IASTA 10 Ways to Drive Procurement Influence Using Advanced Technology


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IASTA Webcast: 10 Ways to Drive Procurement Influence Using Advanced Technology

May 2, 2012 at 11am EST

Hosted by IASTA
Moderator: IASTA: Scott McBride- Director of Global Alliances
Featuring: SpendMatters: Jason Busch- Founder & Executive Editor and Cushman & Wakefield: Joanna Martinez- Executive Managing Director & CPO

The journey to becoming a best-in-class, integrated category management company requires you to grow your sourcing pipeline with projects that align with your organization's goals and growth initiatives. Using advanced technology to streamline your strategic sourcing process will help you implement data-driven decisions that earn the support of your executives. In addition, strong user adoption will expand your procurement department’s reach and influence your entire organization.

During this Webcast, you will learn:
● How to raise your procurement influence and drive corporate growth with proven technology techniques and processes
● 7 reasons to make contract management part of your strategic sourcing process
● Tips to better serve your internal and external customers through cross-functional collaboration
● How to maximize your sourcing, supplier and spend intelligence to engage more business and drive additional savings


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IASTA 10 Ways to Drive Procurement Influence Using Advanced Technology

  1. 1. 10 Ways to Drive Procurement Influence Using Advanced Technology May 2, 2012 Copyright © Iasta, All Rights Reserved
  2. 2. Speakers Copyright © Iasta, All Rights Reserved
  3. 3. Audience Profile Has your company been involved in or have plans for a M&A within the next 12 months? #1 CHALLENGE hindering your company from becoming best in class in procurement… LACK OF RESOURCES Copyright © Iasta, All Rights Reserved
  4. 4. 10 Ways To Drive ProcurementInfluence Using Advanced Technology IASTA hosted Webinar May 2, 2012 Presented by: Jason BuschCopyright © 2012 Azul Partners Inc. All rights reserved. Not for distribution. | www.spendmatters.com - spendmatters.co.uk - www.agmetalminer.com 4
  5. 5. A quick background on the Spend Matters family...The team Former: Strategy and sourcing consultants Metals traders Heads of procurementThe sites www.spendmatters.com www.agmetalminer.com First blog in sector, now much more 4 years old, largest metals publication in North America www.spendmatters.co.uk www.hcmatters.com Launched in 2010 Launched in 2011Copyright © 2012 Azul Partners Inc. All rights reserved. Not for distribution. | www.spendmatters.com - spendmatters.co.uk - www.agmetalminer.com 5
  6. 6. Our supply markets still won’t rest! • Total cost/labor cost on the rise – Country-specific labor – Trade/export policy – Shipping (fuel surcharges, bunker charges) • Currency volatility • Production capacity constraints • Lean extremes • Raw material availability (e.g., rare earth metals) • New regulations • Black Swan eventsCopyright © 2012 Azul Partners Inc. All rights reserved. Not for distribution. | www.spendmatters.com - spendmatters.co.uk - www.agmetalminer.com 6
  7. 7. Think big for a moment... stepping into today’s global procurement and finance shoes Globalization challenges  Trade imbalances, total cost hiccups (and missteps) and policy uncertainties  Different definitions of acceptable behaviors Currency & commodity volatility  Currency madness (Dollar, Euro, RMB, Pound, etc.)  Coming soon or already here: currency inflation (or deflation)/commodity inflation Economic uncertainty  Quantitative Easing (continued)  Weak demand  Liquidity concerns, supplier access to capitalCopyright © 2012 Azul Partners Inc. All rights reserved. Not for distribution. | www.spendmatters.com - spendmatters.co.uk - www.agmetalminer.com 7
  8. 8. What were the top procurement and supply chain priorities weobserved last year (including finance)?• Incremental cost reduction (including cost reduction based on total cost analysis)• Capacity challenges (in certain markets)• Managing the workforce: – Contingent/services procurement – Getting more from the procurement group• Compliance and risk: supplier performance and visibility, operational/financial stability, etc.• Balancing demand/supply volatility (e.g., part/component shortages for the holiday season)• Evaluating alternative models vs. business as usual – shared services, BPO, contingent staffing (for both procurement and A/P)Copyright © 2012 Azul Partners Inc. All rights reserved. Not for distribution. | www.spendmatters.com - spendmatters.co.uk - www.agmetalminer.com 8
