Urgent Purchasing - How One Procurement Professional Took Matters Into His Own Hands to Get Spend Under Control

Urgent Purchasing  How One Procurement Professional Took Ma=ers Into His  Own Hand to Get Spend Under Control   Wednesday, December 16, 2009  Dave Howard  Jason Hekl  Director, Central Purchasing  Vice President, Marke<ng  Reebok‐CCM Hockey  Coupa So?ware 

Poll 1:   How have you personally helped your company save?  I've helped  I've slept in a  develop policy  crummy hotel; 1%  that reduce  I've take a pay cut  wasteful  or reduced my  spending; 8%  hours; 5%  I've helped  improve process  efficiencies; 33%  I've nego<ated  contracts that  offer beLer  pricing; 52%  I've taken an  inconvenient  flight; 1% 

Introducing David Howard David Howard, Director, Central Purchasing Reebok-CCM Hockey With more than 20 years of supply chain and project management experience, David is responsible for the management of resources, processes and key financial and service objectives of purchasing of raw materials for domestic factories, and for non-product supplies and services for the Reebok-CCM Hockey Global Head Office, including 2 large distribution centers. Among his many achievements, David has been able to deliver 10-15% cost reduction in many areas of non-product spend through SKU and supplier consolidation. Prior to joining Reebok-CCM Hockey, David was a subcontracts and project manager at Lockheed Martin Canada, Cost Manager at ASTEC APS, a division of Emerson Electric, and Purchasing Supervisor at Bombardier Aerospace. He holds a Bachelor of Business Administration from St. Francis Xavier University, NS.

Reebok-CCM Hockey A history of challenging conventions to create products that tap into athletes unlimited potential and empower new, innovative ways to solve problems and address issues. •  Headquartered in Montreal, Canada •  Provider of hockey gear and apparel •  Among others, Official sponsor of

Reebok-CCM Hockey Non-Product Purchasing Raw Materials Sourcing Non-product Purchasing •  4 manufacturing facilities in •  Reebok-CCM Hockey Global Canada Headquarters •  $35M in annual spend •  $15M in annual spend

In Need of a Process •  The extent of the process –  No formal written processes, other than Finance Spend Approval Matrix by department –  All departments managed their spend independently and differently, some using manual POs, but most making verbal or e-mail commitments Facility OperaNons  Oﬃce  DistribuNon  MIS OperaNons  & Maintenance  AdministraNon 

No Visibility = No Control •  Monthly reports from Finance •  Includes supplier payments only •  Little visibility on commitments or accruals •  Spend history only payment by account

Problems Beyond Purchasing •  Money being spent without proper approval –  No delays in getting business done –  But spend under-managed and local to functions •  “Monthly” invoice approval exercise –  AP chasing approvals for payment –  Missing most discounts –  Late payments resulting in late fees –  Duplicate payments / no proof of receipt / fraud potential •  Inefficient, multiple ordering and payment systems –  Finished Goods, factory Raw Materials and all non-product invoices, all purchased in separate systems –  Invoice payments are made using a 4th system

An Even Greater Challenge Senior management wasn’t bought into the need for purchasing automation. Believed tighter manual controls would be sufficient to control and manage spend.

Leading the Charge •  Becoming “The Champion” for change –  Would not take NO for an answer –  Did the homework, created a full business case for the requirement –  Publically committed to savings in non-product purchasing

Gaining Momentum •  Internal Audit –  Mandated purchasing processes to manage non- product spend –  Ensure segregation of duties •  Economic Pressures –  Down-sized company resources –  New ways of doing more with less

A Plan to Get Management to Say “YES” •  Conduct a vendor evaluation –  Find a low risk solution Oui Sí Áno •  Perform an ROI analysis –  Determine its potential impact YES Ndiyo Ja •  Phased roll out Hai –  Identify points of failures, Na'am repeat successes

Conducting the Vendor Evaluation Evaluation Options Add-on Factory MRP Modules to Parent- Purchase 3rd Tools Existing A/P Company Tools Party Tools Tool

Conducting the Vendor Evaluation Evaluation Checklist   Ease of Entry   Annual Operating Cost   Functionality / Best Practice Alignment   Ease-of-use / Process Automation w/ Workflow   Segregation of Duties / Audit Trail   Scalability   IT Independence   Real-time Dashboard Reporting   Create Self-Enforcing Process / Controls

Conducting the Vendor Evaluation Why Coupa? ✔   Ease of Entry No CAPEX to push through corporate approvals ✔   Annual Operating Cost Annual cost vs. anticipated “easy” savings ✔   Functionality / Best Practice Alignment Automation, speed of spend ✔   Ease-of-use / Process Automation w/ Simple Google, Amazon type experience Workflow ✔   Segregation of Duties / Audit Trail Segregated duties with password approvals for audit ✔   Scalability Easily add users, business groups ✔   IT Independence No hardware or software to support ✔   Real-time Dashboard Reporting Alerts, immediate action ✔   Create Self-Enforcing Process / Controls Dynamic, flexible controls

Determining Potential Impact ROI Analysis •  Analysis on short-list vendors –  2 license purchases w/ on-site implementation & support requirements –  2 SaaS (software-as-a-service) systems, including Coupa •  Demo each system •  Priority based “qualitative” scoring

Determining Potential Impact ROI Checklist   Improve Control & Accuracy Over Non-Payroll Expenditures   Improve Use of Contract Pricing   Improve Purchase Leverage through Spend Data   Reduce Waste, Duplication, Fraud & Overpayments   Reduce Overhead on Source-to-Settle Process   Expand Purchasing Spend Under Management   Improve Usage of Automated PO Creation and Transmission   Improve Ability to Manage Early Payment Discounts   All with the goal of supporting company re-alignment of cost-structure to invest in value-creating activities

