Cost Containment At The Container Store - A Lesson in Smarter Spending

Containing Costs at The Container Store A Lesson in Smarter Spending Welcome to Today’s Web Seminar! Presented by: The Institute for Supply Management TM and Coupa We’ll be starting momentarily. © Copyright 2009. Institute for Supply ManagementTM; All Rights Reserved.

Terri Tracey, CAE Vice President, Technology and Publications Institute for Supply Management® Terri is ISM’s Vice President of Technology and Publications. She is responsible for all ISM’s technology applications, including integration of all internal and external association management, web and ecommerce systems. Terri also serves as the editor of ISM’s monthly magazine, Inside Supply Management ®, of Supply Chain Management. Additionally, she is responsible for the montand oversees all print and online publications, including editorial, design and outsourced relationships for the magazine, supplements, e- newsletters, and the Journal hly Manufacturing and Non-Manufacturing ISM Report on Business® areas as well as the R. Gene Richter Awards program for Leadership and Innovation in Supply Management.

  Saving 36 hours a week that was previously wasted maintaining in- house inventory and manually shipping supply orders by integrating their supply management process with warehouse management and supplier systems.   Giving managers a reality check of just how much they are spending by stockpiling and over-ordering supplies by exposing end costs to inventory managers.   Accurately charging supply costs to individual stores based on supply usage and not just by arbitrary measures like percent of sales volume.   Delivering greater price discounts by creating a supply management machine that automates the req-to-pay process and allows purchasing to focus more on negotiating strategic contracts instead of pushing paper.

Scott Jones Purchasing Manager The Container Store With more than decade worth of experience, Scott Jones is responsible for the day-to-day management and direction of purchasing, as well as expense planning and analysis, at The Container Store. Since joining in 1989, Scott has helped The Container Store grow from 7 stores to 47 stores across the country. Scott holds a Bachelor of Science in Business & Marketing from Stephen F. Austin University.

Mike Morrow Purchasing Agent The Container Store An expert in The Container Store’s use of non-merchandise goods, Mike Morrow has spend the last 5 years managing competitive price negotiation and purchase of non-merchandise goods and services consumed at The Container Store’s corporate office, distribution center, and store locations across the country. In addition, Mike is responsible for The Container Store’s e- procurement planning and implementation. Mike holds a Bachelor of Science from Texas A&M University and a Master of Arts from Southwestern Theological Seminary.

  If you could achieve just one of the following, what would have the biggest impact on your organization?  Get employees to actually use the proper purchasing system and follow procedures  Eliminate purchasing “paper pushing” (i.e. rekeying data)  More efficiently manage supplier relationships and streamline the purchase fulfillment process  Real-time visibility into spend as it happens in order to take immediate action to eliminate wasteful spend  Automate manual tasks so purchasing can spend more time on strategic activities (i.e. contract negotiations)  Other

Welcome to The Container Store •  The Container Store offers more than 10,000 time and space-saving storage and organization solutions divided into 14 different lifestyle departments such as closet, kitchen, home office and travel. –  Located in 19 states, in 23 markets and has 47 store locations across the country. –  Projecting an excess of half a billion in sales for fiscal 2009. –  Has about 4000 GREAT employees across the country. –  Has been named to the top of FORTUNE magazine’s annual list of “100 Best Companies to Work For” the past ten years. Cost Containment at The Container Store  7 

Non-Merchandise Supply Management •  Everything a store needs to conduct business –  Bags –  Aprons –  Office and Cleaning Supplies •  Non-merchandise supply inventory centrally managed at Distribution Center Cost Containment at The Container Store  8 

End-to-End Process Challenges •  Receiving Supply Orders –  Costly, manual process –  Stores fill out an excel spreadsheet –  Email to centralized procurement –  All items pulled from inventory and shipped to each store along with merchandise •  Fulfilling Supply Orders –  1 truck every 7 to 10 days –  Limited amount of truck space for supplies –  Limited amount of warehouse space to devote to supplies Cost Containment at The Container Store  9 

Needs Checklist Cost Containment at The Container Store  10 

The Options Doing nothing, Full service stay with the inventory e-Procurement status quo companies Cost Containment at The Container Store  11 

An End-to-End Solution ✔  Maintain control & visibility + Dashboards & benchmarks ✔  Intuitive, easy-to-use ✔  Does not require a lot of + Support & service training ✔  Scalable, adaptable ✔  Direct shipments from key vendors ✔  Integrate with warehouse management Cost Containment at The Container Store  12 