  9. 9. What will the top procurement and supply chain priorities befor the rest of 2012 and into 2013? • Continued focus on cost savings – either to protect fortress balance sheets companies have amassed or just to survive • Anticipating/forecasting (cash, revenue, demand, etc.) and mapping to procurement and working capital strategies in a questionable recovery or possible recession • Continuing to find new ways to become more efficient on the periphery (e.g., A/P, indirect spend) to focus on core operations • Commodity, cost volatility and reducing exposure/risk • Optimizing for total supply chain/supply management costs for procurement and payables (inventory, working capital, unit cost, logistics, tax implications, etc.) • Risk management, albeit from an expanded perspective/definitionCopyright © 2012 Azul Partners Inc. All rights reserved. Not for distribution. | www.spendmatters.com - spendmatters.co.uk - www.agmetalminer.com 9
  10. 10. 10 Spend Matters ideas that go beyond basic sourcingto enhance procurement’s value to the business• Given the current market context, it’s critical to think beyond the basics to deliver value to the business• Improving procurement’s value to the business requires embracing new sourcing-related tools (contract management, supplier management, etc.) wrapped around basic strategic sourcing activity and services spend knowledge to drive additional savings• There are ten ways (outside of transaction- related focus areas) that we see to deliver this new valueCopyright © 2012 Azul Partners Inc. All rights reserved. Not for distribution. | www.spendmatters.com - spendmatters.co.uk - www.agmetalminer.com 10
  11. 11. 1: Go beyond basic eRFX and reverse auctioncapabilities Advanced sourcing/optimization •Fluid RFI/RFP process •More flexible data collection •Supplier creativity/alternative specifications/alternative proposals •Ability to fully explore – not just weight – all price and non-price factors in a tender •Create and apply constraints •Ability to run scenarios based on constraints and present a menu of outcomes for stakeholders to considerCopyright © 2012 Azul Partners Inc. All rights reserved. Not for distribution. | www.spendmatters.com - spendmatters.co.uk - www.agmetalminer.com 11
  12. 12. 2: Connect sourcing activity to contracts – implementsavings faster and manage complianceSourcing and Contract Management•Link sourcing outputs to implemented savings•Move from a static view of contracts as “papers ina vault” to dynamic usage and reference•Use contract management as an opportunity tocreate greater trust and transparency with suppliersand shareholders•Looking at contract management as an opportunityto locate additional savings and cost avoidanceopportunities•Ability to integrate with – and fully leverage –sourcing, spend analysis and related information tocreate an integrated contract lifecycle solution•A user experience built around procurement andlegal together to drive the contracting – andcontract management – processCopyright © 2012 Azul Partners Inc. All rights reserved. Not for distribution. | www.spendmatters.com - spendmatters.co.uk - www.agmetalminer.com 12
  13. 13. 3: Go beyond the contracting basicsAdvanced contracting philosophies•Pursue an active compliance approach thatleverages internal systems and marketplace Contractinformation (e.g., commodity pricing trends,currency rates)•Make your contract management system arepository for the entire organization to rely on(procurement, legal, etc.)•Rethink the notion of a contract – Make the contract a living document designed to manage and govern the relationship versus serving as a static piece of paper to refer back to for re-sourcing or legal purposes – Influence up front – introduce contract terms (e.g., indemnification) into the negotiation phase of a relationship; this can result in material savings and can foster a basis of mutual understanding and trust – Think long-term – the ownership and transference of risk is often as important as the exchange of physical goodsCopyright © 2012 Azul Partners Inc. All rights reserved. Not for distribution. | www.spendmatters.com - spendmatters.co.uk - www.agmetalminer.com 13
