mitigate Risk & Most Successful
Methods

10. Kraftliner: An example of complex global trade flows
1000 tons
140
1700
360 1170
440
110 50
420
120
750
470 20
190 310
1610 220
20
40
120 90
20
60
60
60 50
170
250 40
280 80
Total 9 million tons
710EY01

11. Procurement Objectives
“$10 MM earned through Russian roulette does not have the
same value as $10 MM earned through the practice of
dentistry. To an accountant though, they would be identical.”
- Nassim Nicholas Taleb Fooled by Randomness

12. Where do you stand in the Procurement Journey?
Full
Procurement 5
Accountability Supply chain
company
Increasing
Business benefits
4
Strategic Procurement
Control 3 buy-sell
Centralized company
procurement
1 2
Decentralized Centrally co-
Procurement ordinated
procurement
Increasing corporate leadership
• Little overall • Information • Center asserts • Procurement • Procurement now
control sharing more control takes full title of part of full supply
• Poor integration • Central strategy • Increasingly goods chain company
with corporate • Execution sophisticated info • Performance structure
objectives decentralised mgt managed centrally • Likely with tax
• Limited sharing of • High risk of rogue • Key deals • Full visibility of key advantages
information buying negotiated numbers
centrally

13. Sourcing Frontiers A Quick Look
Lower Responsiveness Acceptable
Small Cost Advantage to Low Cost
Large Cost Advantage to Low Cost
Countries
Countries
High Responsiveness Required

14. Where do you stand in the Supply Risk Management Journey?
Full Risk 5
Accountability Integrated Risk
company
Business benefits
Increasing
Strategic 4
Enterprise
Control Risk
3
Centralized Management
Risk
1 2
Siloed Risk Centrally co-
Management ordinated Risk
Increasing corporate leadership
• Little overall • Information • Center asserts • Risks considered • Risk now part of
control sharing more control across entire full supply chain
• Poor integration • Central strategy • Increasingly organization company structure
with corporate • Execution sophisticated info • Performance • Proactive
objectives fragmented mgt managed centrally determination of
• Limited sharing of • High risk • Key risks • Full visibility of key potential future
information exposure across managed centrally numbers risks
issues

15. Supplier Risk Scorecard – Quantitative and Qualitative
Weighting and Indexing
Overall
Performance
(H, M, L)
Financial Risk Legal Risk Operational Risk Replacement Other Risks
(H,M, L) (H, M, L) (H, M,L) Risks (H, M,L)
(H, M,L)
40% 20% 20% 15% 5%
• Financial • No. of Suits • On time • On-boarding • Geo-Political
Health • No. of delivery cost Risks
• Bankruptcy Judgments • Fill Rate • Qualification • Supplier Eco-
Index • No. of Liens • Lead time lead time system Risks
• Acquisition • Defects • Compliance • Management
Risk • Returns • Operational Policy Risks
• Credit Risk • Compliance performance

16. Supplier and Risk Management Requires Analytics
Source: Thomas Davenport, “Competing on Analytics”

17. Cutting Costs: Chopping a Tree or Pruning the Right
Branch?
© SAP AG 2010 / 17

18. Maintaining Perspective

19. A Solution for Today
 Industry Update
 A Solution for Today
 Customer Benefits
 Time to Value
© SAP 2010 / Page 19

20. Procurement Organizations Measured on Savings Delivery &
Spend Under Management
To meet strategic business This requires:
goals, procurement needs
to …
 Quickly identify savings  Enterprise-wide visibility and
opportunities context to spend and buying
patterns
 Avoid or mitigate supplier
risk  Complete, accurate, trustworthy
data
 Ensure contract and
regulatory compliance  Powerful information at the hands
of the business user
“ If I can take the data from my spend analysis tool and understand where
it comes from and tie it to performance, then I can easily address the
opportunities to drive savings and reduce spend.”
CPO,
Large North American Insurance Company
© SAP AG 2010 / 20

