VALUE BASED Game PROCUREMENT SEA M LESS IN TEG RA TIO N O F V A - PDF document

11/16/2017 Christopher VALUE BASED Game PROCUREMENT SEA M LESS IN TEG RA TIO N O F V A LUE BA SED P RO C UREM EN T IN O UR D IG ITA L W O RLD Nove mbe r 2017 Vic e Pre side nt Pro c ure me nt – Sta da WHY CHALLENGE THE STATUS QUO ? “in Italy for 30 years under the Borgias they had warfare, terror, murder, and bloodshed, but they produced Michelangelo, Leonardo da Vinci, and the Renaissance. In Switzerland they had brotherly love - they had 500 years of democracy and peace, and what did that produce? The cuckoo clock” * * T he T hird Ma n 1949 ~ Ha rry L ime 1

11/16/2017 WHAT IS VALUE BASED PROCUREMENT ? T hink o f the e ntire e c o syste m in whic h pro c ure me nt o pe ra te s a nd the wa ys in whic h we influe nc e it? Pro duc t De ve lo pme nt, L a unc h, Pla nning , Ma nufa c turing , Ma ke o r Buy de c isio n ma king , supply c ha in, distrib utio n, lo g istic s, ma rke ting a nd e ve n dispo sa l How br oad should we think? • Pro c ure me nt is a do o r to the o utside wo rld, a po rta l to b e st pra c tic e a c ro ss a wide ra ng e o f supplie r a nd b usine ss type s a nd a s suc h a g re a t wa y to ha rve st b e st pra c tic e . T he re is no sha me in c o pying wha t is b e ing do ne b e tte r e lse whe re . • Be st pra c tic e ma y influe nc e in b o th c o st a nd e ffic ie nc y yo u sho uld sho w no fe a r in de plo ying ne w mo de ls o r ha ving the c o ura g e to te st yo ur o wn. • E ve rything is a b usine ss c a se , b ut think b e yo nd c o st, think o f the impa c t o n b o th upstre a m a nd do wnstre a m func tio ns a nd b uild this into yo ur hypo the sis. WHY MOVE TO A VALUE BASED MODEL ? I c o uld g ive yo u the te xt b o o k o n wha t a va lue b a se d Pro c ure me nt syste m is a ll a b o ut, b ut fo r this se ssio n I wo uld ra the r fo c us o n a ra ng e o f a c tivitie s tha t yo u c a n e mb a rk o n e ithe r sing ula rly o r to g e the r tha t will a c c e le ra te yo ur va lue jo urne y Whe r e do we star t ? • Multiple I te ra tio ns o f c a te g o ry ma na g e me nt a re de ple ting tra ditio na l ro ute s to sa ving • Co nstra ine d e c o no mie s a re tig hte ning ma rg ins a nd inc re a sing b o tto m line fo c us • We use the te rm pa rtne r ve ry lo o se ly ~ Va lue b a se d pro c ure me nt b uilds true pa rtne rships • Mo ve a wa y fro m a dve rsa ria l ne g o tia tio n b a se d re la tio nships to c o lla b o ra tive o ne s with e le me nts o f o pe n b o o k a nd inno va tio n ta rg e ts • Va lue b a se d pro c ure me nt e ng a g e s us with the b usine ss a nd inte g ra te s us into o ur upstre a m a nd do wnstre a m func tio ns 2

11/16/2017 FROM ADVERSARIAL TO TOTAL COST OF OWNERSHIP Ma ny o rg a nisa tio ns la c k the c a pa b ility to tra c k to ta l c o st o f o wne rship, e ve n a t a supe rfic ia l le ve l. I t is impo rta nt to g e t yo ur he a d a ro und this ! Purchase Order Lowest Purchase Price Total Acquisition Cost Me ga $$$ AS A BASIS FOR TODAYS DISCUSSION Co mmunic a tio ns I nno va tio n ME I T Supplie r De ve lo pme nt F o unda tio n (Qua lity) VAL UE 3