  14. 14. 4: Invest in capabilities to support basic suppliermanagement activities Supplier Management Activities •Supplier on-boarding (i.e., the need to efficiently electronically enable suppliers for eProcurement and invoicing) •Supplier portals (i.e., basic portal capability designed to capture supplier information for a range of initiatives: eProcurement, supplier diversity, green/CSR, e-sourcing) •Supplier performance and quality management (i.e., tracking qualitative and quantitative supplier performance metrics such as on-time performance, escapes, PPM; surveys such as ISO, QS, TS to qualify suppliers and ensure claimed credentials were real) •Supply risk management (i.e., monitoring supply risk factors including financial data, operational data, compliance information) •Spend visibility/supplier enrichment at the item level (i.e., creating a common – or virtual – vendor master with detailed and accurate information into spending data to drive sourcing strategies)Copyright © 2012 Azul Partners Inc. All rights reserved. Not for distribution. | www.spendmatters.com - spendmatters.co.uk - www.agmetalminer.com 14
  15. 15. 5: Leverage supplier management initiatives to driveadvanced cost and risk reductionAdvanced Activities Risk Exposure vs. Cost per Supplier $ Carbon Footprint Cost (High)•Go multi-tier Factory Audit Cost per Supplier•Embrace approaches that leverage theintersection of different datasets to drive visibility Catalog Supplier Toxic Substancesand predictive analytics (supplier performance Enablement Supplier Diversityinformation, supplier financial risk, geospatial, On-boarding New Supplier Ape-Invoice Enablementcountry risk, etc.) $ Cost Insurance Certificates (Low) 1 2 3 4 5 6 7 8 9 10•Invest in supply chain traceability to support the Risk Exposurebusiness in new ways Source: Aravo – Market entrance/new product introduction – Avoidance of “conflict” items such as conflict minerals – Certification that products do not contain restricted or hazardous substances•Consider network, BPO and other approachesCopyright © 2012 Azul Partners Inc. All rights reserved. Not for distribution. | www.spendmatters.com - spendmatters.co.uk - www.agmetalminer.com 15
  16. 16. 6: Hunt for big category game (even if anti-poachingtypes are defending their territory)Next Level Categories•Combine sourcing, contract management,compliance and transactional management•High visibility (and high-value) servicescategories – Marketing – Legal – Accounting – Consulting – BPO and outsourcing•Pursue direct materials spend in new ways – Alternative specifications – Demand aggregation – Commodity management/hedging – Supplier-generated innovationCopyright © 2012 Azul Partners Inc. All rights reserved. Not for distribution. | www.spendmatters.com - spendmatters.co.uk - www.agmetalminer.com 16
  17. 17. 7: Embrace specialists and specialty tools foradvanced services categoriesSupplier Management Activities•Consider specialty advisors (just as you wouldwhen buying BPO) – Focus on knowledge transfer and building internal self-sufficiency – Identify internal/external candidates to lead efforts for larger opportunities•Understand the importance of generating trustwithin the business and winning executivesupport•Use advanced (standard) toolsets whenpossible for sourcing activities, but leverageadditional solutions as needed in specificcategories (marketing spend intelligence,matters management/legal, etc.)•Leverage a VMS for SOW/project-basedengagements when requiredCopyright © 2012 Azul Partners Inc. All rights reserved. Not for distribution. | www.spendmatters.com - spendmatters.co.uk - www.agmetalminer.com 17
  18. 18. POLL QUESTIONFrom a solution standpoint, whats your top investment areaoutside of strategic sourcing and procurement cost reduction(excluding transactional procurement)? O Services procurement O Contract management O Supplier management O Savings implementation O OtherCopyright © 2012 Azul Partners Inc. All rights reserved. Not for distribution. | www.spendmatters.com - spendmatters.co.uk - www.agmetalminer.com 18
  19. 19. POLL RESULTSCopyright © 2012 Azul Partners Inc. All rights reserved. Not for distribution. | www.spendmatters.com - spendmatters.co.uk - www.agmetalminer.com 19