21. SAP BusinessObjects Spend Performance Management
Why SAP?
SAP can address immediate needs of business
 Unique approach for spend data classification
 Proven BI platform for actionable analytics
SAP provides a platform for a mid/long-term strategy
 Enterprise process integration with SAP E-Sourcing
 Cornerstone solution for our comprehensive
Procurement Performance Management vision
SAP provides the lowest risk & TCO
 30+ years in spend data cleansing/classification
 Leverages investments made with SAP

22. SAP BusinessObjects Spend Performance Management
Comprehensive Roadmap for Procurement Performance Mgmt
Tomorrow
Today Spend Global
Analysis E-Sourcing Trade
Services
Supply Chain Harmonized
Risk
Performance User
Management
Mgmt Experience
Procurement Performance Management
 Comprehensive procurement performance
management platform
SAP Spend Performance Mgmt  Integration with Risk Management
 Integration with Global Trade Services
 Enterprise data extraction  Integration with Supply Chain Performance
 Data standardization & enrichment
Management
 Comprehensive SAP BW data model
 SAP BusinessObjects universe layer
 Pre-delivered analytics & reporting
 Harmonized UI across SAP EPM products
 Flexible deployment options
 Delivered integration with E-Sourcing

23. Empower Procurement Business Users with Relevant
Insights To Support Spend Initiatives
Spend Related Comparison to
Insight Plan or Budget
 Over 130 packaged
analytics
Savings  Four role-based Evaluate
Potential dashboards Supplier Risk
 Create new reports and
dashboards (self-service)
 Create custom measures
Price Contract
Variance Performance
© SAP AG 2010 / 23

24. Addressing the #1 Challenge:
“How Do I Get to My Spend Data?”
Disparate Data Sources
Disparate Data Sources Dirty Data Difficult to Access
Government watch lists
GL
Supplier financial/
Operational data P-Cards BW
 Partial Solutions: MDM,  Can’t quantify buying  Complex spreadsheets
ETL leverage without  Reliance on IT for reports
 Manual processes are knowing supplier parent-
child  Complicated analysis
expensive tools
 Multiple vendor licenses  Can’t identify aggregate
volume by category  Analysis not integrated to
of spend transaction systems
 Can’t optimize for
common purchases
across departments
© SAP AG 2010 / 24

25. Integrated Data Management Enables Continuous and
Clear Spend Analysis
Data Standardization Spend & Supplier
Data Integration
& Enrichment Risk Analysis
Phase 1: Supplier Phase 2:
Data Standardization Spend Data
& Enrichment Classification
BW
GL/AP
Global Reference Transactional
Database Knowledge
Base
Supplier data
P-Cards
 SAP extractors (SAP ECC,  Global coverage  Over 120 pre-built spend analysis
SAP SRM) models
 1.6T transactions in knowledge
 Data Integrator ETL license for non- base  Out-of-the-box support for supplier
SAP systems risk analysis
 100+ external data sources
 Support to bring in third-party  Set & Track Performance Targets
data feeds  Supplier financial and risk data with Spend Advisor
 Diversity and government  Comprehensive set of Analytics
watch lists functionality
 Briefing book supports stakeholder
collaboration

26. SAP Spend Performance Management
Dashboards and Reports
 Relevant Out-
of-the-box
Analytics
 Personalized
Access
 Dashboard
Wizard
© SAP 2010 / Page 26

27. SAP Spend Advisor
Set Goals, Measure Performance
 Set Goals
 Measure
Performance
 Identify
Opportunities
© SAP 2010 / Page 27

28. Briefing Books
 Build and
Store
Analytics
 Aggregate
 Communicate
© SAP 2010 / Page 28

29. Multiple Disparate Solutions or an Integrated Closed-
Loop Solution?
Today: Sustainable Solution:
Multiple Solutions from different vendors Integrated, Insight Driven, Actionable
Supplier Supplier
Performance Rating/Risk
Spend Supplier
Analysis Evaluation/
Audits
Supplier
Intelligence
 Multiple systems  One solution
 No data integration  Complete visibility
(No single view of data)
© SAP AG 2010 / 29

