Set Up and Deploy the Right Sourcing Strategy for Complex Products with mySAP PLM and mySAP

SRM
Peter Szincsk
SAP

Sourcing of Complex Products mySAP PLM cFolders and Strategic Sourcing mySAP PLM cFolders and Operational Procurement mySAP PLM cFolders and Supplier Portal Wrap-up

Its All About Connectivity

Service integration
Development partners

Customerdriven design
Customer

Service provider HQ Plant

Design consortium

Dealer

Subcontractor

Execution consortium

Plant Supplier

Integration
SAP AG 2006, 3

Decentralized production and sourcing

Customer Needs The sourcing of engineered materials requires efficient collaboration between buyer and supplier
A car manufacturer searching for a supplier to provide a specific part, e.g., a bumper A construction company collaborating with a subcontractor to build a specific part of a building, e.g., the roof A power plant construction company searching for a turbine supplier

Bidding scenario

Bid evaluation

Strategic contract

Request for Design quotation collaboration

Purchase order

Bidding scenario and design collaborations are highly integrated, simultaneous processes
SAP AG 2006, 4

Value Proposition

Companies waste enormous resources due to a lack of tight integration between product development and strategic sourcing.
PLM+SRM: A Marriage Made in Heaven By John Moore June 27, 2002 ARC Insights 2002-27E

Optimize product costs in the early design stage by blending engineerings ideas with sourcings up-to-date information Increase process efficiency and shorten time-to-market with better communication between engineering and purchasing Accelerate the development and delivery of new products Make the right deals with the right companies

SAP AG 2006, 5

Customer Pain Points SAP Supplier Relationship Management (SRM) provides the tools to assess the capability levels of suppliers and to choose the best suppliers for supply needs
However, this is easier said than done. Customers struggle with the following:
Non-harmonized data Lack of visibility of data, which is spread through various systems Supply base management Managing suppliers through their entire lifecycle; supplier status visibility The means for suppliers to efficiently collaborate on RFQ bidding Alternatives for access to RFQs and bids Bid award process being based on price alone Insufficient criteria for determining the ideal source of supply Limited use of auctions Auctions that did not consider other cost factors
Underlined pain points are especially valid for complex goods
SAP AG 2006, 6

Value Proposition of mySAP SRM Sourcing A fully integrated eSourcing solution can bring insight and discipline to sourcing practices far beyond RFx (request for quotation/information/proposal) and auctioning
Key Capabilities Include:
Global spend analysis Built-in performance and knowledge management Collaborative RFx and real-time reverse auction Contract integration and compliance monitoring Design, planning, and global trade integration Integration with eProcurement Strategic road-map focus: Category management, governance, risk management
SAP AG 2006, 7

Sourcing of Complex Products mySAP PLM cFolders and Strategic Sourcing mySAP PLM cFolders and Operational Procurement mySAP PLM cFolders and Supplier Portal Wrap-up

Strategic Sourcing with mySAP SRM: Supplier Negotiation

Purchasing Planning Category Management Supplier Qualification Supplier Negotiation Contract Management Requisitioning
Purchasing Governance Strategy Development Risk Management Procurement Office Planning

Program Management

Data Improvement

Spend & Opportunity Analysis

Supplier Development

Purchasing Controlling

SOURCING

Demand & Market Analysis

Specification Development

Supplier Identification

Supplier Evaluation

Approved Vendor List

Event Preparation
Contract Development Requirement Definition

Request for Quotation

Contract Execution Requisition Approval

Reverse Auction

Bid Evaluation & Awarding

Contract Monitoring Requisition Analysis

PROCUREMENT

Order Management

Source of Supply Assignment

Restriction Validation

Order Generation & Tracking

Receiving

Replenishment

Acknowledgement & Delivery

Quality Assessment

Returns Handling

Financial Settlement Supplier Enablement

Invoice Verification

Evaluated Receipt Settlement

Invoice Payment

Document Exchange

Supplier Network

Supplier Portal

Supplier Collaboration

Supplier negotiation is a key value-generation component of SRM

(mySAP PLM cFolders is integrated into my SAP SRM Supplier Negotiation)

