r12 Sourcing

1
Copyright 2013, Oracle and/or its affiliates. All rights reserved.
Sourcing and Procurement

Contracts:
Strategy, Update, and
Roadmap
Mark Peachey
Director, Product Strategy
Collaborate 2013
Denver
Safe Harbor Statement

The following is intended to outline our general product
direction. It is intended for information purposes only, and
may not be incorporated into any contract. It is not a
commitment to deliver any material, code, or functionality,
and should not be relied upon in making purchasing decision.
The development, release, and timing of any features or
functionality described for Oracles products remains at the
sole discretion of Oracle.
Opportunity:
Transform to Value
Driven Procurement
Procurements Disproportionate Margin Impact

Small Changes. Big Difference.
5% Reduction in Spend Increases Profit by 50%
100
Profit
Profit +50%
Increase Sales by 50%

Cut Overhead by 20%
75
Spend -5%
Payroll, Tax, &

Other
Expenses
50
25
Purchases
0
Before
After
In order to obtain
an equivalent
impact, a firm
would have to...
Classic eSourcing Playbook

Transfer Margins From Suppliers Bottom Line to Your Own
Pick low hanging fruit
Common
Denominator for
Requirements
Price Benchmarks
from Emerging
Markets
Shake up incumbents
Rationalize pricing
Generate CxO support
Lowest
Standardize agreements
Bid Wins the

Business
Prices from
Transparent
Bidding
(Auctions)
Consolidate suppliers
Create EPS impact
Stand Alone Contracts to the Rescue?

Hindered by Isolation
Limited price enforcement
Resistance from Legal Dept
Walled Garden repository

Meaningful analytics ?
What About Successful Companies?

Corporate
Strategy
Sourcing
Strategy
Program
Design
Talent & Knowledge

Management
Formal Metrics &

Measurement
Change
Management
Consultation &
Process
Facilitation
Project
Management
Leading CPOs Are Diversifying Playbook

To Better Align with Enterprise Goals
Align with the

Business
Contribute to the
Top and Bottom
Lines
Consistent
Manage Risk
Supplier
Systemically
Relationship
Management
Tailored Procurement and Sourcing Strategies

Adopt Technology
Win War for Talent
leading procurement organizations are

becoming more strategic, playing an active role
in developing and executing top-line strategies

for growth.
Source: AT Kearney Excellence in Supply Management 2011
Value-Driven Procurement
Seizing the Larger Opportunity
Complexity
Reduction
Revenue
Growth
Corporate
Social
Responsibility
Supply
Assurance
Product &
Service
Differentiation
Procurement
Value
Supplier
Development
Cost
Best Practices
10
Reduce Asset
Intensity
Quality
Risk
Innovation
Next Practices
Creating Alignment Via Key Value Drivers

Extend Reach of Procurement Knowledge
RISK
PRODUCTS
DEMAND
SUPPLIERS
SPEND
SUPPLY
11
ASSETS
Multiple Business Models

Standard
Process
Varying
objectives
Upstream
planning and
scheduling
Coordination &
Execution
12
Sourcing and Contracts
13
Streamlined Negotiation
Sourcing & Contract Negotiation in Sync
Tactical / Strategic
Requirements
Establish Standards
& Org, Policies
Define Strategies
& Key Components
SOURCING & SOURCING OPTIMIZATION
Conduct OnLine Negotiations
Analyze &
Monitor
Incorporate in
Negotiation
Capture Deliverables
& Supplier Variables
Monitor, Track
& Update
Use Standalone
Contracts
Dynamic Rules
& Word Sync
Create Re-usable
Components
Re-negotiate &
new round
Compare &
Award
PROCUREMENT CONTRACTS
14
Re-use &
Configure
New Technology Requirements
Functionality
Program Management
Project Management
Knowledge
Management
Talent Management
15
Interoperability
Supplier & Risk

Management
SCM, PLM, Projects, etc.

Procure-to-Pay
Planning & Budgeting
Intelligence
Master Data
Management
Transactional Data
Management
Forecasting & Scenario

Planning
Sourcing At-a-Glance
Strategic
Sourcing
Award
Supply
Contract
Supplier
Lifecycle
Mgmt
16
Key Components
Strategic Sourcing
Sourcing Optimization
Supplier Lifecycle Management
Procurement and Spend Analytics
Spend Classification
Key Capabilities
Key Performance Indicators
Easy sourcing event creation
Percent Purchases Negotiated
Online negotiations and bids with automatic scoring
Awarded Amounts
& recommendations
Top Suppliers
Improve Supplier Performance Management
Projected Savings
Enhance Supplier Compliance Management
Realized Savings
Archive and reference
Parent Supplier Count
Contracts At-a-Glance
Buying
Organization
Key Functions
Request
Project Mgmt
Legal
Finance
Negotiate
and Author
Supplier
Organization
Key Functions
17
Procurement
Approve
and Sign
Execute
Sales
Project Mgmt
Legal
Billing
Top Mgmt
Close-Out
OR
Renew
Top Mgmt
Improve Strategic Sourcing Outcomes
Suppliers
Shorter time to market

