ASML has been on a journey to use technology, innovation, and collaboration to drive a procurement transformation that brings the function closer aligned with the business. In this session, discover the company's first steps of success that were taken, the trials and tribulations they faced, and how those challenges have shaped the future. Particular points of discussion will include: collaboration and support between IT, Supply Chain & Finance, process re-design and lifting the procurement capabilities toward world class.

1. #AribaLIVE
Procurement Transformation: Story of a
Learning Journey
Yolanda van Norden, Senior Director Procurement, ASML
April 9, 2014
© 2014 Ariba – an SAP company. All rights reserved.
@ariba

2. Before we start… introducing…
• Yolanda van Norden
• Senior Director Procurement at ASML
• Over 15 years of experience in global Procurement roles at
ASML, NXP Semiconductors and Philips
• Fascinated by Indirect Procurement, and the potential value usually
„locked‟ within the organization
• “By accident” working in the High Tech Industry
© 2014 Ariba – an SAP company. All rights reserved.2

3. Before we start… introducing…
© 2014 Ariba – an SAP company. All rights reserved.3

4. CHIPS ARE EVERYWHERE
Part 1

5. It’s hard to imagine a world without chips
5

6. More than 180 billion chips are made every year
6
Data: WSTS
In 2012 185 billion chips were
produced — 27 for every man,
woman and child on the planet.
Global semiconductor industry
sales reached $300 billion.
0
20
40
60
80
100
120
140
160
180
200
IC units, in billions

7. INTRODUCING ASML
Part 2

8. ASML makes the machines for making
those chips
8
• Lithography is the
critical tool for
producing chips
• All of the world’s top
chip makers are our
customers
• 2013 sales: €5.2 bln
• Payroll: 10,000 FTEs
© 2014 Ariba – an SAP company. All rights reserved.

9. Founded in 1984 as a spin-off from Philips
9 © 2014 Ariba – an SAP company. All rights reserved.

10. A global presence
10
2,522 employees
Source: ASML Q4 2013
Over 70 sales and service offices located worldwide
5,654 employees 2,184 employees
© 2014 Ariba – an SAP company. All rights reserved.

11. © 2014 Ariba – an SAP company. All rights reserved.11
A global presence Public
Slide 11
Veldhoven
Wilton (CT)
Chandler (AZ)
Korea
Taiwan
San Diego(CA)

12. © 2014 Ariba – an SAP company. All rights reserved.12
Company
2013 semi capex
(estimate, $M)
Intel 10,500
TSMC Group 9,750
Samsung 9,500
GlobalFoundries 4,000
SK Hynix 2,730
Toshiba (incl. SanDisk) 2,580
Micron Technology 1,800
United Microelectronics Group 1,500
SMIC 805
Infineon 640
Sony 617
STMicroelectronics 500
A market of 12 large ASML customers
For the 10th consecutive
year, top five of VLSI‟s “Best
Wafer Processing” suppliers„Good Partner‟ Award
Preferred
Quality Supplier Award
Technology
Collaboration Award
Source: Gartner, Q4 2013
18 February 2014
Public
Slide 12

13. OUR PROCUREMENT
JOURNEY
Part 3

14. Where were we with indirect procurement three
years ago?
In 2011:
• Procurement strategies were incidental
• Procurement strategies were not fuelled by strong market insights and deep understanding of business drivers
• Control of spend was fragmented; organized as check at the end instead of directing spend in controlled ways
Benchmarks 2011
• Value add (combined savings & contribution) is consistent and just below market averages (2%-4%)
• Supplier consolidation is at par with market (4%)
• Managed spend per procurement employee is very high compared to market
•
 Conclusion: Good potential for improvements
15 © 2014 Ariba – an SAP company. All rights reserved.

15. Our intent is to build a High Performance
Indirect Procurement organization
High Performance procurement means *
1. Strategic alignment with the ASML business and stakeholder needs  translated
into measurable value add to the business
2. Cross-functional partnering to drive value add category strategy management
processes
3. Reduced complexity in processes, and supply base  standardization of R2P
processes
4. Standardized technology and tools used within procurement processes
* Sources: The Hackett Group; G.Rietveld
© 2014 Ariba – an SAP company. All rights reserved.16

16. We assessed our currently maturity status
Assessment
Factor
Best Practice Score
1 2 3 4 5
Strategy &
Organisation
Business
Engagement &
Functional
Excellence
Strategic
Sourcing
Category &
Supplier
Management
Purchase
To Pay
People &
Skills
Measurement,
Policies,
Controls &
Compliance
Systems,
Data & Metrics Own Efficio assessment
ASML Readiness
• Trust the Procurement team to use all levers
Team Readiness
• Capability to professionally use all levers
Resources
• Capacity to manage all spend globally
© 2014 Ariba – an SAP company. All rights reserved.17

17. Category strategy
Objectives
Stakeholder needs
Supply market dynamics
Product portfolio
Category specific targets
Strategy
implementation
RFI, RFQ
Negotiations & contracting
Contract implementation
Operational fulfillment
Requisition to pay
KPI management
Supplier performance
management
Contract management
Business alignment
Processes
People
The change program
Strategic NPR Workstream
Operational Excellence Workstream
© 2014 Ariba – an SAP company. All rights reserved.18