  20. 20. 8: Partner with suppliers in creative ways including targetingtotal costFocus on the total relationship cost•Understand the TCO of doing business withglobal suppliers – Balance of global sourcing and regional sourcing – Re-shoring•Embed cost models at all stages of the sourcinglifecycle•Put on your operational efficiency hat Source: Chainlink – Joint cost take out programs – Put waste in the crosshairs – Just-in-time (JIT), vendor management inventory (VMI) and related programs for direct spend•Understand “sweet spot” for preferred servicessuppliers and pooling the right set of business forthemCopyright © 2012 Azul Partners Inc. All rights reserved. Not for distribution. | www.spendmatters.com - spendmatters.co.uk - www.agmetalminer.com 20
  21. 21. 9: Track implemented savings, cost avoidance andresults from a finance-driven perspectiveSavings Implementation•Savings tracking and forecasting systems help companiesdrive savings opportunity identification in a way that goesbeyond spend analysis•They can accelerate the execution of savings implementationinitiatives and objectives and reduce savings leakage bypinpointing and documenting specific areas where lost savingsoccurred•For tracking information, users can get extremely granular withthe inputs they want to report against on a high level includingmarket indexes, rebate structures, baselines, currency rates,cost structures, dimensionality, target costing/pricing, budgetsand forecasts•On the actual reporting side, procurement leaders can definespecific savings tracking mechanisms and fields (e.g., pricesavings, market/commodity/index fluctuation savings, currencyfluctuation savings, substitution savings, batch size savings,spend reduction savings, external savings, realized savings)they wish to measure againstCopyright © 2012 Azul Partners Inc. All rights reserved. Not for distribution. | www.spendmatters.com - spendmatters.co.uk - www.agmetalminer.com 21
  22. 22. 10: Deploy commodity management programsalongside sourcing activitiesGet Serious About Direct Spend•Develop a point of view and explain to management andshareholders the underlying reasons driving commodityvolatility and forecasting uncertainty•Reduce commodity exposure•Understand how to best price the underlying risk elements ofcontracts•Explore how suppliers price (and potentially misprice) risk•Lower overall costs (potentially) despite upward pressure onraw material inputs•Build more collaborative relationships with suppliers that helpmake us a customer of choice•Aggregate the buy (to enable hedging, to buy forward in risingmarkets, to create more effectivebudgeting/planning/forecasting, etc.)•Statistical modeling for demand planning and forecasting, plusmore to correlate factors on the supply side. Gatheringintelligence and building tools around it (looking forcorrelations)Copyright © 2012 Azul Partners Inc. All rights reserved. Not for distribution. | www.spendmatters.com - spendmatters.co.uk - www.agmetalminer.com 22
  23. 23. Contact detailsJason BuschManaging Director, Azul Partners, Inc.Founder and Executive Editor, www.spendmatters.comEmail: jbusch@azulpartners.comPhone: 773-525-7406Copyright © 2012 Azul Partners Inc. All rights reserved. Not for distribution. | www.spendmatters.com - spendmatters.co.uk - www.agmetalminer.com 23
  24. 24. Smarter Procurement to Drive Corporate Growth A Partnership Joanna Martinez, Executive Managing Director & Chief Procurement Officer © Joanna Martinez, May 2012, All Rights Reserved
  25. 25. Overview• Cushman & Wakefield, a privately held company, is one of the world’s largest commercial real estate services firms with brokerage, facilities management, consulting, capital markets, and other services.• The company was founded in 1917 and the firm’s largest shareholder is Exor, the investment arm of the Agnelli Family.• Cushman & Wakefield currently has 231 offices in 58 countries, and 13,000 talented professionals.• Cushman & Wakefield was named the exclusive leasing agent for 1 World Trade Center, the Freedom Tower, by the Port Authority of New York and New Jersey. The Freedom Tower, will total 2.6 million square feet upon its completion in 2012. © Joanna Martinez, May 2012, All Rights Reserved
  26. 26. Facilities Management Trends• Facilities Management is evolving from localized building management and office services to a centralized workplace solution• Sourced through corporate procurement groups and/or consultants• Focus on operational and performance management to deliver best in class price points and service delivery levels. Major changes in FM include: – Investments in energy and utility management – Expanding scope – Focus on enterprise goals • Sustainability and LEEDs mandates • ISO compliance • Diversity – Risk Management © Joanna Martinez, May 2012, All Rights Reserved