SAP AG 2006, 9

Supplier Negotiation

Enables companies to thoroughly assess new suppliers and measure the performance of existing suppliers

Create Demand

Create RFQ

Create Bid

Evaluate Bid

Follow-On Processes

mySAP SRM

Key Business Objectives of Supplier Negotiation

Supplier rationalization and prequalification Efficient supplier selection process (including technical design evaluation by engineering) Contract creation
SAP AG 2006, 10

Value Proposition of Supplier Negotiation The Pressure comes from:

Supply base management Supplier collaboration Award based on a combination of price and non-price

The Opportunity lies in:

Supplier evaluation and status visibility Collaboration tools integrated into eRFX Advanced bid evaluation with factored cost bidding and weighting and scoring

mySAP SRM Supplier Negotiation is the only solution that:

Maximizes supplier and buyer communication with internal and external collaboration throughout the negotiation process Speeds up the competitive bidding process through real-time auction monitoring and bidding Simplifies global sourcing by integrating demand requirements and contracts in multiple backend ERP systems Shortens supply cycle time Reduces process costs Minimizes procurement costs through integration with purchasing and negotiated contracts
SAP AG 2006, 11

Positioning Basic Functionality mySAP SRM Supplier Negotiation provides

Event Preparation
Project management Unstructured online collaboration

Reverse (Live) Auction

Real-time auction monitoring and bidding Online and offline auction maintenance Etc.

Request for Quotation

Multi-round processing Online and offline RFQ and bid maintenance Open catalog integration Bid attributes Weighting and scoring Lotting RFQ versioning Bidding in alternative currencies Surrogate bidding

Bid Evaluation and Award

Analyze responses Weighted score analysis Awarding Contract and PO integration

SAP AG 2006, 12

Positioning Integrated Solution

Integrated into procurement process in back end
Receive requirement from back end Create follow-on documents in back end

Suppliers enter bids online Invite new suppliers via standardized interface Access historical data in SAP Business Information Warehouse (SAP BI)
Vendor evaluation Bidding history Track savings

Support design collaboration via Collaboration Folders (cFolders) integration

SAP AG 2006, 13

SRM/PLM Integration Points

PLM

Feature and Feature and requirements requirements planning planning

Design Design collaboration collaboration

Engineered goods and services sourcing

Strategic Strategic sourcing sourcing

SRM SRM analytics analytics

SRM
Bidding Engine

Supplier/ Supplier/ contracts contracts PO PO Enterprise Enterprise buyer buyer Product structuring Product structuring process planning process planning

:
Plant maintenance/ Plant maintenance/ project system project system
SAP AG 2006, 14

MRO Procurement
Operational Operational sourcing sourcing

Sourcing Process Triggers Collaboration

Engineering Purchasing
Receive demand

Suppliers

Purchaser creates bid invitation in SAP bidding engine Purchaser creates collaboration in cFolders (mySAP PLM) and invites engineers to add product specifications within cFolders Purchaser assigns suppliers to bid invitation and sends out invitation

Create RFQ and assign suppliers

Create a collaboration, add data Add technical data

Issue RFQ

Review information. A supplier area is automatically created

Suppliers automatically receive email with link to SAP bidding engine Suppliers can access the product specifications in cFolders directly via link in bid invitation When putting together a bid, private supplier areas where technical product information can be stored are automatically created in cFolders Both engineers and purchasers review and evaluate bids

Enter price and add technical information

Submit bid Evaluate the bid from a commercial point of view Evaluate the bids from a technical point of view Create contract or Purchase Order

SAP AG 2006, 15

What is cFolders? cFolders is the Web-based SAP PLM collaboration platform, and it extends SAP PLM to enable users to work on design and development projects in virtual teams within cross-enterprise processes cFolders can be used throughout sourcing as container for complex technical specifications in addition to a simple attachment

SAP AG 2006, 16

Add/Assign Collaboration to Bid Invitation

cFolders collaboration can be created from SAP Bidding Engine

Existing cFolders collaboration can be assigned to bid invitation

SAP AG 2006, 17

Public Area is Container for Product Specification

Data can be added to SAP cFolders directly from PCs hard disk or from mySAP PLM back-end system

