DIGITAL TRANSFORMATION OF PROCUREMENT Årsdage for offentligt indkøb - SKI January 2019
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DIGITAL TRANSFORMATION OF PROCUREMENTÅrsdage for offentligt indkøb - SKI January 2019
AGENDA
Maersk Procurement
Digital transformation
Example 1: Digital tendering and negotiation
Example 2: The robots are coming…
Wrap-up
|2
Maersk Procurement
Maersk Group
The Maersk Line brand includes Safmarine, Seago Line, SeaLand, Mercosul Line and MCC Transport
Transport & Logistics Energy
Managed and operated as individual business units
More focused and structurally agile strategies to optimise value
Intent to separate out of A.P. Møller - Mærsk A/S, creating value for shareholders in the process
Managed and operated as an integrated company
A one company structure with multiple brands
Growing topline, earnings for our owners, and opportunities for our people
RevenueUSD 28.0b
Employees75,000
RevenueUSD 7.5b
Employees13,000
Maersk Procurement | 3
| 4
Group Procurement Coordination
Group Procurement
McKinsey engagement
Establishing competencies
Building an international team in Copenhagen
2002-2006 Going beyond
Copenhagen
E-sourcing
Offshoring
Indirect mandate
CAPEX basics
BU centered procurement org.
2006-2016 ‘Procurement in the
Business’
Digital Procurement
Fully leveraging Indirect
BU shared objectives and targets
‘Net savings’
2016 - …
Our procurement journey for the past 15 years …
Maersk Procurement
Maersk Procurement
USD 20bTotal Spend
600FTE’s
10Locations/Offices globally
Maersk Procurement numbers:
AGENDA
Maersk Procurement
Digital transformation
Example 1: Tendering and negotiation in a digital world
Example 2: The robots are coming…
Wrap-up
|5
Digital transformation
|6
The Digital transformation is accelerating...
Emerging trends and technologies Many views on Digital procurement
Big Data IoT
BlockchainCloud-computing Social Media
Mobility
RoboticsA.I.
Digital transformation of procurement|7
Digitizing processes
Digitally Connected
suppliers
Data foundation
Digitizing products
Real time transparency
New valuegenerators
Solutions beyondprocurement
Greater agility
DigitalOperating
Model
DigitalValue
Proposition
McKinsey study as reference for determining automation potential.
How will the organization be impacted?|8
607 FTE’s mapped as current set-up
Potential to automate +60% while performing today’s tasks
85% of all positions will be strategic
154 OperationalProcurement
5575
323
Out of Scope Data management
StrategicProcurement
532
202
Today In the future
61%
29%10%
85%
9% 6%
StrategicProcurement
DataManagement
OperationalProcurement
Share of total todayShare of total in future
330
AGENDA
Maersk Procurement
Digital transformation
Example 1: Tendering and negotiation in a digital world
Example 2: The robots are coming…
Wrap-up
|9
Example 1: Digital tendering and negotiation
Maersk Procurement | 10
Amazon have automated part of the sourcing process
The people who command six-figure salaries to negotiate multimillion-dollar deals with major brands are being replaced by software that predicts what shoppers want and how much to charge for it.
Computers know what to buy and when to buy, when to offer a deal and when not to, these algorithms that take in thousands of inputs and are always running smarter than any human…
Negotiation process for ”lightning deals” – Not a traditional e-auction
Amazon vendor manager
VendorAmazon alogorithm
Vendor submits their deal via online platform1
2
1
2 The algorithm determines whether Amazon likes the deal and what quantity it is willing to buy
No time needed for forecasting, planning and negotiations – major leap in efficiency!
Maersk Procurement | 11
We have started our journey towards sourcing automation – but still have a long way to go...
Sourcing end-gameE2E automation of sourcing processes
Building the foundation:Introduce a digital first culture
Make use of the data:Taking advantage of data complexity
20081st Strategy
2009E-Sourcing support in Mumbai 2010
1.000 E-Auctions
20112nd Generation Sourcing Tool
2013 Savings sign-off
via E-Sourcing Spanish
language support
2013Network optimization added
2016 Moneyball
sourcing Combinatoria
l auctions
2018 Robot
launches RFQ’s for spot buying / PR’s
2019
Fully automated e-auction process for selected categories
2018 Development
and launch of FLEX
Use of e-auctions is a key step towards digitizing negotiations
Predicting results from data
Data driven sourcing strategies
Example of findings:
Incremental saving from e-auction
% of e-auctions with double digit savings
53%2.8%
How valuable is a baseball player?Big Data – Moneyball SourcingDriving Online Negotiations
10-15 % Auction Throughput
Total Value Auctions
Auction Strategy/Game Theory
E-auction policy
Incremental value of adding one supplier:
1%
Optimal # of suppliers Wasted Tender Time:
7 days8
Optimal day to negotiate
Tuesday
AGENDA
Maersk Procurement
Digital transformation
Example 1: Digital tendering & negotiation
Example 2: The robots are coming…
Wrap-up
|13
Example 2: The robots are coming…
Robotics process automation• Software robots that operates on top of existing applications
• Execute tasks are rule based, requires no human judgement and has pre-defined outputs 24/7
• Examples are supplier creation, PO release, rate updates, data migration, Sending supplier inquires, etc.
|14
Meet Holger – our virtual colleague
Robotic process automation delivers improved contract compliance, hands-free procurement and improved quality/service to the business
|15
Every week Holger takes on more workload...
Robotized tasks per quarter in 2018:
Q1 Q2 Q3 Q4
2.916
25.831
56.012
78.048
5Holger Robots
160,000+Tasks Successfully Completed
38Processes Automated
26Access to different systems
|16
Teaching Holger to think like a buyer…
Vessel creates requisition Holger find prices in catalogue (+RFQ) PO prepared for buyer
Rule book
350Vessels
250ports
1.2Marticles
750KInquires sent
= Millions of rules…
e-Cat prices
Purchase History
Purchasing principles
Buyer experience – continous feedback
= Purchasing recommendation (+85% accuracy)
A.I. Powered algorithm
~25%Of scope addressed
~70%Approval rate
AGENDA
Maersk Procurement
Digital transformation
Example 1: Digital tendering & negotiation
Example 2: The robots are coming…
Wrap-up
|17
Wrap-up
Digital transformation of procurement is more than automation
|18
Key take-aways
Turning your data into an asset is critical for a digital transformation
Going digital is a lifestyle, not a diet!
It is not (only) about technology – changing processes are key
The transformation goes beyond procurement
The secret of getting ahead is getting started
|19
Mark Twain
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