  27. 27. Many Standard FM Services and Resulting Skill Sets are NotNecessarily Procurement Core Competencies  Critical Systems  Compliance & Regulatory  Energy Management Management  EH&S Administration  Emergency Preparedness  Sustainability Program  Work Order Management  Financial Management &  Predictive Maintenance Reporting  Housekeeping  Office Support Services  FM Staff Development  Knowledge of building codes  Project management, and and regulations, and how they differ across the globe resulting partnerships with GC’s, subecauseontractors But our core competencies are complementary, and by working together we can do a faster, more effective job for our clients and our suppliers © Joanna Martinez, May 2012, All Rights Reserved
  28. 28. The Circle Charts: Partnering to Better Serve our ClientsFormer Process FM Professionals Purchasing RFI, RFP Spot Buys for Corporate Spend Supplier Selection Negotiations ? Transactional Processing Order Entry Ongoing SRM Delivery TrackingCurrent Process FM Professionals Supplier Evaluation Corporate Sourcing Business Requirements Sourcing Strategies Procurement Tools and Techniques Detailed Specifications Negotiations Manage Strategic Sourcing Process Scope of Work Total Cost Analysis & Measurements Contracts Final Decision Category Management Supplier Mgmt © Joanna Martinez, May 2012, All Rights Reserved
  29. 29. What Happens When a New FM Account Relationship Begins?FM Action Related Procurement Competency• Manage people transition • Contract Management Systems• Organize contracts and understand key expiration dates © Joanna Martinez, May 2012, All Rights Reserved
  30. 30. Contracts Management Benefits How a Contract Management System helps the Strategic Sourcing process: • Automated alerts and reports on contract expiration. • Captures payment terms to support early payment discounts • Provides visibility to supplier rationalization options • Helps the accrual process by providing visibility to contractual commitments • Assists in assessing compliance to signatory policy • System features help employees know where to go for purchases • Improves planning: - Workload management - Business cycles (union contracts, energy peaks, etc.) © Joanna Martinez, March 2012, All Rights Reserved © Joanna Martinez, May 2012
  31. 31. A Contract Management tool can be a powerful asset and a “To-Do” list for years to come Number of Contracts Archived10000 Information = Sourcing Projects 9000 8000 7000 6000 5000 4000 3000 2000 1000 0 Feb Mar Apr May Jun Jul Aug Sep Oct No7 Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct• Note: The trend line indicates the number of contracts identified, including contracts in queue. © Joanna Martinez, May 2012, All Rights Reserved
  32. 32. What Happens When a New FM Account Relationship Begins? FM Action Related Procurement Competency • Manage people transition • Contract Management Systems • Organize contracts and understand key expiration dates • Global processes and linkages • Assess for cost reduction opportunities © Joanna Martinez, May 2012, All Rights Reserved
  33. 33. Procurement Understands Global Relationships …and understands that not all spends should be global Global Client Preference Global Maintenance Help Desk Elevator Maintenance Suppliers ability to deliver Local Regional Security Lease s MRO Local Specific Generic Business Needs © Joanna Martinez, May 2012, All Rights Reserved
  34. 34. What Happens When a New FM Account Relationship Begins?FM Action Related Procurement Competency• Manage people transition• Organize contracts and • Contract Management Systems understand key expiration dates• Assess for cost reduction • Global processes and linkages opportunities• Support facilities on behalf of • Different sourcing approaches the client • Automate/ apply sourcing tools• Manage projects on behalf of to the general contractor the client relationship © Joanna Martinez, May 2012, All Rights Reserved
  35. 35. Corporate Procurement Supports Facility Management Supported the facility management sourcing team consolidation for the integration of two large banks.  Team charter, spend analytics, supplier leverage opportunities Utility company used eProcurement tools to speed up NDA process for 30 potential vendors Large bank reduced cost audio conferencing via benchmarking Created a client specific Contract Management System template as part of new client on- boarding.  Allowed facility teams to quickly identify sourcing opportunities Enabled advanced negotiation tools to allow immediate pricing feedback to suppliers.  Immediate Pricing Feedback Tool – eProcurement tools for General Contractors to obtain “Best and Final” Pricing  Dynamic Bidding – spreadsheet bidding over several day to allow subecauseontractor input/ participation © Joanna Martinez, March 2012, All Rights Reserved