SAP AG 2006, 18

Bidder Receives Bid Invitation with Collaboration

Bidder can access specification through link

SAP AG 2006, 19

Public Area within cFolders

Public area as read-only for all bidders

SAP AG 2006, 20

Private Area for Bidders within cFolders

Private area with editing permission Store technical product documentation Redline drawings Add documentation Change buyer specifications

SAP AG 2006, 21

Incoming Bids

Buyer accesses private area of each supplier

SAP AG 2006, 22

Buyer Can See All Private Areas

Unlike the bidder, who can see only their own private area and the public area, the buyer has access to all areas

SAP AG 2006, 23

Private Area within cFolders

SAP AG 2006, 24

cFolders In a Nutshell
Structured collaboration on: Documents, CAD assemblies, data sheets, materials, BOM, technical assets, manufacturer part numbers, product variant structures, and custom-defined (generic) objects Sophisticated authorization concept for access control Integrated visualization and redlining/markup tool for 2D/3D object viewing BOM comparison and extraction

SAP AG 2006, 25

cFolders In a Nutshell (cont.)

Integration to SAP PLM (DMS, ) and SRM (Strategic Sourcing, ) Search functionality (Search in file content supported) Notification and status management for process control Support of distributed content server architecture Large file handling via FTP

mySAP PLM cFolders is a vertical collaboration application that enables users to work on design and development projects in virtual teams with external business partners
SAP AG 2006, 26

Documents Digital Signature

Usage within the integrated scenario with SAP Bidding Engine

Create cFolders Collaboration project https://[cFolderSystem]/... Create document

1 6
Verification and display

Usage with cFolders standalone Supported formats: ASCII (.txt) HTML PDF XML Digital Signature according to standard PKCS#7

3
Digitally sign document

5
Verify

Collaboration Folders Database

Store

Extension available on customer project base. Contacts: mailto:Arnd.Goebel@sap.com (Expert Consultant DigSig) mailto:Ruediger.von.Dahlen@sap.com (SRM Consulting Director)
SAP AG 2006, 27

New Features with cFolders 4.00

The installation of cFolders 4.00 on SRM Server 5.5 (SRM 5.0) was validated and released to customers Significantly lower TCO
Since common hardware and user management can be used when using cFolders as container for technical specifications for bidding events
Add technical documents

Design Design Engineers Engineers

Backend Systems
(DMS on SAP R/3 or ECC, ...)

Supplier Sales Supplier Sales Engineer Engineer

cFolders and cFolders and Bidding Engine Bidding Engine (running on (running on SRM Server) SRM Server)

Purchaser Purchaser
Assign/create collaboration and create bid invitation

Submit bid

Add technical documents

Internet

Intranet

cFolders and SRM Server installed on same machine (Sketch of Possible System Landscape). More information will be available in Solution Manager. Look for SRM Business Process: Processing Collaborative Bidding Events Using cFolders.
SAP AG 2006, 28

New Features with cFolders 4.00 (cont.)

Business Partner (Organizations) in cFolders

In addition to users and user groups Import of SRM Business Partner Data possible Business-Partner-related search planned for cFolders 5.00

SAP AG 2006, 29

mySAP PLM Application Map 2005

Product and project portfolio management Life-cycle process support Life-cycle data management

Idea management and concept development Product development Document management

Project planning

Time and resource management

Project execution

Strategic portfolio management SAP NetWeaver

Development collaboration and strategic sourcing

Prototyping and Hand over to sales, Quality production service, and engineering and ramp-up maintenance improvement Specification and recipe management Service and maintenance structure management

Product costing Change and configuration management

Product master and structure management

Corporate services

Audit management

Hazardous tracking/product stewardship

Dangerous goods/waste management

Workers health and safety

On the mySAP PLM Application Map 2005, cFolders belongs to the business process development collaboration The business process development collaboration focuses on cross-company collaboration on product data (technical documents and product structure information) during product development and sourcing cFolders (development collaboration) and Strategic Sourcing form a so-called process group on the mySAP PLM Application Map. This underlines the importance of the integration between mySAP PLM and mySAP SRM in the area of sourcing.
SAP AG 2006, 30

