Stéphane GUELAT                                                                    Head of Strategic Procurement EMEA     ...
Eaton Corp & SMART SuppliersDEVELOPING ATTRACTIVITYTO BECOME A CUSTOMER OF CHOICEStéphane GuélatHead of Strategic Procurem...
Eaton CorporationEaton is a diversified $ 16Bn power management company and global technology leader.Eaton provides energy...
Eaton’s vision among stakeholders Eaton’s vision is to be the most admired company within its markets.    Is Eaton attrac...
Our end to end Supply Chain                              © 2013 Eaton Corp.                              All rights reserv...
Our end to end Supply ChainEaton purchase every year:•   230’000 tons of steel•   129’000 tons of grey iron•   40’000 tons...
Our end to end Supply Chain• Long & complicated Supply Chain   Simplify, standardize, rationalize• International business...
How is Eaton attractive to this supplier?   Real Case from   one of our suppliers   => Eaton is position #6               ...
Selection criteria for being a STRATEGIC supplier What are the criteria to select a strategic suppliers ? •   Meet basic r...
Selection criteria for being an ATTRACTIVE customer? What are the criteria to be selected as an attractive customer? •   C...
The SMART supplier •   SMART suppliers are organizations driving     Innovation and Performance Excellence. •   SMART supp...
Why aim to be an attractive customer? • Most attractive customer will:     o Get access to Brainpower     o Receive Develo...
How does this sound familiar to you as a customer? • Customers sometimes (often) do not pay invoices   according to agreed...
How does this sound familiar to you as a customer? • Suppliers ship products with inferior specs –   especially when suppl...
Change the GameDRIVE INNOVATION AND PERFORMANCE EXCELLENCE           BEST TOTAL COST           PERFECT SERVICE          ...
Change the GameDRIVE INNOVATION AND PERFORMANCE EXCELLENCE           BEST TOTAL COST           PERFECT SERVICE          ...
Change the GameDRIVE INNOVATION AND PERFORMANCE EXCELLENCE  Thetransformation           BEST TOTAL COST       PERFECT SE...
Innovation Drives Excellence, Achievements and Savings                                                         © 2013 Eato...
Innovation Drives Excellence, Achievements and Savings        The procurement function is also:        - A relationship bu...
Innovation Drives Excellence, Achievements and Savings      Eaton, Supplier survey      October 2012      Q: What strategi...
Innovation Drives Excellence, Achievements and Savings                                                         © 2013 Eato...
Value derived from joint business process improvements                                                         © 2013 Eato...
Selection criteria for being an ATTRACTIVE customerQuestion from the SMART suppliers where Eaton needsto position itself i...
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Stephane Guelat, Head of Strategic Procurement at Eaton Corporation - Developing attractivity to become a customer of choice

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Stephane Guelat, Head of Strategic Procurement at Eaton Corporation spoke at the CPO Event UK 2013

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  • We know that continued change and agility will be key to continuing to compete successfully. We begin Eaton’s “second century” as a fully transformed company. Being today a global power management company, Eaton works with suppliers who deliver the best quality, value and service at the most competitive cost.
  • Our strategic suppliers are innovative and dedicated to driving continuous improvement in their operations. Together we address all aspects of cost reduction, waste elimination and efficiency improvement in a dynamic global environment.
  • We are competiting with the big guys: Schneiderm ABB & co.How do we improve our ranking from #6 to #1. ? Even being in the Top 3 would be great, wouldn’t it be ?
  • BCC: Best Cost Country = Globally Competitive regionsImprove supply chain and material management capabilities to improve lead times, component quality and security of supply
  • Stephane Guelat, Head of Strategic Procurement at Eaton Corporation - Developing attractivity to become a customer of choice