What We Achieved Company Wide Success Accounting Distribution Center Purchasing •  Eliminating 100% of •  Automatically pulling •  Writing over 50% fewer department keying orders into WMS Purchase Orders per errors •  Saving 36 hours a week week •  Regaining wasted time by eliminating manual •  Managing inventory by working with only rekeying levels for 62% fewer on approved invoices •  Freeing up over 150 supply skus picking locations •  Significantly reducing invoice processing Store Location time - 5 minutes for limitless number of invoices vs. 1 to 2 •  Visibility to supply cost minutes per invoice •  Ease of use – less time spent ordering supplies •  More time spent with customer Cost Containment at The Container Store  13 

What We Learned 5 Lessons to Promote Smarter Spending 1.  Employee Empowerment. 2.  Stop being the middle man. 3.  Time really is money! 4.  Close, isn’t close enough. 5.  Create a supply management machine. Cost Containment at The Container Store  14 

Employee Empowerment Expose employees to how much things cost… THEN THEN No price lists, employees Employees not aware of ordered supplies with no financial impact from stock visibility to ordering history piling supplies Cost Containment at The Container Store  15 

Employee Empowerment Expose employees to how much things cost… THEN THEN No price lists, employees just Employees would stock pile ordered whatever they felt supplies – even if there they needed wasn’t an immediate need …and they’ll critically evaluate need. NOW NOW Employees see how much Employees are more cost each item costs and the total conscious, buying only the for their entire order necessities Cost Containment at The Container 16 Store

How did we do it? 1.  Products listed in the catalog show actual prices 2.  When creating a requisition, employees can easily see the total amount they are spending 3.  They can also see the approval process their order will go through – if it goes to the CEO, would you think twice about submitting? Cost Containment at The Container Store  17 

Stop being the middle man. Still maintain purchasing visibility and control… THEN THEN Purchasing maintained Every order had to be inventory and managed handled by purchasing fulfillment Cost Containment at The Container Store  18 

Stop being the middle man. Still maintain purchasing visibility and control… THEN THEN Purchasing maintained Every order had to be inventory and was handled by purchasing responsible for packing and shipping supplies …without wasting time packing and shipping every supply needed. NOW NOW Automatically enforce approval processes and Suppliers ship directly to workflows – no need to touch retail locations every order! Cost Containment at The Container Store  19 

How did we do it? 1.  Orders are automatically sent to the appropriate approvers 2.  Once approved, they are sent electronically to suppliers 3.  Suppliers fulfill orders and ship directly to retail locations 4.  Retail locations confirm receipt 5.  Vendors are paid Cost Containment at The Container Store  20 

Time really is money! Provide store Inventory Coordinator with an easy-to- use tool… THEN THEN Products were hard to find It took a few hours to place an and spreadsheets difficult to order use Cost Containment at The Container Store  21 

Time really is money! Provide store inventory managers with an easy-to-use tool… THEN THEN Products were hard to find It took a few hours to place an and spreadsheets difficult to order use …and they’ll have more time to spend with customers. NOW NOW Online catalogs with search and pictures makes it easy to It takes a few minutes! find what is needed Cost Containment at The Container Store  22 

How did we do it? 1.  Intuitive, user friendly UI with item pictures easily identify needed supplies 2.  System defaults, no need to worry about which supplier, which cost center, etc. 3.  A few clicks to submit 2 1 3 Cost Containment at The Container Store  23 

Close, isn’t close enough. Get an accurate view into usage and costs… THEN THEN Supply costs were Two systems not able to determined based on % of communicate sales volume Cost Containment at The Container Store  24 

Close, isn’t close enough. Get an accurate view into usage and costs… THEN THEN Supply costs were Two systems not able to determined based on % of communicate sales volume …and ensure that the right budgets are charged. NOW NOW Bridge of communication Costs are based on actual built between two systems usage Cost Containment at The Container Store  25 

How did we do it? 1.  Store supply needs are managed through a single platform 2.  Each purchase is assigned to the appropriate cost center 3.  Spend reports accurately reflect how much each store has used Cost Containment at The Container Store  26 

Create a supply management machine. Use technology to streamline and automate… THEN THEN Costly, time consuming Excel Majority of time spent based process pushing paper Cost Containment at The Container Store  27 

Create a supply management machine. Use technology to streamline and automate… THEN THEN Costly, time consuming Excel Majority of time spent based process pushing paper …and have more time to spend on strategic activities. NOW NOW Automated, online solution Analyzing spend data, that alerts when action is negotiating better prices, needed building supplier relationships Cost Containment at The Container Store  28 

How did we do it? 1.  Deployed a SaaS solution that is easy to customize and integrate 2.  Standardized and automated workflows Store Inventory Manager •  Weekly supply orders •  Supply receipt confirmation 3.  Clearly defined roles, responsibilities and accountability Suppliers •  Timely fulfillment •  Direct shipment Purchasing •  Handle exceptions •  Negotiate savings Cost Containment at The Container Store  29 