Business Benefits For mySAP PLM customers:

Tight integration with mySAP SRM sourcing capabilities Engineering collaboration on technical specifications can be extended towards RFP and RFQ processes

For mySAP SRM customers:

Tight integration with mySAP PLM design collaboration capabilities providing: Access to engineering objects within cFolders Backend integration of materials, BOMs, and documents into mySAP PLM system Markup and redlining capabilities for 2D/3D drawings

SAP AG 2006, 31

Sourcing of Complex Products mySAP PLM cFolders and Strategic Sourcing mySAP PLM cFolders and Operational Procurement mySAP PLM cFolders and Supplier Portal Wrap-up

Relationship Between Sourcing and Operational Procurement

Strategic Sourcing Category Management Spend Analysis Vendor Evaluation Demand Aggregation

Vendor

Catalog

Contract

RFQ/Auction

Requisition

Determine Source of Supply Operational Procurement

PO/GR/IV

SAP AG 2006, 33

Definition of Operational Procurement Operational procurement covers the purchase of goods and services for indirect (maintenance, repair, and operations) and direct (production) materials even though they have very distinct requirements and processes With mySAP SRM, the process is decentralized, but the purchasing organization centrally creates the controls that manage the process, roles, and sourcing objectives mySAP SRM integrates operational procurement with planning, maintenance, project, and order-processing systems to requisition and source materials for key business processes

SAP AG 2006, 34

Solution Map for mySAP Supplier Relationship Management (mySAP SRM)

Purchasing Planning Category Management Supplier Qualification Supplier Negotiation Contract Management Requisitioning

Purchasing Governance

Strategy Development

Risk Management

Procurement Office Planning

Program Management

Data Improvement

Spend and Opportunity Analysis

Supplier Development

Purchasing Controlling

SOURCING

Demand and Market Analysis

Specification Development

Supplier Identification

Supplier Evaluation

Approved Vendor List

Event Preparation

Request for Quotation

Reverse Auction

Bid Evaluation and Awarding

Contract Development

Contract Execution

Contract Monitoring Requisition Analysis

Requirement Definition Source of Supply Assignment

Replenishment

Requisition Approval
Restriction Validation

PROCUREMENT

Order Management

Order Generation and Tracking

Receiving

Acknowledgement and Delivery

Quality Assessment

Returns Handling

Financial Settlement Supplier Enablement

Invoice Verification

Evaluated Receipt Settlement

Invoice Payment

Document Exchange

Supplier Network

Supplier Portal

Supplier Collaboration

SAP AG 2006, 35

Engineering Process Triggers Purchasing Engineer creates collaboration in cFolders and uploads technical product information of the product to be purchased Engineer creates requisition from cFolders Purchaser receives unassigned requisition in sourcing cockpit, including a link to the respective cFolders collaboration Purchaser triggers
The creation of an RFQ The creation of PO or contract

SAP AG 2006, 36

cFolders Integration into Operational Procurement Integrates operational procurement with a system containing the detailed technical specification of complex direct materials This allows you to have the technical documentation always at hand when negotiating contracts, creating new purchase orders, or triggering a bid invitation
cFolders system (Engineering)

Demand and requisition

Consolidate demands

Order
Contracts
Spend, Scorecard, and Supplier Info.

Winning Bids

Assign source of supply Assign

SAP AG 2006, 37

Creation of Shopping Cart from cFolders

Engineering can create shopping cart from cFolders The shopping cart has a reference to the respective cFolders collaboration

25.10.2004 18:29:28

SAP AG 2006, 38

Creation of Shopping Cart from cFolders (cont.)

