1. SAP Ariba Direct Material Sourcing
User Research
One Device Supply Chain –
Abdul leading the team from Ariba.
Need to talk to someone on Commercial Team
Add chart showing collaboration links
MSFT wants to look at what processes
1DSC Product Costing
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2. Interviews and Site Visits
January 21-22, 2016
One Device Supply Chain
Send to Jennifer to Leonard
Need to talk to someone on Commercial Team
Add chart showing collaboration links
MSFT wants to look at what processes
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3. Teams Interviewed Sourcing Finance Operations
Teams interviewed and visited
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4. Joanna Staebler-Kimmel
Tom Liao
Cristos Teriakidis
Aaron Boltz
Teams
Sourcing
Finance
Operations
Daniel Yeh
Brook Foust
Joanna Staebler-Kimmel
Jonathan Simons
Bill Hilleary
©2011 Duarte Press LLC. All rights reserved. CONFIDENTIAL

5. Goals and Objectives Sourcing
Provide best-in-class products, pricing, and quality
Secure a strong supply base with a Continuity of Supply (COS)
Provide product development with the best parts to optimize technology
Sourcing
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6. Goals and Objectives Sourcing Finance
Responsible for pricing of finished goods for all hardware products
Creates Push Quote and True-Up processes to obtain final pricing
Puts pricing into SAP Purchase Information Record (PIR)
Sourcing
Finance
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7. Enable better decision-making with data, tools, and visualization
Goals and Objectives
Supports Sourcing Org (70 worldwide) with KPIs, processes, governance, and tools
Wants to make systems fast and usable, consolidate data, manage by exceptions, and maximize consistency
Enable better decision-making with data, tools, and visualization
Sourcing
Operations
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8. Sourcing Challenges Process Part Master With Process
No history kept for EOL or older parts; have to enter part and associated info again
No hierarchy of assemblies or sub-assemblies to understand associations, relationships, ID numbers
Reporting is manual and unstructured
Volumes not available if needing Spend per Supplier (for fiscal year, year-to-date, year-to-go)
Can’t view parts across multiple SKUs or BOMs
Difficult to enter supplier splits and alternate parts
Can’t filter for contracts needing amendments
Systems are separate and disparate
BOMs created late
Constant volatility
Process
Monthly volume? Forecast
With Process
Systems are separate and disparate – have to enter or obtain data (contracts, factory locations, Approved Manufacturers List (AML), audit status, social accountability in multiple places
Constant volatility
BOMs created late
Monthly forecast visibility done by and spreadsheets
Can’t filter for parts with contracts needing amendments
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9. Sourcing Finance Challenges
Lack of system integration; no single point of truth
Price negotiations happen after product ships
Development process built on assumptions; find out until later what works or doesn’t
Get blind-sided by Planning; have to scramble to get pricing for POs
Lack of process and discipline – can’t get timely and accurate data
Process
Monthly volume? Forecast
With Process
Systems are separate and disparate – have to enter or obtain data (contracts, factory locations, Approved Manufacturers List (AML), audit status, social accountability in multiple places
Constant volatility
BOMs created late
Monthly forecast visibility done by and spreadsheets
Can’t filter for parts with contracts needing amendments
©2012 Duarte Press LLC. All rights reserved. CONFIDENTIAL

10. Sourcing Finance Challenges
Part Master
Overrides of historical part information with updates
Lack of reports to highlight problems/missing data
Can’t add supplier splits
Tools not stable – sometimes crashes or hangs
Lack of expertise using tool for Sourcing teams
Info about Make vs. Buy incorrect; Sourcing doesn’t know to source
Part Master
Can’t calculate weighted average for pricing with part splits
BOM statuses not updated – some are obsolete
Corrected prices not updated in tool
BOMs not updated
SKU names different (1PDM name, internal code names, Contract Mfgr. Names
Discontinued BOMs still pinned; SKUs not removed
Monthly volume? Forecast
We’ll try to tackle all the challenges and work with MSFT to prioritize
©2012 Duarte Press LLC. All rights reserved. CONFIDENTIAL