Phased Roll Out •  Slow and calculated, targeting one department at a time –  Purchasing resources as a constraint –  High-volume departments with biggest need and fastest “payback” –  Users who could easily adapt their processes –  Users who wanted the independence of using the system to order with only the approvals of their own organization –  Grass roots; creating a “I want it next” situation

Implementation To Date •  Implemented in 6 of 10 departments –  represents roughly 70% of Hockey Distribution Center Footwear & Apparel our non-product spend Distribution Center Facility Operations & Office volume. Maintenance Administration MIS Applications MIS Operations •  100% planned by Marketing & Advertising R&D mid-2010 Product & Design Sales Management

Setting The Example with Coupa e-Procurement •  The right solution for all users –  Easy-to-use and efficient –  Automated and Controlled –  Quick and cost-effective •  Requestors and approvers actually use the system! –  Users love being independent –  Managers love being knowledgeable –  Improved budget forecasting from detailed historical data •  The entire organization benefits –  Significant reduction in errors –  Defaults ensure accurate information –  Improved supplier invoicing, better cash flow and finance visibility

Real Process, Real Results Supplier Fulfillment Invoice Payment Footwear & Review / Manage Contracts Apparel Distribution Center Issue PO MIS Operations Purchasing Facility MIS Operations & Maintenance Applications Management Office Disposition Administration Request (approve / Hockey reject) Distribution Center Coupa e-Procurement

Identifying New Opportunities •  Real-time Insight •  10-15% cost reduction through SKU & supplier consolidation –  KPI tracking •  20% reduction in suppliers through –  Performance tracking consolidation –  Market benchmarks •  30% reduction in invoice payment transactions •  High compliance to use of contract •  Identify areas to pricing •  Process savings estimated at $50/PO, –  Improve efficiencies primarily from invoice approval process –  Streamline suppliers •  Payment discounts now available in –  Negotiate better prices 100% of invoice opportunities •  Accruals changed from guessing to –  Educate buyers firm numbers

A Plan for Success •  Implement e-Procurement to remaining departments, where spend is high, volumes are low and have unique requirements •  Product & Design / R&D •  Marketing & Advertising •  Sales Management •  Finance / HR / Traffic •  Extend online workflows to receipt and invoicing •  Integrate processes with accounting •  Further automate paper-based processes •  Continue to set the example •  Showcase the power and benefits of a SaaS solution •  Educate users and reinforce industry best practices •  Paint a vision for the future that includes a completely integrated end-to-end procure-to-pay solution •  Influence outside the boundaries of our division

Poll #2  What factors are preven<ng you from achieving your e‐procurement  and spend management goals (check all that apply)?  Cumbersome  Skep<cism from  ERP plaXorm and  employees about  business  Purchasing's  applica<ons;  value; 25%  24%  Disinterest from  Lack of execu<ve  the business  support for our  groups we  ini<a<ves; 29%  support; 22% 

Introducing Jason Hekl 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.

Part of the Problem is Inertia

The Best Intentions “In theory, our ERP system could do what we wanted it to do, but in practicality it would never happen, because the cost of doing that would have been astronomical.”

The Best Intentions "Like tectonic plates adrift on a sea of magma, ERP instances and the businesses they serve are bound to drift apart over time or dramatically collide with earthquake-like consequences.”

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

Lowest TCO with SaaS IT Support Maintenance Upgrade Costs Professional Services Software Subscription Year 3 Year 3 IT Support Maintenance Professional Services Software Subscription Year 2 Year 2 Implementation Hardware Database / Middleware Software Licenses Year 1 Software Subscription Year 1

SaaS Eliminates Hidden Costs IT Support Over 3X Maintenance Upgrade Costs Cost! Professional Services Software Subscription Customer takes on IT Support Maintenance all Risk! Professional Services Software Subscription Broken Implementation Model! Hardware Database / Middleware Software Licenses Software Subscription

Smarter Spending Across the Enterprise Uniﬁed & Simple   Cross Company RequisiNoning Divisional  Divisional  Divisional  AccounNng  AccounNng  AccounNng 

Immediate Impact with Requisition to PO PredicNve  Spend  Benchmarks  Crowd  Sourcing  RequisiNons  Purchase  Orders  Invoices  General  Ledger  Strategic &  AdministraNve &  Front Oﬃce  Back Oﬃce 

You and the CFO are more tightly aligned than you think Performance Compliance Visibility

5 Strategies to Cut Costs 2010 with Coupa 1.  Spend Under Management Attract more spend at the top of the 1 funnel 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 Strategies to Cut Costs with Coupa in 2010 1 1.  Spend Under Management 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

Our best spokespeople are our customers…

Satisfying the Skeptical CFO What If You Had Visibility Into ALL Non-Payroll Spend? 100% What if you could use the same APPROVAL Spend Under workflow across purchases and expenses? Management What if you could BENCHMARK your expense Expenses? management practices against the market? What if you could effectively AUDIT the expense process to reduce fraud and save even more? With Coupa + 20% Spend Under Management Baseline 41% Spend Under Management

New Year’s Resolutions

THANK YOU  Dave Howard  Jason Hekl  Director, Central Purchasing  Vice President, Marke<ng  Reebok‐CCM Hockey  Coupa So?ware  david.howard@reebokccm.com   jason.hekl@coupa.com  

Urgent Purchasing - How One Procurement Professional Took Matters Into His Own Hands to Get Spend Under Control

by Coupa Software on Dec 18, 2009

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