30. Enable Sourcing & Procurement Excellence
Integrated Spend & Risk Management Approaches
Enable Supply Chain Decisions Through Spend Visibility
 Dashboard visibility to key supplier and contract manufacturing
opportunities
 Immediately identify cost and renegotiation opportunities with supply chain
 Free up cash based on optimized category strategies aligned to demand
requirements
Automate Spend Data Management to
Enable Sourcing & Procurement
Strategies
 Packaged extractors and ETL capability to
ensure data capture.
Quickly Improve Operating Margin  Supplier normalization and classification
 Implement spend reduction strategies based on robust automated methodology
based on global priorities
 Initiate renegotiation backed by hard data
 Reduce overall contract leakage
Embed Risk Mitigation Into Sourcing
Approach
 Risk alerts and mitigation strategies built into KPIs
 Balance supplier scorecards based on financials,
liquidity, and traditional evaluation criteria (cost, etc.)
 Enable supplier declaration on critical compliance
initiatives
Quick Short-Term Wins with Sustainable Long-Term Gains
© SAP AG 2010 / 30

31. Summary
Maximize Savings, Reduce Supplier Risk
 Visibility into accurate spend data
 Increase spend under management
 Rapidly identify savings opportunities
 Reduce supply disruptions
“ We selected SAP not only based on the functionality of its solutions, but for
its experience and commitment to helping companies like ours achieve rapid
ROI. Because we have a variety of spend categories across numerous
company divisions, we needed a solution that was versatile enough to
accommodate our current needs, yet scalable enough to grow with our
company.” Christine Rousseau, SVP Information Technology, Callaway Golf Company
© SAP 2010 / Page 31

32. Customer Benefits
 Industry Update
 A Solution for Today
 Customer Benefits
 Time to Value
© SAP 2010 / Page 32

33. Leading Companies Already Benefiting Today
In Procurement with SAP BusinessObjects Solutions
4x leverage with a single
global supplier, with local
relationships [CPG]
50% improvement in RFQ
process cycle time with sub-
contract supplier visibility [High
 Aggregated data from 19 business Tech]
units, 22 source systems at one
company
 In 12 weeks, classified all spend into
$150 million in procurement-
a proprietary taxonomy and related savings from supply
performed supplier normalization
base rationalization
 Consolidated billions in spend across [Entertainment]
~15 sites and multiple business units
© SAP AG 2010 / 33

34. Proven Supplier Validation and Spend Classification
Supplier Normalization
Financial Client - 66% Reduction Electronics Client - 44% Reduction
13%
3% 19%
34%
16% 56%
25%
34%
Predictive Coding Classification methodology: business context focused
Freight Telecom Utilities
9% Savings 23% Savings 12% Savings
 Standardized policies  Vendor Consolidation  Spend consolidation
 Reduction of overnight usage  Signing bonus  Renegotiated rates
 Domestic vendor  Policy changes  Cogeneration
consolidation
© SAP AG 2010 / 34

35. Sara Lee
Sourcing Excellence in 45 Days!
Savings from 12-22%
“SAP E-Sourcing has helped
to save over 12% on $240M of Standardized process across
Indirect procurement spend.” the organization
Driven value in >$240M in
spend
John Freel
Director of Procurement
© SAP 2010 / Page 35

36. A fluid success at a large petroleum company
The Challenge
 One of the largest Petroleum with upstream and downstream
services
 Diverse systems spread over multiple geography
 Multiple vendors for same products with no central visibility
 Extensive duplication of material, vendors and services
Key Deliverables:
 Challenging contract management
Supplier The Solution
Normalization  Implemented Spend Analysis, Contract Management and
Supplier Evaluation Supplier evaluation
Contract Management  Activated custom classification schema for mapping
Spend Analysis  Enabled Bristlecone spend analysis and optimization methodology
 Implemented BI and Portal solutions as well
The Result
Service Enabled:  Enabled strategizing of sourcing
 Consolidated the spend to a focus group of suppliers
On Premise
 Optimized spend data visibility across the board
Environment
 Enabled across the board purchase price visibility
Refresh Services
 Activated streamlined contract management
Consulting Services
 Huge savings on direct and indirect spend