Shopping cart can be transformed to: PO Contract Bid Invitation cFolders collaboration can be used as another type of attachment for PO, contract, and bid invitation

SAP AG 2006, 39

Engineering Generates Requisition Creation of RFQ

Engineering Purchasing Suppliers
Create a collaboration, add data Trigger creation of requirement, add information for purchasing Receive unassigned requisition Trigger creation of RFQ (alternatively PO, contract)

In the bidding engine, a purchaser adds relevant purchasing information (requester, delivery address, and so on) Purchaser selects suppliers and publishes RFQ Suppliers automatically receive email with link to RFQ in SAP bidding engine Suppliers can access the product specifications in cFolders (public area) directly via a link in the bid invitation When creating a bid, private supplier areas where technical product information can be stored are automatically created in cFolders Suppliers enter pricing information in bidding engine

Complete RFQ

Publish RFQ

Receive email with link to RFQ Review product specification in public area in cFolders Create bid in bidding engine

SAP AG 2006, 40

Engineering Generates Requisition Creation of RFQ (cont.)

Engineering Purchasing Suppliers

A supplier area is automatically created in cFolders

Suppliers enter technical specification in cFolders Suppliers submit bid Bids are evaluated

Enter price in bidding engine

Add technical specification in cFolders

Purchasers in bidding engine Engineers in cFolders

Submit bid

Evaluate bids in bidding engine Evaluate technical specification in cFolders Determine winner

Purchaser determines and notifies winner Purchaser creates PO or contract

Notify winner

Create PO or contract

SAP AG 2006, 41

Engineering Generates Requisition Creation of Purchase Order or Contract

Engineering Purchasing Supplier
Create a collaboration, add data Trigger creation of requirement, add information for purchasing Receive unassigned requisition Trigger creation of PO or contract (alternatively RFQ)

Purchaser adds relevant purchasing information (requester, delivery address, accounting information, and so on) to PO or contract Purchaser selects supplier Purchaser issues PO or contract Supplier receives PO or contract

Select supplier

Complete PO or contract

Issue PO or contract Receive PO or contract Review product specification in public area in cFolders Add technical specification in cFolders

Supplier can access the product specifications in cFolders (public area) directly via a link in PO or contract Supplier may add technical specification in cFolders Engineers review specification in supplier area

Evaluate technical specification in cFolders

SAP AG 2006, 42

Technical View: Sketch of Possible System Landscape Operational Purchasing Design Design Engineers Engineers
Add Technical documents Add Technical documents

Back-end Systems
(DMS, BOM Processing, CAD Desktop, iPPE on SAP R/3 or ECC, ...)

Sales Sales Engineer Engineer

mySAP PLM mySAP PLM cFolders cFolders

SAP SAP router router

Create Shopping Cart

Submit bid

mySAP mySAP SRM SRM

Purchaser Purchaser

ITS ITS

Create bid invitation

Internet
SAP AG 2006, 43

Intranet

Sourcing of Complex Products mySAP PLM cFolders and Strategic Sourcing mySAP PLM cFolders and Operational Procurement mySAP PLM cFolders and Supplier Portal Wrap-up

Enabling Collaboration to ALL Suppliers is KEY Expand your value proposition by linking any kind of suppliers via appropriate and cost-effective channels SUPPLIERS
1
Supplier Portal

BUYER
NetWeaver

Web Web Browser Browser

Collab. Design

PLM

Order Collab.

Low-volume suppliers

SRM

High-volume suppliers

Fulfillment

ERP

SAP

2
CRM CRM System System Supplier Connectivity

Collab. Replenish.

SCM

Browser EDI/XML

SAP AG 2006, 45

Effective Processes Behind Supplier Collaboration Improved effectiveness through cooperation and communication along the entire supplier relationship lifecycle
Design Sourcing Planning Procurement Fulfillment

Buyer

Supplier selection (RFx and Collaborative auctions) Demand and engineering inventory visibility and design Contract negotiation Supplier managed inventory (SMI) Relationship monitoring

Order collaboration Release processing Invoicing and dispute resolution

ASN processing Packaging and Printing Labeling

Design Supplier
SAP AG 2006, 46

Selling

Planning

Ordermgt/ Billing

Fulfillment

Customers Using cFolders Usage together with mySAP SRM:

Usage of competitive scenario for technical RFI:

