Beyond Cost Savings and Discounts – How to Get Real Value from Your Suppliers
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Most Procurement organizations are adept at driving cost savings and discounts from their suppliers. But are they really getting value in focusing only on this? Join this buyer-seller panel discussion to learn how to become "customer of choice" even in the tightest of supply markets by building multi-faceted supplier management initiatives that provide transparency, foster collaboration, and share risks and incentives with key suppliers.
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Beyond Cost Savings and Discounts – How to Get Real Value from Your Suppliers
- 1. Beyond Cost Savings and Discounts: How to Get Real Value from Your Suppliers Brian Bender, Sr. Director, Global Purchasing, JM Huber Corporation Arielle Owens, Sr. Sourcing Analyst, Bi-Lo Holdings Allison Perdue, Sr. Sourcing Analyst, P2P & SRM, Dick’s Sporting Goods Jeff Bollman, CEO, Next Day Toner Jonathan Fiala, Operations Manager, Next Day Toner March 19, 2014 #AribaLIVE @ariba © 2014 Ariba – an SAP company. All rights reserved.
- 2. Brian Bender, Sr. Director, Global Purchasing, JM Huber Corporation BEYOND COST SAVINGS & DISCOUNTS: HOW TO GET REAL VALUE FROM YOUR SUPPLIERS 2 © 2014 Ariba – an SAP company. All rights reserved.
- 3. 08.03.12
- 4. J.M. Huber Corporation • Purchasing Excellence Program began in 2009 Category Management Performance Management Process Management • E-commerce three toolsets Sourcing Contract Management Spend Visibility 4 © 2014 Ariba – an SAP company. All rights reserved.
- 5. E-Commerce path • Sourcing started in across multiple categories Raw Materials, CAPEX, MRO, Travel, & Logistics • Enabled users in Asia Pacific, Europe, North & South America Each region organized differently in approach Never mandated use • Success came in different looks Auctions RFP/RFI Discovery events • Acceptance across geographies came in different looks Internal & external issues • • 5 Contract Management – Process control and governance Spend visibility – Master data management © 2014 Ariba – an SAP company. All rights reserved.
- 6. Software procurement • • Background: EH&S organization desire to select, contract & implement Global Enterprise Information system consisting of modules in performance management, action tracking, incident reporting, compliance and audit Challenges EH&S & Sustainability one of four core principles for Huber EH&S teams spread across the globe Difficulty in securing clarification on requirements, timing and commitments EH&S enterprise management not one of our core sourcing categories EH&S group considered using outside resources for discovery, bid and award Team had never used the Ariba sourcing tool for a software & implementation project 6 © 2014 Ariba – an SAP company. All rights reserved.
- 7. RFP Process • Ariba project tool to circulate RFP to four suppliers covering: Major core requirements Essential elements required Development timeline Documentation and support tools Training and roll-out Pricing • User & Vendor participation Internal users agreement on RFP requirements External users understanding of the tool Clarification and editing of bid responses in tool Incorporated live script demo’s into the RFP responses 7 © 2014 Ariba – an SAP company. All rights reserved.
- 8. Final Ending • Identified best-in-class application to contract for purchase Acquired all five core modules Finalized contracts for software, licenses and services • Procurement efforts extended through Capital Requisition creation, approval and successful handoff to EH&S project management Used the RFP template to generate the project implementation schedule over the next two years Used RFP results in cash flow schedule development Results provided FTE requirements; both internal & external 8 © 2014 Ariba – an SAP company. All rights reserved.
- 9. Lessons & Recommendations • Overall difficulty in sourcing a category that is considered foreign EH&S Professionals very passionate group Technical requirements in selecting an enterprise IT system • Need to get engaged and stay plugged in Global group constantly changing Longer response times do not necessarily imply lack of interest • Need to demonstrate power of good sourcing effort Non- Purchasing professionals need to be educated on negotiation strategy Software sourcing animal all by itself 9 © 2014 Ariba – an SAP company. All rights reserved. .
- 10. Arielle Owens, Sr. Sourcing Analyst, Bi-Lo Holdings BEYOND COST SAVINGS & DISCOUNTS: HOW TO GET REAL VALUE FROM YOUR SUPPLIERS 10 © 2014 Ariba – an SAP company. All rights reserved.