37. Revlon
Managing 95% of Their Supply Base
In Production in 3 Weeks!
250% increase in COGS
savings over three years
“The rapid, three-week
phase I implementation 300% increase in managed
process allowed us to spend, using same staff levels
immediately start generating
benefits.”
Live implementation in three
William Reis, weeks
Chief Procurement Officer
© SAP 2010 / Page 37

38. Time to Value
 Industry Update
 A Solution for Today
 Customer Benefits
 Time to Value
© SAP 2010 / Page 38

39. Accelerated Savings in Procurement
Identify, Optimize, and Sustain Supplier Value
Rapid Business Enablement Offer
Leveraging years of expertise, Bristlecone offers a fixed-fee and fixed
time implementation. Impact your organization in as little as 90
days and $125,000!
Rapid Business Enablement Investment ($USD)
Duration
Offer Small Medium Large
(weeks)
(<$1B Spend) ($1-3 B Spend) (>$3B Spend)
DSE + SPM 10 + $190,000 + $255,000 + $380,000 +
Rapid
SPM Only 6+ $125,000 + $175,000 + $250,000 +
Business
E-Sourcing + CLM 18 + $330,000 + $425,000 + $535,000 + Enablement
CLM Only 13 + $280,000 + $330,000 + $375,000 +
 Risk mitigation – Fixed price deployment contract
 Deferred payment – Customers who simultaneously sign a
Bristlecone services contract with an SAP license agreement, will
have only 25% of the services contract amount due in 30 days, with
the remaining amount due upon going live.
 Services discount – If the Bristlecone contract contains Spend
Performance Management and Data Standardization and Enrichment
Services then the customer is eligible for a 10% services discount.
 Flexibility – Deployment may be hosted, on-premise, or on-premise
with managed services.
For more information contact: info@bcone.com

40. Key Points to Take Home
 Traditional focus on efficiency and cost alone is not sufficient; proactive visibility
to supply risk is critical
 Ensure information is complete, accurate, and timely
 Establish an integrated process from insights to action
 Empower business users with easy-to-use solutions to drive adoption and deliver
results
 Drive collaboration with key internal stakeholders and suppliers; provide
management visibility to drive informed decision making
 Pre-packaged applications deliver out-of-the-box capabilities that are best in class
 A cohesive approach looking across cost factors, mitigation actions, and
monitoring of KPIs is required to minimize supply chain disruptions
© SAP AG 2010 / 40

41. About Bristlecone
© SAP 2010 / Page 41

42. Bristlecone:
Our Parent Company – The Mahindra Group
 US$ 6.7 Billion Conglomerate with Diversified Interest across 6 Segments
The Mahindra Group
Automotive
• Leadership
Information
Technology • Innovation
• Global Potential
• Financial Returns
Trade and
Automotive • Customer
Financial
Services Components Centricity
Farm
Equipment
Infrastructur
e
Development

43. Our Global Services Capability
Diagnose. Design. Enable. Enhance.
Supply Chain
Planning &
Collaboration
Technology & Supply Chain
Integration Services Execution
Integrated Sourcing
Managed Services
& Procurement
Information
Management

44. SAP and Bristlecone – Unique Relationship
 SAP AG Works and Services Partner
 SAP Services Partner
 SAP BPO Partner
 SAP Business Partner
(All-in-One Solutions for Auto, Hi-tech, OGSD)
 SAP xAPPs Partner
 SAP Ramp-up Partner for NetWeaver
 SAP Indian Offshore Partner
 Core Product & Custom Development Partner
 Founding partner for SAP Testing Competency Center
(TCC)
 Founding partner for CRM on Demand
 Part of the Hi-tech Industry Value Network
We are not only just a Global SI Bristlecone is consistently
Strong and pro- 200,000 Man rated as one of the top
active relationship days of but have “Co-developed” SAP -
to earn hands-on experience on quality partner for
with SAP since development deployment services at SAP
inception all phases of SAP’s product
relationship development lifecycle. Labs

45. Copyright 2010 SAP AG
All Rights Reserved
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© SAP AG 2010 / 45

46. Thank you!
Michael Hartman
Michael.hartman@bcone.com
(404) 964-8966
Copyright © 2010 Bristlecone