    1. 1. Stéphane GUELAT Head of Strategic Procurement EMEA DEVELOPING ATTRACTIVITY TO BECOME A CUSTOMER OF CHOICEThis presentation contains Eaton Confidential and Proprietary Information – February 2013. The participants are subject tostrict confidentiality thereto. The Participants are not authorized at any time to wholly or partially use, reproduce and/or disclosein any manner this presentation to any third-party without the prior written authorization of Eaton.
    2. 2. Eaton Corp & SMART SuppliersDEVELOPING ATTRACTIVITYTO BECOME A CUSTOMER OF CHOICEStéphane GuélatHead of Strategic Procurement EMEA © 2013 Eaton Corp. All rights reserved.
    3. 3. Eaton CorporationEaton is a diversified $ 16Bn power management company and global technology leader.Eaton provides energy efficient solutions for electrical, mechanical, and fluid applications.And we’ve been doing business for 100 years. Revenue Operating margin Cities & Industrial & Information Buildings Machinery Technology EBIT Cash Conversion Cycle DSO + DOH – DPO Transport Infrastructure Energy & Utilities © 2013 Eaton Corp. All rights reserved.
    4. 4. Eaton’s vision among stakeholders Eaton’s vision is to be the most admired company within its markets.  Is Eaton attractive to its Customers ? Yes, if Customers say, “We want to do more business with Eaton.”  Is Eaton attractive to its Shareholders ? Yes, if Shareholders say, “Eaton is one of my best investments.”  Is Eaton attractive to its Employees ? Yes, if Employees say, “I am proud to be part of the Eaton team.”  Is Eaton attractive to its Suppliers? Why should Eaton be attractive to its Suppliers? © 2013 Eaton Corp. All rights reserved.
    5. 5. Our end to end Supply Chain © 2013 Eaton Corp. All rights reserved.
    6. 6. Our end to end Supply ChainEaton purchase every year:• 230’000 tons of steel• 129’000 tons of grey iron• 40’000 tons of plastics• 26’000 tons of copper• 18’000 tons of aluminumThis material is then machined,stamped, extruded, turned, forged, painted and tested. © 2013 Eaton Corp. All rights reserved.
    7. 7. Our end to end Supply Chain• Long & complicated Supply Chain  Simplify, standardize, rationalize• International business  Playground for international players• High Quality & Service expectations  Focus on Supply Excellence• Competitive environment  Total Cost of Ownership• 700+ Direct material suppliers  Focus, Select, Award, Consolidate, Collaborate, Involve, Deliver Synergies, Business continuity, Added Value © 2013 Eaton Corp. All rights reserved.
    8. 8. How is Eaton attractive to this supplier? Real Case from one of our suppliers => Eaton is position #6 © 2013 Eaton Corp. All rights reserved.
    9. 9. Selection criteria for being a STRATEGIC supplier What are the criteria to select a strategic suppliers ? • Meet basic requirements: competitive pricing, quality / certifications, service delivery, customer satisfaction • Meet extended requirements: competitive value, flexibility, standardization, complexity reduction, business continuity • Dedicate resources to the joint business relationship: people – process – technology – capacity – investments • Grant access to brainpower, deliver innovation • Align to Eaton’s strategic goals © 2013 Eaton Corp. All rights reserved.
    10. 10. Selection criteria for being an ATTRACTIVE customer? What are the criteria to be selected as an attractive customer? • Can Eaton be an attractive customer ? • Eaton have 12’000 unique suppliers in Europe • Can / will Eaton be attractive to all ? © 2013 Eaton Corp. All rights reserved.
    11. 11. The SMART supplier • SMART suppliers are organizations driving Innovation and Performance Excellence. • SMART suppliers attract Talents, invest in Technologies and are looking for great companies to serve and build mutual competitive advantage. • SMART suppliers proactively dedicate resources to the joint relationship and grant you access to their brainpower for best total cost & perfect delivery and services. STRATEGIC SUPPLIER  What are you doing to become attractive = to these organizations ? SMART SUPPLIER © 2013 Eaton Corp. All rights reserved.
    12. 12. Why aim to be an attractive customer? • Most attractive customer will: o Get access to Brainpower o Receive Development efforts o Get innovation & best practices shared • Devotion to Eaton, not to its competitors ! • Our role in Procurement: o Identify the SMART suppliers o Get the SMART suppliers to select us © 2013 Eaton Corp. All rights reserved.
    13. 13. How does this sound familiar to you as a customer? • Customers sometimes (often) do not pay invoices according to agreed terms • Customers overestimate demand to ensure suppliers will produce enough – and negotiate lower prices • Customers specify tight delivery time windows • Customer places too many orders with average low order size • Customer does too many last minute changes • Customer always push rush order costs on the supplier • Customers push inventory on suppliers (Consignment Stock) © 2013 Eaton Corp. All rights reserved.
    14. 14. How does this sound familiar to you as a customer? • Suppliers ship products with inferior specs – especially when supplies are tight • Suppliers make promises they know they can not always keep • Suppliers overcharge for services not explicitly in the agreement • Suppliers push inventory on customers (Minimum Order Quantity MOQ) What does each party do that cost money to the other party ? What if the parties would engage into Joint business process reengineering to unlock the costly burden we impose each other ? © 2013 Eaton Corp. All rights reserved.
    15. 15. Change the GameDRIVE INNOVATION AND PERFORMANCE EXCELLENCE  BEST TOTAL COST  PERFECT SERVICE  PERFECT QUALITY © 2013 Eaton Corp. All rights reserved.
    16. 16. Change the GameDRIVE INNOVATION AND PERFORMANCE EXCELLENCE  BEST TOTAL COST  PERFECT SERVICE  PERFECT QUALITY © 2013 Eaton Corp. All rights reserved.
    17. 17. Change the GameDRIVE INNOVATION AND PERFORMANCE EXCELLENCE Thetransformation  BEST TOTAL COST PERFECT SERVICE has started  PERFECT QUALITY © 2013 Eaton Corp. All rights reserved.
    18. 18. Innovation Drives Excellence, Achievements and Savings © 2013 Eaton Corp. All rights reserved.
    19. 19. Innovation Drives Excellence, Achievements and Savings The procurement function is also: - A relationship builder agent - A change agent - A partner identifying, selecting and developing attractivity with SMART suppliers - A business process improvement agent © 2013 Eaton Corp. All rights reserved.
    20. 20. Innovation Drives Excellence, Achievements and Savings Eaton, Supplier survey October 2012 Q: What strategic actions are you planning in the next 24 months to become more globally competitive? (check all that apply) A: Out of 8 possible actions, 3.4 strategic actions selected on average by SMART suppliers © 2013 Eaton Corp. All rights reserved.
    21. 21. Innovation Drives Excellence, Achievements and Savings © 2013 Eaton Corp. All rights reserved.
    22. 22. Value derived from joint business process improvements © 2013 Eaton Corp. All rights reserved.
    23. 23. Selection criteria for being an ATTRACTIVE customerQuestion from the SMART suppliers where Eaton needsto position itself in a way to answer YES to every question:• Do we share strategic & transactional data and have we linked our information systems ?• Do we have multiple channels of communication and established escalation paths to a higher level ?• Is the relationship with Eaton built on mutual trust, openness and a network of cross-functional connections ?• Is working for Eaton the best place to learn how to develop the supplier’s competitive advantage ?• Am I working jointly with Eaton on projects to improve inter-company processes ?• Do we jointly use best-cost model and share best practices+ Establish formal strategic procurement organization with standard approach how to build attractivity © 2013 Eaton Corp. All rights reserved.

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