- 11. Bi-Lo Holdings • • • • 11 Bi-Lo Holdings, LLC is the parent company of BI-LO and Winn-Dixie grocery stores Ninth-largest traditional supermarket chain in the United States The company employs nearly 60,000 associates who serve customers in 686 grocery stores and 482 in-store pharmacies throughout the eight southeastern states of Alabama, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina and Tennessee BI-LO and Winn-Dixie are well-known and well-respected regional brands with deep heritages, strong neighborhood ties, and a proud history of giving back © 2014 Ariba – an SAP company. All rights reserved.
- 12. Supplier Management Initiatives The organization plan and expectations for transparency Comes open dialog which fosters collaboration • • • • • 12 © 2014 Ariba – an SAP company. All rights reserved. Knowledge Management Reporting Requirements Performance Management Risk Reduction & Compliance Maximized Value Beyond Cost Savings
- 13. Collaborative Sourcing Case Study Ariba LIVE 2013 • Networking Reception – Next Day Toner Pilot Program 13 © 2014 Ariba – an SAP company. All rights reserved. Sourcing Process • • • Ariba Supplier Questioner Contract Expiration Supplier Discovery Mining Information Facilities Tour RFP/Auction Process Awarding Business
- 14. Allison Perdue – Sr. Sourcing Analyst – P2P & SRM, Dick’s Sporting Goods BEYOND COST SAVINGS & DISCOUNTS: HOW TO GET REAL VALUE FROM YOUR SUPPLIERS 14 © 2014 Ariba – an SAP company. All rights reserved.
- 15. Company Background • • • Founded in 1948 Headquarters in Pittsburgh, PA Full Line Sports and Fitness Omni-Channel Retailer 558 Dick’s Sporting Goods stores in 46 states 82 Golf Galaxy Stores in 30 states 2 True Runner stores 2 Field & Stream stores 15 © 2014 Ariba – an SAP company. All rights reserved.
- 16. Department Background Non-merchandise Strategic Procurement • • • • 16 Group inception in 2009 Aligned in category functions (imbedded members) Shared service team for project execution Senior Analysts focused on niche areas © 2014 Ariba – an SAP company. All rights reserved.
- 17. Background Sr. Sourcing Analyst – P2P and SRM Previous responsibilities: Managing RFIs, RFPs and auctions for non-merchandise procurement 17 © 2014 Ariba – an SAP company. All rights reserved. Current responsibilities: Implementation and rollout of P2P across the entire store chain and expansion into corporate and DC areas
- 18. RFP/RFQ Bid details • Office Supplies was pilot project with Ariba Sourcing Pro • Multi Round RFx • Toner included as a separate lot • Awarded to Next Day Toner 18 © 2014 Ariba – an SAP company. All rights reserved. Factors considered in award decision • Price • Service levels • Quality and reliability of product • • • Year 5 of supplier/ customer relationship Renegotiated contract in Year 3 Selected to be pilot vendor in store implementation of P2P 60 store pilot 600 store rollout
- 19. Collaboration Give visibility into pending company initiatives Two-way communication Honest dialogue Ask for it! 19 © 2014 Ariba – an SAP company. All rights reserved.
- 20. Jeff Bollman Jonathan Fiala BEYOND COST SAVINGS & DISCOUNTS: HOW TO GET REAL VALUE FROM YOUR SUPPLIERS 20 © 2014 Ariba – an SAP company. All rights reserved.
- 21. Background Jeff Bollman CEO, President Operations Manager • Over 25 years in the printing supplies industry • Dedicated to the strategic growth and overall management of the company • Leverages technology to stay at the forefront of an evolving industry 21 Jonathan Fiala • 9 years with Next Day Toner • Oversees day to day operations of company • Constantly reviews, changes, and pursues new strategies as company grows • Ariba Liaison © 2014 Ariba – an SAP company. All rights reserved.
- 22. Our Company OEM Supplies Compatible Supplies Next Day Toner MFDs Personalized Service 22 © 2014 Ariba – an SAP company. All rights reserved.