11. Sourcing Operations Challenges
Part Master
Does not have logistics information (factory addresses)
Actual and forecasted volumes not available
Don’t know reasons for changes – should be required
Takes a lot of data to piece together picture of spend
Naming conventions different between teams/vendors
Missing lead times
BOMs have errors; detection too manual
Need Excel expertise
Limitations of systems limit processes
Systems not built for hardware manufacturing
Lack of integration between systems for data flow and data integrity and quality
Too much time spent collecting and validating data
Process
Monthly volume? Forecast
With Process
Systems are separate and disparate – have to enter or obtain data (contracts, factory locations, Approved Manufacturers List (AML), audit status, social accountability in multiple places
Constant volatility
BOMs created late
Monthly forecast visibility done by and spreadsheets
Can’t filter for parts with contracts needing amendments
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12. Sourcing Managers Daniel Yeh Tom Liao Aaron Boltz Cristos Keriakidis
Director, Batteries
Team of 4: 2 Local, 2 Finland
At MSFT 5 years
Manage parts
Tom Liao
Sr. Sourcing Manager, Electrical
Team of 11: 7 Local, 4 Finland
At MSFT 2 years
Spend: $5-10B
Aaron Boltz
Manager, Flash, SSDs, EMMCs, DRAMS
At MSFT 2 years
New college hire, EE major
Cristos Keriakidis
Manager, Flex Circuits
At MSFT 2 years
Prior life did SAP implementation
©2012 Duarte Press LLC. All rights reserved. CONFIDENTIAL

13. Sourcing Organization and Part Types
Commercial Team
(Manages Contract
Manufacturers)
Sourcing Team
Strategic Parts
Microsoft owns contract with vendor and dictates price/terms
Tells CM which parts to use at what price, and Supplier splits
Assembl ies
Commodity Parts
Low-level components (resistors, capacitors, packaging, etc.)
CM owns pricing
Sourcing finance team = Commercial Team
Consigned Materials
Microsoft purchased
Expensive – price is masked
Stored in virtual plant
Shipped to CM
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14. Collaborations Sourcing BMI Liability Auditing Planning Contract Mfgr.
Engineering
Contract Mfgr.
Legal
Quality
Collaborations
Config. Mgt.
Sourcing
Operations
Sourcing
Finance
Planners – figure out which SKUs belong to CM, create roadmap of products to ship, release dates (Build and ship plans), create POs; 6-month plans in SAP
Compliance – have Sourcing Manager Dashboard, update contract amendments or new master agreements, use word docs and docusign, BIG CONSUMER OF PART MASTER – extract new parts into Excel DB and determines what needs contracts.
Audit Mgt. – mostly resides in China, uses AMS system that talks to PART MASTER
Configuration Manufacturing – provides assembly and part hierarchy
Risk Mgt.
Compliance
Factory Mgt.
Project Mgt.
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15. Sourcing Operations Brook Foust Jonathan Simons Group Manager
Team divided by B/U
Owns COGP budget
Responsible to support Sourcing Org with needed tools, BI, KPIs
Jonathan Simons
Sourcing Operation Lead
One of 6 team members
Distributes docs with needed information
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16. Collaborations Sourcing Operations Cost Accounting Auditing Planning
Engineering
Quality
Contract Mfgr.
Collaborations
Sourcing
Operations
Sourcing
Finance
Planners – figure out which SKUs belong to CM, create roadmap of products to ship, release dates (Build and ship plans), create POs; 6-month plans in SAP
Compliance – have Sourcing Manager Dashboard, update contract amendments or new master agreements, use word docs and docusign, BIG CONSUMER OF PART MASTER – extract new parts into Excel DB and determines what needs contracts.
Audit Mgt. – mostly resides in China, uses AMS system that talks to PART MASTER
Configuration Manufacturing – provides assembly and part hierarchy
Risk Mgt.
Compliance
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17. Sourcing Finance Joann Bill Hilleary Staebler-Kimmel
Sr. Finance Manager
Team of 4
Owns Push Quote and True Up
Joann
Staebler-Kimmel
Sr. Finance Analyst
Converted from Contractor to Full-time
Uses SQL to extract information
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18. Collaborations Sourcing Finance Planning Finance Sourcing Config. Mgt.
Contract Mfgr.
Collaborations
Sourcing
Finance
Sourcing
Operations
Planners – figure out which SKUs belong to CM, create roadmap of products to ship, release dates (Build and ship plans), create POs; 6-month plans in SAP
Compliance – have Sourcing Manager Dashboard, update contract amendments or new master agreements, use word docs and docusign, BIG CONSUMER OF PART MASTER – extract new parts into Excel DB and determines what needs contracts.
Audit Mgt. – mostly resides in China, uses AMS system that talks to PART MASTER
Configuration Manufacturing – provides assembly and part hierarchy
©2011 Duarte Press LLC. All rights reserved. CONFIDENTIAL