18. The transition impacts both the own team as
well as the way we interact with our
stakeholders
To
Strategic category management
Business value add KPI’s
Solution focus
Stakeholder centric procurement
Process & Service orientation
From
Tactical Procurement
Procurement KPI’s
Responsibility focus
Managing stakeholders
Task orientation
© 2014 Ariba – an SAP company. All rights reserved.19

19. Our action plan
What we did
• Thorough analysis of spend
• Set-up cross-functional teams for all main categories
• Set-up strategies for all major spend categories
• Investment in team in all regions
• Improved alignment with Control to ensure recognized value add in P&L
• Started a transformation project on the operational requisition to pay process
(EasyBuy)
© 2014 Ariba – an SAP company. All rights reserved.20

20. Indirect procurement spend vs ASML’s turnover
21 © 2014 Ariba – an SAP company. All rights reserved.

21. We decided to measure our efforts by using the
following metrics
23
Strategic Workstream Now
Savings Below benchmark
Return on Investment At benchmark
Spend covered by a contract Above benchmark
Consolidation Benchmark
% Spend covered by an
approved strategy
Below benchmark
Operational Workstream Now
Catalog orders Below benchmark
% of e-invoicing Below benchmark
Spend covered by a PO At benchmark
© 2014 Ariba – an SAP company. All rights reserved.

22. Our journey starts….
© 2014 Ariba – an SAP company. All rights reserved.24

23. A mission helped to clarify the new
organization's purpose
• To deliver recognized added value to its stakeholders and the
ASML business by pro-actively driving a cross-functional
category strategy approach
• Translating market opportunities into valuable business
propositions
• Enabling easy buying methods for ASML
© 2014 Ariba – an SAP company. All rights reserved.25

24. Our Procurement Journey was clarified to our
stakeholders with defining our ‘product’
© 2014 Ariba – an SAP company. All rights reserved.26
Our key tasks Strategic value add Tactical procurement Operational fulfillment
Business offering Expertise Process Service
# Stakeholders Very limited: executive mgt More: budgetholders and
up
Many: everyone who can
order stuff
Key care-abouts Support / enable business
strategy
Do the work – secure
delivery of service on time
(and cost)
Quality of service –
reduced complexity and red
tape
Our promise “We know the market, and
can help trigger change”
“We deliver a professional
process any way you like it”
“We answer any
procurement question you
have”
Our delivery model Procurement & Category
Consultancy – Cluster
managers
Procurement Account
managers -
Anyway you like it
Helpdesk: EasyBuy, email,
telephone

25. The strategic procurement challenge
Sourcing Lever Benefits
Value Added
Relationships
Process
Effectiveness
& Compliance
Supply Base
Restructuring
Total Cost
Management
Design &
Specification
Optimisation
Supply Market
Leverage
Demand side
Supply side
Sourcing levers
Supply
Market
Leverage
Value Added
Relationships
Process
Effectiveness
& Compliance
Supply Base
Restructuring
Total Cost
Management
Design &
Specification
Optimisation
Supply Market
Leverage
Demand side
Supply side
Sourcing levers
Supply
Base
Restructuring
Value Added
Relationships
Process
Effectiveness
& Compliance
Supply Base
Restructuring
Total Cost
Management
Design &
Specification
Optimisation
Supply Market
Leverage
Demand side
Supply side
Sourcing levers
Design &
Specifications
Optimisation
 Bundled, fully leveraged volumes and requirements
 Best practice commercial arrangements, where
suppliers‟ incentives are aligned with ASML‟s needs
 Concentration of spend with most qualified suppliers
 Cost flexibility, whereby service levels and volumes
can be adjusted based on ASML‟s market conditions
 A more disciplined, structured and transparent
approach to supplier management
 Optimised total lifecycle costs

26. Both the Procurement team and the business
needs to be prepared and equipped
A cultural change for both parties
Prepared & equipped: required from
the Procurement Team
•Sufficient CAPACITY to address
entire NPR spend strategically
•Required SKILLS to utilize more
advanced sourcing levers
•Appropriate MINDSET towards
customers
•Effective APPROACH to stakeholder
engagement
Prepared: Required from the
Business
• Willingness to work with
Procurement CROSS-
FUNCTIONALLY
• Willingness to start with an OPEN
MIND with regards to
specifications and suppliers used
• RESOURCES to work in cross-
functional sourcing teams
28

27. The operational procurement challenge
• Reduce bureaucracy
By steering purchases into the most appropriate and efficient buy-channel
By eliminating “double‟ approval loops from contract to requisition
• Improve stakeholder satisfaction by a faster procurement process
• Improve control on spend by improving the procurement involvement earlier in the
buy-process
• Improving the “closed loop” of contract to requisition to order to deliver to pay
© 2014 Ariba – an SAP company. All rights reserved.29