- 23. What Drove Our Journey? Customer Demands 23 Customer Service © 2014 Ariba – an SAP company. All rights reserved. Additional Value Beating Competition
- 24. What Were Our Initial Fears? Financial Labor 24 © 2014 Ariba – an SAP company. All rights reserved. • Upfront cash commitment • Ability to obtain realistic ROIs • ROI on time • Other initiatives
- 25. Challenges and Obstacles? Software limitations/customizations 25 © 2014 Ariba – an SAP company. All rights reserved. Communication between all parties and at all levels
- 26. Overcoming the Challenges and Obstacles Communication Clearly designed specifications 26 © 2014 Ariba – an SAP company. All rights reserved. Kick off meeting Regular updates
- 27. The Value of e-Procurement Work Flow Efficiencies Increased Production Decreased Human Errors 27 © 2014 Ariba – an SAP company. All rights reserved. Assisted Sales Growth
- 28. Lessons Learned and Recommendations Communicate Be aware of the expectations Strive 28 with all parties involved placed on you and others for a seamless implementation © 2014 Ariba – an SAP company. All rights reserved.
- 29. Ariba Live 2013 “Discovery Call” Registered as an indirect supplier 29 Manufacturing tour in Van Nuys, CA © 2014 Ariba – an SAP company. All rights reserved. Meeting at corporate headquarters 2014 RFP Invite on Ariba Network
- 30. • • • Participated in a reverse auction RFP through the Ariba network Next Day Toner placed number one in all lots Invited to meet at the Dick’s Sporting Goods corporate office in Coraopolis, PA Partnership is stronger than ever! 30 © 2014 Ariba – an SAP company. All rights reserved. Additional savings year over year Pilot supplier in DSG’s journey to Ariba platform
- 31. What Should Buyers Do Differently? Discovery Calls • Learn about their company • Become educated on their products Meet • Meet your potential business partner • Understand their value Qualify 31 © 2014 Ariba – an SAP company. All rights reserved. • Tour supplier’s facilities • Sample their products
- 32. What Are the Keys to Your Success? Core Values Personalized Service 32 © 2014 Ariba – an SAP company. All rights reserved. Unique Business Story Quality Products
- 33. Questions 33 © 2014 Ariba – an SAP company. All rights reserved.
Editor's Notes
- Communicate:We all recognize communication plays a critical role in ensuring an organizations expectations are meet. From the initial sourcing process to contracting, implementation, and continuous performance management; effective communication by both parties is what provides transparency (Example: RFP Process)Transparency and Collaboration:Once the foundation for collaboration is cemented, the relationship will take shape through trust, transparency and communicationKnowledge Management, Reporting Requirements, and Performance Management are staples in the supplier management process. As you collaborate with suppliers, they will embed an additional level of knowledge regarding the industry of which you may not have know about. Our vendors are the Industry Experts (Example: Grease Trap Pumping)Reporting requirements serve as a two way communication source. From an organization, I expect for my supplier to address any outliers within the report with me. Additionally, we will be monitoring reports as a portion of performance management.Win-Win Situation: (Example: Car Industry Contract Negotiations)Our relationship should reduce risk and ensure we are meeting any compliance requirements that may existWhen it’s all said in done, our relationship should be a win-win situation which maximizes value beyond cost savings via communication, transparency, trust, and collaboration.
- Ariba Live 2013:We all recognize communication plays a critical role in ensuring an organizations expectations are meet. From the initial sourcing process to contracting, implementation, and continuous performance management; effective communication by both parties is what provides transparency (Example: RFP Process)Transparency and Collaboration:Once the foundation for collaboration is cemented, the relationship will take shape through trust, transparency and communicationKnowledge Management, Reporting Requirements, and Performance Management are staples in the supplier management process. As you collaborate with suppliers, they will embed an additional level of knowledge regarding the industry of which you may not have know about. Our vendors are the Industry Experts (Example: Grease Trap Pumping)Reporting requirements serve as a two way communication source. From an organization, I expect for my supplier to address any outliers within the report with me. Additionally, we will be monitoring reports as a portion of performance management.Win-Win Situation: (Example: Car Industry Contract Negotiations)Our relationship should reduce risk and ensure we are meeting any compliance requirements that may existWhen it’s all said in done, our relationship should be a win-win situation which maximizes value beyond cost savings via communication, transparency, trust, and collaboration.