Faster cycle times
Access to new technologies
Total cost reduction
Compliance to negotiated agreements
Operations
Procurement
Research & Development
18
Gaining Leverage for

Enhanced Impact
19
Execute on Category Strategies

Center-Led Services
Complete from Planning &

Budgeting through Payment
Integrated Financial and

Procurement systems of
record
Shared Contracting,
Ordering, & Payment
Processes
Multi language, currency,

country support
20
Centralize, standardize, and consolidate common processes

and suppliers
Enable localization for unique categories and practices
Generate cost, scale, and tax benefit
Use Information as a Fundamental Enabler

Classify Spend for Use by Procurement
P-CARD FEEDS
Organize Spend
Into Logical
Categories
Spend
Analysis
Automate
Expensive Data
Management
Employee
Expense
Analysis
OTHER
LEGACY A/P
21
Adapt to Changing
Spending Patterns
Create Insight and Understanding

Procurement and Spend Analytics
Prebuilt integration
Best Practice library of over 250
reports and alerts
Complete solution for
Spend
Procurement Performance
Supplier Performance
Employee Expenses
Configurable & Extensible
Suited to heterogeneous back-end applications

Pinpoints and prioritizes savings opportunities
Monitors key trends and period comparisons
Measures key operational efficiencies
22
Agenda
23
Oracle Sourcing
Key Features in Oracle Sourcing

KEY FEATURES in R12 & R12+
Access From Professional Buyers

Work Center
Complex contract negotiation
Automatic & team scoring
Knockout of suppliers from shortlist
Negotiation styles
Collaboration team messaging
Prospective & new supplier
invitation
Contractor buyer support
24
Enhanced Spreadsheet support

Price Tier Optimization
Team Scoring
Two Stage Evaluation of RFPs
Cost Factor Enhancements
Bid Response PDF

Countdown Clock
Supplier Incentives
Supplier Reminder Notifications
Earnest Money Deposit
Structured Sourcing Event Creation

Greatly Reduce Preparation Time and Manual Effort
Expiring
agreement
1-Click
renegotiation
RFx, Auction
Renewal
Driven
Instantly create new sourcing event from previous agreements
Requisitions
Sourcing
template
RFx, Auction
Request
Driven
Aggregate requests across the enterprise to leverage buying power
25
Automatic Scoring of Requirements

Quickly Identify the Best Qualified Suppliers
Requirements
Weight
Are you ISO certified?

Number of years in
business
Number of shipping
locations
Value (Score)
Quote 990
Response
Score
25%
Yes (100)
No (0)
No
35%
> 14 (100)
10-14 (75)
< 10 (0)
15
35
40%
> 19 (100)
11-19 (50)
1-10 (25)
35
40
Total Score Calculated by Oracle Sourcing
75
Automatically eliminate suppliers that score below minimum requirements

Automatically exclude non-compliant suppliers from shortlists
26
Cost Factors and Bid Transformation

Evaluate Tangible and Intangible Costs
European
supplier
North American
supplier
Latin American
supplier
Example:
LA Supplier Bid
$14
System Added
Freight
$6
Tariff
$4
Risk
$2
Transformed Bid = $26
27
NA
Europe
Asia
LA
Supplier Transformed
Bid
Bid
$21
$21
$16
$23
$20
$23
$14
$26
Capture Total Cost

- Tangible (eg. freight)
- Intangible (eg. switching costs)
- Buyer and supplier entered
Evaluate Transformed Bids

- View transformed or un-transformed
- Visible during analysis and award
Asian
supplier
Sourcing Knowledge Capture

Drive Optimal Results by Re-Using Best Practices
Knowledge from Sourcing
Methodologies and Past
Events
Sourcing policy rules
Negotiation event style
New Sourcing Event
Sourcing templates
Supplier lists
Pricing factors
Bidding rules
Scoring methods
28
Leverage proven practices

Replicate buyer expertise
Retain knowledge across
the organization
Agenda
29
Oracle Procurement Contracts
Global Terms Repository

Use Terms As Is or Adapt to Local Requirements
Policy
Makers
Business
Units
Define
Legal
Procurement
/ Sales
Legal Rqmts
Best Practices
Regulatory
Policies
Government
Regulations
30
Central
Terms
Library
Use
Standard
Western
Region
Ts & Cs
Localized
Versions
Corporate
Headquarters
Eastern
Region
Standardize Processes But Allow for Variations

Contract Terms Library
Clause Deviations
Policy Deviations
Contract
Terms
Library
Establish:
Identify:
Identify violations based on:
Standard contract
Non-standard clauses
Additions, deletions &
Commercial terms
Responses to questions
User-defined variable
templates
Policy deviation rules
31
section modifications
Excluded expertsuggested clauses
values
Systematically Track Threats and Vulnerabilities
32
Reputation
Negative Media Code of Conduct, Product Safety Standards

Potential Criminal Investigations
Compliance
Code of Conduct / Hazardous Chemical Usage / Worker Cond.