Summary You can achieve these kind of results! •  Significantly reducing invoice processing time - 5 minutes for limitless number of invoices vs. 1 to 2 minutes per invoice •  Saving 36 hours a week by eliminating manual rekeying •  Writing over 50% fewer Purchase Orders per week •  Managing inventory levels for 62% fewer supply skus Just remember the lessons. 1. Employee empowerment. 2. Stop being the middle man. 3. Time really is money! 4. Close, isn’t close enough. 5. Create a supply management machine. Cost Containment at The Container Store  30 

  Looking ahead to 2010, what is the biggest challenge you will need to overcome?  Having to do more with less resources  Achieving aggressive cost cutting goals  Enforcing purchasing policies and processes  Streamlining the procurement process for greater efficiency  Implementing / upgrading the procurement system  Negotiating better supplier prices / contracts

Jason Hekl Vice President of Marketing Coupa Software Jason Hekl is responsible for all of Coupa’s marketing initiatives, including demand generation, messaging, and marketing communications. Prior to joining Coupa, Jason was with InQuira, where helped grow revenues nearly ten-fold over a four year period. Jason earned a Master of Business Administration degree from the Ross School of Business at the University of Michigan, and a Bachelor of Arts degree in International Relations and Economics from the University of Delaware.

The Question for 2010 How do you save 10% more with FEWER resources in ½ as much time?

The Question for 2010 How do you save 10% more with FEWER resources in ½ as much time? Assess your suppliers Analyze your spend

The Question for 2010 How do you save 10% more with FEWER resources in ½ as much time? Practice smarter spending

It’s hard to run with a pebble in your shoe… Photo by Prabhu

It’s hard to run with a pebble in your shoe… 1.  Ease of Use 2.  Eﬀort to Implement and Maintain 3.  Cost Photo by Prabhu

SaaS and the Power of One Platform One Infrastructure  Deploy once. We update. We support. We maintain One Oﬀ  - Risky, resource-intensive implementations Enterprise - Complex, long upgrades Software - Slow pace of innovation - Difficult to support - Costly and painful to maintain (higher TCO)

5 Ways to Achieve Your Goals with e-Procurement in 2010 1.  Spend Under Management Attract more spend at the top of the funnel 1 2.  Compliance With purchasing guidelines and 2 negotiated contracts 3.  Better Deals 3 Crowd source savings on one-oﬀ purchases 4.  Control 4 Prevent wasteful spending before it happens 5 5.  Eﬃciency Increase velocity through the funnel, and save as a result

If only it were this easy…

It is. Provide a requestor experience that is faster and easier, than every alternative, and you will be amazed by what happens.

Addressing the adoption problem with a compelling requestor experience SUM 1. Know what’s allowed, and what’s not.

Addressing the adoption problem with a compelling requestor experience SUM 1. Know what’s allowed, and what’s not. Compliance 2. Guide requestors to preferred suppliers and contract pricing, greatly reducing “maverick” spend

Addressing the adoption problem with a compelling requestor experience SUM 1. Know what’s allowed, and what’s not. Compliance 2. Guide requestors to preferred suppliers and contract pricing, greatly reducing “maverick” spend Best Pricing 3. And for those ad-hoc items not covered by existing contracts, ﬁnd deals online

A ﬂexible approval workﬂow engine that you can change without help Control

A ﬂexible approval workﬂow process that works for busy managers Control

Proactive alerts and spend dashboards to prevent mistakes before they occur Control

Achieve greater eﬃciencies in the req to PO process Avoidance 5% Self Approval 29% Efficiency

Achieve greater eﬃciencies in the req to PO process Cycle Time 23 Hours Savings 9.5% of Spend Avoidance 5% Self Approval 29% Efficiency

5 Ways to Achieve Your Goals with e-Procurement in 2010 1.  Spend Under Management 1 Attract more spend at the top of the funnel 2 2.  Compliance With purchasing guidelines and negotiated contracts 3 3.  Better Deals Crowd source savings on one-oﬀ purchases 4 4.  Control Prevent wasteful spending before it happens 5 5.  Eﬃciency Increase velocity through the funnel, and save as a result

They’re not making hay of pennies. Spend Under Mgmt + 20% Savings 9.5% of Spend

Learn More 1 2 3 +1 650.931.3200

Contact Information Scott Jones Purchasing Manager The Container Store scott@containerstore.com Mike Morrow Purchasing Agent The Container Store mjmorrow@containerstore.com Jason Hekl Vice President, Marketing Coupa Software jason.hekl@coupa.com Thank You for attending this Web Seminar!

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Cost Containment At The Container Store - A Lesson in Smarter Spending

by Coupa Software on Dec 14, 2009

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Cost Containment At The Container Store - A Lesson in Smarter Spending — Webinar Transcript