28. What we like to achieve
 Simple and efficient ordering, invoicing & payment process
 Substantial reduction in process time
  reduce with 50%
 Minimal manual handling & interventions
 30% - 40% hands free buying via catalogues, templates, and scheduled
ordering
 < 20% paper invoices
 Full visibility for users within the R2P process
 Reduction in alternative ordering processes
 one platform for all required sourcing channels
 Pushing spend through the right channels and reduce the alternatives for
users 
Procurement at the start of the process
© 2014 Ariba – an SAP company. All rights reserved.30

29. Why we choose for Ariba P2O
31
• Functionality:
• categories
• e-Invoicing
• NPR & PR
• Process:
• Authorization
• Reporting
• Master data
• Integration
Interfaces
Architecture
ASML adjustments
Ease of implementation
• Implementation
Team and set-up
Planning
• Financials & Contract:
• Implementation costs
• Recurring costs
• Business case
• Contract conditions
• Statement of Work
• Supplier network
• Amount of suppliers
• On-boarding capabilities
• ASML suppliers on the network
• User interface
• Intuitive
• User friendly
• After go-live
• Supplier governance
• Support organization
• KPIs and business review
structure
• Suppliers
• Presentation / sales team
• Cultural fit
• Company profile / financials
• Customer reference
© 2014 Ariba – an SAP company. All rights reserved.

30. A planning was detailed out
• Phase 1
• E-invoicing
• Technical solution first
• Onboarding suppliers in
waves
• Phase 2
• P2O
• Technical solution and
catalog preparations
• Go-life per region
© 2014 Ariba – an SAP company. All rights reserved.32

31. 33
Top level Ariba landscape
Ariba P2O Application
Catalog Buy
Non - catalog Buy
Approval
flow
TIBCO
interface
SAP ECC
~ 60 csv
files
PR info
XML
Users
Catalog management and
approval
Approval
flow
Suppliers
GDS
(user roles)
User
info
Ariba Network
Ariba Reporting SAP BIreports
~ 45
manual
files

32. P2O preparation was done through a project
team and the procurement organization
• Project team
Focus on technical solution and customizing P2O functionalities
Onboarding suppliers for e-invoicing
Set-up communication plan and change management approach
• Procurement team
Catalog preparations and channel strategies
Execute change management activities
„Walk the talk‟
© 2014 Ariba – an SAP company. All rights reserved.34

33. Category managers were tasked to prepare a
channel strategy
© 2014 Ariba – an SAP company. All rights reserved.35
Non
catalog
No PO
flow
Category Sub-category Sub-sub-category
punchout
cif
internalsupplier
NonCatalogPOwith
Collaborative
Requisitioning
ServicesProcurement
Releaseordercontract
(nocommit)
BPO-Releaseorder
contract(metcommit)
NonreleaseBPO/Non
releasecontract(P2P)
RegularPO
Invoiceonly
Training - general X
Training - specific (technical) X X X
Recruitment - Scholarships X
Recruitment - Executive search X B
Recruitment - Search and selection -
(Non-executive)
X X X
Housing B X X
Lease Cars - monthly allowance B X
Lease Cars - fuel B X
Relocation services US, APAC X B X
Relocation services UTS - Vhv B X
Compensation & Benefits B X X
Financial - Accounting X B X
Pay roll services, Employee Benefit
admin
X B X
Insurances B X
Internal X X
Labor Market X X B
IP B X
Law Firm X B X
Milestone based X B X
Time and material B X
Time Based X
Professional
Services
HRO People Development
HRO Mobility
HRO Compensation and
Benefits
Financial Services
Communications
Legal Services
Consultancy
Catalog Non Catalog
catalog PO collaborative (Non) release BPO
• Keep Category responsible for full end-
to-end process in their own category
• Increase adoption of new system in
Procurement
• Enable good content at the moment of
go-life  impact for end-users

34. Communications & change management
started early
• Own „brand‟ for the new solution: EasyBuy
• Channel strategy owned by Procurement team, not the Project
• Training materials and dedicated website
• Instruction sessions for all requestors in all regions
• Go life in waves
© 2014 Ariba – an SAP company. All rights reserved.36

35. Status today… improvements everywhere
37
Strategic Workstream Now
Savings Doubled
Return on Investment Doubled
Spend covered by a contract Increased with 10%
Consolidation Down to 3.5%
% Spend covered by an
approved strategy
Increased with 90%
Operational Workstream Now
Catalog orders Increased with 20%
% of e-invoicing Increased with 40%
Spend covered by a PO Increased with 20%
© 2014 Ariba – an SAP company. All rights reserved.

36. Learning along the way….
• The Strategic Program went faster, yielded faster results, and was easily accepted
• The Operational Program was more difficult to explain; processes are more integrated
with other stakeholders
• Not only Procurement should want the solution, also ALL stakeholders
• Understand the impact on your own processes; willingness to change and adapt
• IT architecture is to be understood early in the process; don‟t think it is all SAP now, so
it will work
• Find an project manager or consultant that has experience with the Ariba solution (or
the solution you have chosen).
© 2014 Ariba – an SAP company. All rights reserved.38

37. Are we there yet???
© 2014 Ariba – an SAP company. All rights reserved.39