Contract / SLA compliance
Financial
Financial stability - Ability to Grow, Credit Problems, Bankruptcy

Business Losses
Transaction
Product/Service Delivery Delay / On-Time Performance

Product Quality Issues Out of Specification, Warranty Support
Operational
Labor Action, Force Majeure / Natural Disaster / Security

Liens and Claims, Insurance Coverage
Other
OFAC / Suspect / Debarred Watch-list

Country - Potential for Civil Unrest/Military Action, Public Health
Improve Cycle Time

Expert-based Contract Authoring
Configurable rules
Contract
Template
Commercial
Government
Over $50k?
.
.
.
No
Yes
Add Clauses
High Value
Insurance
33
drive terms selection

for complex contracts
Industry Segment?
Draft
Contract
Clauses default
based on product,
supplier, contract
value, etc.
Author high quality

contracts with
minimal legal
supervision
Rule-Based Policy Approvals

Tailor Approval Routing
Accelerate approval
cycles by highlighting
standard thresholds
Route approvals based
on category, existence
of non-standard terms,
etc.
View redline
comparisons of
modified terms to
standard
34
Deliver Value through Continuous Development
Improve User Productivity
Streamline Business Processes

Strengthen Compliance and Control
35
R12.1.3 - Improve User Productivity

Oracle Sourcing & Procurement Contracts
Applying multiple Contract Templates to a Sourcing or Purchasing
document
APIs to import Contract Templates, Rules, Questions and Constants
Display of Clause numbers and sorting by Clause numbers
Add new Requisitions to a draft Sourcing or a Purchasing document
36
R12.1.3 - Streamline Business Processes

Deletion of Amendment Specific Clauses and Provisional Sections
Capturing and Printing of Multi-Row Variables
Allow and Track Offer Withdrawals
Support Attachments in Online Discussions
37
R12.1.3 - Strengthen Compliance and Control

Control Defaulting Section for Contract Expert added Clauses
Additional Descriptors for clauses in the contract terms page
eNDA process for displaying Terms and Conditions with attachments to
supplier users and configuring text based on Operating Unit

MS Word Synchronization
38
Product Roadmap
Planned Enhancements
Sourcing Project Dashboard
Staggered Award of RFQs
Alternate Award post Order Cancellation
Standalone Contracts Enhancements
Adding lines to repository contracts, linking to Procurement documents
Contract Expert Enhancements
Alternate Offers and Multiple Active Offers
39
Oracle Sourcing and Procurement Contracts

Driving Value Driven Procurement
Standardize to meet category and business
objectives
Collaborate across teams
Maintain visibility, flexibility, and control
40
Q&A
41
42
43

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1

Copyright 2013, Oracle and/or its affiliates. All rights reserved.

Sourcing and Procurement

Safe Harbor Statement

Copyright 2013, Oracle and/or its affiliates. All rights reserved.

Copyright 2013, Oracle and/or its affiliates. All rights reserved.

Procurements Disproportionate Margin Impact

Increase Sales by 50%

Payroll, Tax, &

Copyright 2013, Oracle and/or its affiliates. All rights reserved.

Classic eSourcing Playbook

Bid Wins the

Copyright 2013, Oracle and/or its affiliates. All rights reserved.

Stand Alone Contracts to the Rescue?

Walled Garden repository

Copyright 2013, Oracle and/or its affiliates. All rights reserved.

What About Successful Companies?

Talent & Knowledge

Formal Metrics &

Copyright 2013, Oracle and/or its affiliates. All rights reserved.

Leading CPOs Are Diversifying Playbook

Align with the

Tailored Procurement and Sourcing Strategies

Copyright 2013, Oracle and/or its affiliates. All rights reserved.

Win War for Talent

leading procurement organizations are

in developing and executing top-line strategies

Source: AT Kearney Excellence in Supply Management 2011

Copyright 2013, Oracle and/or its affiliates. All rights reserved.

Creating Alignment Via Key Value Drivers

Copyright 2013, Oracle and/or its affiliates. All rights reserved.

Multiple Business Models

Copyright 2013, Oracle and/or its affiliates. All rights reserved.

Sourcing and Contracts

Copyright 2013, Oracle and/or its affiliates. All rights reserved.

SOURCING & SOURCING OPTIMIZATION

Conduct OnLine Negotiations

Copyright 2013, Oracle and/or its affiliates. All rights reserved.

New Technology Requirements

Copyright 2013, Oracle and/or its affiliates. All rights reserved.

Supplier & Risk

SCM, PLM, Projects, etc.

Forecasting & Scenario

Supplier Lifecycle Management

Procurement and Spend Analytics

Key Performance Indicators

Easy sourcing event creation

Percent Purchases Negotiated

Online negotiations and bids with automatic scoring

Improve Supplier Performance Management

Enhance Supplier Compliance Management

Archive and reference

Parent Supplier Count

Copyright 2013, Oracle and/or its affiliates. All rights reserved.

Copyright 2013, Oracle and/or its affiliates. All rights reserved.

Improve Strategic Sourcing Outcomes

Shorter time to market

Copyright 2013, Oracle and/or its affiliates. All rights reserved.

Gaining Leverage for

Copyright 2013, Oracle and/or its affiliates. All rights reserved.

Execute on Category Strategies

Complete from Planning &

Integrated Financial and