11/16/2017 THE FOUNDATION Ac tivity Ba se d Ma turity Pro filing Ma turity Awa re ne ss Unde rsta nding Inno c e nc e Co mpe te nc e E xc e lle nc e L o w • Sa ving s Ge ne ra tio n • Sa ving s Ge ne ra tio n • Sa ving s Ge ne ra tio n • Sa ving s Ge ne ra tio n • Sa ving s Ge ne ra tio n a g a inst ta rg e ts a g a inst ta rg e ts a g a inst ta rg e ts a g a inst ta rg e ts a g a inst ta rg e ts • Sa ving s Ge ne ra tio n • Sa ving s Ge ne ra tio n • Sa ving s Ge ne ra tio n • Sa ving s Ge ne ra tio n a g a inst a g a inst a g a inst a g a inst b e nc hma rks b e nc hma rks b e nc hma rks b e nc hma rks • Da ta a va ila bility • Da ta a va ila bility • Da ta a va ila bility • Da ta a va ila bility • Ma rke t Ana lysis • Ma rke t Ana lysis • Ma rke t Ana lysis • Ma rke t Ana lysis • Supplie r Ana lysis • Supplie r Ana lysis • Supplie r Ana lysis • Oppo rtunity • Oppo rtunity • Oppo rtunity Ana lysis Ana lysis Ana lysis • Stra te g y • Stra te g y • Stra te g y Do c ume nte d Do c ume nte d Do c ume nte d • Me tho ds De plo ye d • Me tho ds De plo ye d • Me tho ds De plo ye d • Se nio rity o f T e a m • Se nio rity o f T e a m • Ca pa b ility o f T e a m • Ca pa b ility o f T e a m • Spe nd le ve ls • Spe nd le ve ls • One -o ff a ppro a c h to • Ro le Cla rity • Ro le Cla rity E ffo rt Supplie rs – L e tte r • E -Pro c ure me nt • L e ve ra g e d • Be nc hma rke d a ppro a c h Purc ha sing po we r a nd Ne g o tia tio n • Optimize d supplie r • L e ve ra g e d Appro a c h b a se • Sho uld Co st a ppro a c h • Re duc tio ns o ve r • Ca te g o riza tio n • Re duc tio ns o ve r ye a rs in ye a rs in re turn fo r re turn fo r lo ng e r te rm. lo ng e r te rm. • E -Auc tio n • E - Auc tio n • Supplie r • Supplie r Ra tio na liza tio n • Supplie r Ra tio na liza tio n • Inc e ntivize d c o ntra c ting Ra tio na liza tio n • L o w Co st So urc ing / • Inc e ntivize d • Inc e ntivize d Outso urc ing c o ntra c ting c o ntra c ting • Supplie r Wo rksho ps – • L o w Co st So urc ing / • L o w Co st So urc ing / Co lla b o ra tio n Outso urc ing Outso urc ing • Outso urc ing • Supplie r Wo rksho ps – • L e a n Pro c ure me nt • Supplie r Wo rksho ps – L o w Co st So urc ing • Ope n Inno va tio n Co lla b o ra tio n Co lla b o ra tio n • Supplie r Wo rksho ps – • L • L e a n Pro c ure me nt e a n Pro c ure me nt Co lla b o ra tio n • Ope n Inno va tio n • Ope n Inno va tio n T o o ls • L e a n Pro c ure me nt • Ope n Hig h • Ope n Inno va tio n Inno vatio n THE FOUNDATION Cr e ate a Cate gor y for Innovation / Pr oc e ss Impr ove me nt One o f the q uic ke st c ha ng e drive rs whic h I e mplo ye d wa s to c re a te c a te g o ry he a ds fo r no n-c o nve ntio na l c a te g o rie s……….. Innovation - I e mplo ye d a n e ng ine e r with a n MBA, so me o ne with a n e xplo ring mind who kno ws o ur spe c ific industry b ut a lso ha s the c a pa b ility a nd de sire to disc o ve r ne w a nd b e tte r wa ys. Pr oc e ss Impr ove me nt –I e mplo ye d a le a n / six sig ma g uru who ne w a little a b o ut pro c ure me nt a nd a lo t a b o ut pro c e ss impro ve me nt. He wo rke d o n impro ving the pro c ure me nt te a ms c a pa b ility in this a re a , he ld supplie r wo rksho ps a nd la unc he d a nd ma na g e d va lue re la te d pro je c ts / pro g ra ms, fo c using o n re duc ing imple me nta tio n time I a lso hire d a n e xpe rt knowle dge manage r ………………. 4

11/16/2017 THE FOUNDATION Cre a te Re fe re nc e T o o ls We Don’t Know what we don’t Know T r anspar e nc y to fac ilitate ope n book c osting, highe r le ve ls of e asily ac c e ssible mar ke t knowle dge , c le an she e ting … … .Quic k and Simple 1 appr oac h Re se ar c h func tion for diffic ult to ac quir e data Pe r sonalize d c ommodity page s for e ac h sour c ing / pur c hasing 2 pr ofe ssional with ke y c ommoditie s whic h ar e por tfolio r e le vant, inte r ne t ale r ts and me ssaging. Re fr e she s on star t-up. Soc ial ne twor king as a knowle dge manage me nt tool… … ..the futur e of 3 knowle dge manage me nt, c ontain it whe r e it give s you a c ompe titive advantage . Cr e ate r e fe r e nc e tools both as a c ate gor y guide r olle d up into a 4 manual and a spe nd c ube basis. Ke e p fr e sh. Allow ac c e ss for ke y busine ss par tne r s. Don’t for ge t har d c opie s whe r e r e le vant THE FOUNDATION Inc e ntivize value add ac tivity Pa ying to sa ve so unds c o unte r intuitive ……… Po te ntia l Upside Conve ntional Pr ic e $100 - - $ ++$ +++ Inc e ntivize d Volume - - Vol Vol I nc e ntivize d Po rtio n • I nc e ntivize o n Vo lume o r Pric e o r b o th • E nsure tha t upside is c o ve re d b y the va lue o f the impro ve me nt 2X+ • Ha ve fle xib ility a ro und wha t yo u inc e ntivize a ro und, pro c e ss impro ve me nt, inno va tio n, spe e d, c o -de ve lo pme nt a re a ll va lue a dd • Yo u ma y inc e ntivize fo r se ve ra l diffe re nt e le me nts…..Qua lity, HSE e tc . • T a ke c a re no t to o ve r-pe na lize 5