19. PLM Sourcing Sourcing Quoting Manage Materials Awarding
Market assessment
Concept Dev.
Change Mgt.
Release to mfg.
Launch market rollout
Product design
Product costing
Reporting
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20. PLM Sourcing Ariba area of focus Sourcing Quoting Manage Materials
Awarding
Sourcing
Market assessment
Concept Dev.
Change Mgt.
Release to mfg.
Launch market rollout
Product design
Product costing
Reporting
Ariba area of focus
©2012 Duarte Press LLC. All rights reserved. CONFIDENTIAL

21. Case Study
A UX case study is an account of the events that led you to the discovery of some new knowledge, the answer to a UX design problem. ... You case study is a glimpse into your way of thinking: It is a demonstrator of process and critical reflection, rather than of the end product.
We analyzed the to-do lists of 40 users aged for a period of 45 days and discovered that about 60% of their tasks were excel and legacy system driven. From this analysis, we made 3 user personas and defined their experiences in managing to-do lists with customer journey maps.

22. Journey Mapping

23. Sourcing Triggers and Process
Product design
Product costing
New Product Intro (NPI) or
Business Opportunity Proposal (BOP)
High-level spec approved
(preliminary BOM?)
Engineering Validation Build (EVB)
Sourcing notified to get pricing
Work with Engineering to
understand specifications and assumptions
Reference Cost of Goods Purchased (COGP) for similar pricing
Establish estimated target pricing
Create COGP Roll-up S
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24. Sourcing Triggers and Process
Product costing
Sourcing
Production cycle begins
Engineering finalizes BOM
BOM accessed and Pinned for assignments
Part Master
Parts assigned to Owners
Checks owners/assignments for parts
Needs to enter pricing, splits,
lead times, INCO and payment terms
Starts RFX process to gather above data
Works with Suppliers S SO
©2012 Duarte Press LLC. All rights reserved. CONFIDENTIAL

25. Sourcing / Product Lifecycle Sourcing – Part Quote
PLM (Aras)
Sourcing Costing
Quote
Analysis
BOM
Part Master BOM
Sourcing RFX
Part Master BOM
SAP
PIR
Assign to Owners
Quantity Splits do not occur during this process
Select Items to quote and send; those that don’t have price/quantity
Estimate
Part Picker Process
Quantity estimate may not be available
Quote two suppliers
Pre-Assign quantity % splits during this process such that suppliers see different qty.
.pcx standard format
Is a separate part list sent?
Push or Pull?
Send back to Part Master for BOM Analysis before awarding?.

26. Calculated weighted average cost
Sourcing / Product Lifecycle Sourcing – Push Quote
SKUs
Associated
Compilation
BOM Validation
Approval
Part Master BOM
Calculated weighted average cost
Related BOM w/Price
Data Cleansing
SKU BOM from PM
Weighted quarterly quote at Finished Goods SKU and Buy Component level
Complete Quote of SKU and Buy Component level
Updated Push Quote with corrected BOM
Push Quote updated with Transformation and Commodity costs
Approved Push Quote for specific quarter of FG SKU and Buy Component level

27. Sourcing / Product Lifecycle Sourcing – Part Quote
Sourcing Operations – Cost of Goods Produced (COGP)
Budget
Cost Savings
COGP
Unit Performance Review
Part Master
Part Master
Part Master
Part Master
Roll-up of 130 COGP reports
150k records of data
Takes 2 weeks
Lots of validation
167 configurations of product
89 programs
140 product versions
Add volumes to COGP to calculate spend (?)
Calculate future spend (?)
Feb.-April create budget for all 130 products
120 BOMs/month
Compares Budget to Actual to calculate
Incorporate ECOs
Updated prices
Missing configurations
Reasons required
Reasons required
CM enters commodity parts (confirm) pricing, splits, and TC – from Bill Hilleary
Are they adding parts? BOM matching occurs beforehand?

28. Bill of Materials and Sourcing Metrics?
Creating a Sourcing RFQ event maximum of 80.
Maximum total Number of Bill of materials is 120 per month in one SKU.
Each bill of material has a maximum of 100 Assemblies and Sub Assemblies.
Each Bill of material can maintain & manage in more than ten programs and plants.
Each bill of material has a minimum of 1000 and a maximum of components.
Depends on the program the sourcing managers owns the category part types.
Feb- April created a budget for all 130 products
Rollup of 130 COGP reports
150k records of data
Takes 2 week to process
Lot of validation 167 configuration of product
89 Programs
Compares Budget to Actual to calculate
Incorporate ECOs
Updated prices
Missing configurations
Reasons required

29. Next Steps Interview team members of the Commercial Team
Interview team members of the Compliance and Audit teams to understand Part Master challenges and needs
FLI DC-5N
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30. Questions?
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