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Procurement Transformationin Mining and Metals IndustriesKonstantin Penz, MBA - LOB Procurement VP Strategy & Business Development Wednesday 12 September

AgendaCreating Value For Your Business Procurement Transformation is about Enabling Operational ExcellenceProcurement Transformation How and Where to Start With SAPs Suggested ApproachSAPs Competences & Expertise Able To Execute Procurement Transformation SAPs Services, Solutions, and ECO System to Drive Procurement TransformationWhat do Analysts say about SAP in ProcurementPoint Of Proof 2012 SAP AG. All rights reserved.3

Creating Value For Your BusinessProcurement Transformation is about Enabling Operational Excellence

Creating Value For Your BusinessProcurement Transformation Is The Enabler For Operational ExcellenceProcurement Transformation is about,“creating a customer-focused enterprise to achieve increased effectiveness, efficiency,& compliance”which will result in significant financial benefitGlobalization, regulatory pressures, procurement automation, outsourcing, and supplymarket instability have simultaneously elevated the procurement discipline andincreased supply management challenges./ Source Cap Gemini 2012 SAP AG. All rights reserved.5

Creating Value For Your BusinessProcurement Transformation Is The Enabler For Operational ExcellenceIn order to be more competitive and excellentin operational execution companies and theirbusiness networks need to:differentiate by consistently deliveringproducts or services to customersmore profitably, at the right cost,quality, quantity, date and location.KPIs:- Profitability / Margin- Operating cost- Cost savings- Cost/unit- Inventory days- Productivity- Operating cycle-time- Quality (goods and services)- Number of quality defects- Customer service level 2012 SAP AG. All rights reserved. Reduce costs by cost-effectively andefficiently managing your end-to-endoperational processes Sustain superior performance byensuring continuous improvement of yourprocesses and systems Deliver high-quality products orservices with integrated quality standards Improve customer service by deliveringon promises Accelerate decision making withcomplete visibility on operationsperformance Ensure business viability by complyingwith legal mandates such as forenvironment, health and safety or einvoicing compliance6

Creating Value For Your BusinessOperational ExcellenceCurrent( Millions)DecreasingExternalSpend by 5%( Millions)IncreasingRevenues by5%( Millions) 1,000 1,000 1,050Cost Margin 700 677.50 735Selling Generaland Administrative 200 178 210Operating Income 100 145 105Taxes at 38% 38 55 40Net Income 62 90 65Change in Net Income 28 3Change in Net Income %45%5%Income StatementRevenuesDid you know that a 5%reduction in spend contributesto up to a 45% improvement inNet Income?“Enabling Profitable Growth through Procurement:Transforming the Sourcing and ProcurementOrganization”, an SAP Insight paper by Vanessa C. Smith,Shruti Goel and Tushar Gulhane and published by theASUG/SAP Benchmarking and Best Practices programBenefits of Best Run Procurement Organizations 82% of spend under management 81% have automated the source to pay process (companies have achieved a 30% higher rate of costsavings using automated spend analysis) 24% savings leakage by not integrating the source-negotiations-contract compliance processSource – Aberdeen, CPO ‘s Agenda 2009 2012 SAP AG. All rights reserved.7

Creating Value For Your BusinessEarly Involvement Source IBM 2012 SAP AG. All rights reserved.8

Creating Value For Your Business - How To Do Integrated Strategic Sourcing and Procure To Pay 2012 SAP AG. All rights reserved.9

Procurement TransformationHow and Where to Start

Procurement TransformationHow and Where to Start https://valuemanagement.sap.com 2012 SAP AG. All rights reserved.11

Procurement TransformationHow and Where to Start SAP s Suggested Approach 2012 SAP AG. All rights reserved.12

SAP Procurement PortfolioIntegrated Solutions Enable the End-to-End Source-to-Pay Process 2012 SAP AG. All rights reserved.13

Procurement TransformationProcurement Solution Innovation by SAP s 5 Market CategoriesApplicationsAnalyticsMobileDatabase &TechnologyCloudPowered by SAP HANA 2012 SAP AG. All rights reserved.14

Procurement TransformationScenario Operational Procurement ExcellenceOtherMarket PlacesOrderOrder Conf.Invoice 2012 SAP AG. All rights reserved.15

Procurement TransformationScenario Integrated End to End Source to Pay ProcessOtherMarket PlacesOrderOrder Conf.Invoice 2012 SAP AG. All rights reserved.16

Procurement TransformationWhat do Analysts say about SAP in Procurement

SAP – A Leader in The Procurement MarketSAP a Leader inForrester Wave :ProcurementSAP a Leader in MagicQuadrant : SourcingSuitesSAP a Leader inForrester Wave : CLMSAP the #1 Ranked Providerby CapGemini:SRM Research 2010-11 2012 SAP AG. All rights reserved.18

2012 SAP AG. All rights reserved.19

Thank youVisit Procurement Demo Pods: 3.3 Gustav Mahler IIIProcurement: S3Commodity Procurement: S13SAP Information Interchange OD: S11Contact information:Konstantin Penz, MBAVice President Procurement Strategy and Business DevelopmentSAP [email protected]

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Sep 12, 2012 · Procurement Transformation Is The Enabler For Operational Excellence Procurement Transformation is about, “creating a customer-focused enterprise to achieve increased effectiveness, efficiency, & compliance” which will result in significant financial benefit Globalization, regulatory pressures,