SAP AG 2006, 47

Sourcing of Complex Products mySAP PLM cFolders and Strategic Sourcing mySAP PLM cFolders and Operational Procurement mySAP PLM cFolders and Supplier Portal Wrap-up

Further Information on cFolders Integration into SRM Configuration Information is stored in SAP Solution Manager Necessary Input for Solution Manager: Process name: Organizational Area Procurement Processing Collaborative Bid Events Using SAP cFolders Configuration Element: mySAP SRM 5.0 Basic Settings for Strategic Sourcing Integration with Other Components Make Settings for mySAP PLM cFolders

SAP AG 2006, 49

Resources
Presentation at SAP Insider PLM 2006:
Introduction to SAP cFolders for collaborative product design

cFolders on SAP service marketplace:

http://service.sap.com/cFolders

cFolders 3.00 Overview presentation:

http://service.sap.com/~sapidb/011000358700002976192003E.ppt

cFolders 3.10 Delta presentation:

http://service.sap.com/~sapidb/011000358700002024392004E.pdf

Information on cFolders 3.10 on help.sap.com:

http://help.sap.com/saphelp_cproject31/helpdata/en/00/e8c80ae8fc3842b5bedf5d6787 9dae/frameset.htm

Information on cFolders 4.00 on help.sap.com:

1. Help on cFolders application: http://help.sap.com/saphelp_ppm400/helpdata/en/00/e8c80ae8fc3842b5bedf5d67879dae/frameset. htm 2. Help on portal integration of cFolders (BP PPMDC 4.0): http://help.sap.com/saphelp_xrpm40/helpdata/en/dd/9d9f42ac47c56ae10000000a155106/frameset.h tm
SAP AG 2006, 50

Resources (cont.)
cFolders 3.10 configuration information:
http://service.sap.com/plm-inst using cProject Suite 3.10 Configuration Guide Collaboration Folders Master Guide - SAP cProjectSuite 3.10

cFolders 4.00 configuration information:

Configuration Information is stored in SAP Solution Manager - Necessary Input for Solution Manager: Process name: Organizational Area Product Development and Introduction Development Collaboration Configuration Element: mySAP PLM SAP cProject Suite 4.00 Basic Settings for cFolders http://service.sap.com/plm-inst and Portfolio Management using cProject Suite 4.00 Master Guide - Project

SAP Online Knowledge Product (OKP) for cFolders:

http://service.sap.com/okp
OCP20S - SAP cProject Suite 2.0 OCP30S - SAP cProject Suite 3.0 OCP31S - SAP cProject Suite 3.1

OKP Information Request

SAP AG 2006, 51

Product Roadmap

Ramp-Up mySAP SRM 5.0 and mySAP PLM cFolders 4.00*

Started in October 2005

Default Release mySAP SRM 5.0 and mySAP PLM cFolders 3.10
Since December 2004

* cFolders 4.00 Ramp-Up is part of mySAP ERP 2005 Ramp-Up

(cFolders is referred to as Process Development Collaboration)

SAP AG 2006, 52

7 Key Points to Take Home

The integrated usage of mySAP SRM and mySAP PLM cFolders also supports the sourcing of complex goods cFolders can be used as a container for technical specifications for bidding events during supplier negotiation The competitive scenario of cFolders, with its private supplier areas, is tailored for use in bidding events cFolders integration to PLM functionality in R/3 4.6C, R/3 Enterprise, ECC 5.0 (mySAP ERP 2004), and ECC 6.0 (mySAP ERP 2005) is available out-of-the-box and allows the usage of PLM-related information in bidding events The viewer integrated into cFolders offers visualization capabilities that facilitate 2D and 3D visualization, redline/markup cFolders 4.00 can be installed on top of SRM 5.0 (SRM Server 5.5) The usage of cFolders is included in mySAP SRMs Strategic Sourcing option license*
*License information is subject to change without prior notice, and is in no way binding upon SAP
SAP AG 2006, 53

Your Turn!

Q&A
Peter Szincsk
peter.szincsak@sap.com

SAP AG 2006, 54

Copyright 2006 SAP AG. All Rights Reserved

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SAP AG 2006, 55