  36. 36. Savings Beyond Standard General Contractor Methods Budget Actual Savings % Savings Electrical $270,000 $229,588 $ 40,412 15% Doors Frames Hardware $170,000 $132,000 $ 38,000 22% Glass Glazing $100,000 $89,500 $ 10,500 11% HVAC $146,000 $157,900 $ (11,900) -8% Drywall Accoustical $205,000 $140,500 $ 64,500 31% Paint Wallcover $60,000 $49,000 $ 11,000 18% Flooring $140,000 $138,500 $ 1,500 1% Millwork $140,000 $116,000 $ 24,000 17% Mechanical $1,400,000 $1,224,765 $ 175,235 13% Electrical $1,300,000 $1,175,000 $ 125,000 10% Drywall $700,000 $574,615 $ 125,385 18% Computer Flooring $146,000 $138,730 $ 7,270 5% Paint $98,000 $73,900 $ 24,100 25% Millwork $85,000 $76,000 $ 9,000 11% Cabling $592,000 $522,382 $ 69,618 12% Furniture - new $1,847,850 $1,129,616 $ 718,234 39% Car Parks - 300 $600,000 $443,000 $ 157,000 26% Carpeting $277,500 $198,860 $ 78,640 28% Carpet II $580,000 $385,000 $ 195,000 34% Movers $120,000 $55,453 $ 64,547 54% Dallas Office VOIP $165,000 $147,000 $ 18,000 11% Glass Door & Glazing $124,000 $117,500 $ 6,500 5% Ceiling $215,000 $143,000 $ 72,000 33% Telecom Software and Hardware $335,000 $261,000 $ 74,000 22% Total $9,816,350 $7,718,809 $2,097,541 21% © Joanna Martinez, March 2012, All Rights Reserved
  37. 37. C&W’s Reverse Auction Tool C&W’s Immediate Feedback Pricing Tool C&W’s Online Pricing ToolELECTRICAL © Joanna Martinez, May 2012, All Rights Reserved
  38. 38. C&W’s Online Pricing Tool: Back and Front Covers
  39. 39. Some other thoughts… © Joanna Martinez, May 2012, All Rights Reserved
  40. 40. We found a place with no gatekeeper: The Process Itself! OPPORTUNITY ANALYSIS High Level Potential Cost Improvement High Category Improvement Creative Solution Opportunity Opportunity 20%+ 10%+HistoricalProcurement Significant Benefit Strategic Sourcing ProcessExpertise and Opportunity OpportunityEffort 40% + 30%+ The Process… Low Low Category Content and Technical High Knowledge © Joanna Martinez, May 2012, All Rights Reserved
  41. 41. And we applied the “Captain Cook” method of sourcing engagement © Joanna Martinez, March 2012, All Rights Reserved © Joanna Martinez, May 2012
  42. 42. …Skip the obstacles and go back later Portfolio Professional fees Rent Capital Print and Fulfillment MRO Travel Tech - Maintenance, Leases Recruitment, Training, Outplacement Office Equipment & Services Telecom Tech - Consulting Meetings T&E Promotions and Servicing Misc. Employee Benefits Employee Fringes Misc. Business Fees Sourceable Spend © Joanna Martinez, May 2012, All Rights Reserved
  43. 43. … because you can build a “tidal wave” of Justification. Annualized Value of Cost Reductions (P&L and non-P&L) $ Start Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 © Joanna Martinez, May 2012, All Rights Reserved
  44. 44. Q&A Please submit your questions… Copyright © Iasta, All Rights Reserved
  45. 45. Q&A: Of the 10 ideas that go beyond sourcing,which do you think is most underused?Jason: We think Supplier Management is becoming a very big deal, especially if you canmanage supplier relationships effectively and you have all the data to do so on a vendor & SKUlevel (for direct materials, safety, environmental issues). More broadly, we think there is somuch potential in supplier risk management, supplier performance management and supplierdevelopment opportunities. Over the past 6 months RFP’s have been increasing in suppliermanagement. It’s a smaller market, but advanced procurement organizations are determininghow they can get on top of this information. It’s not just compliance or driving effectiveness incertain programs (like risk or diversity), there are also actual savings to justify the businesscase. Copyright © Iasta, All Rights Reserved
  46. 46. Q&A: Based on the poll released in yourpresentation, were you surprised that “SavingsImplementation” won the day?Jason: Yes, companies try to rig spend analysis to monitor savings per spend over time and tyingthat into implementation, but in many cases you see companies monitoring the implementation ofsavings in basic workflow tools, assignment tools and even complicated excel models. There’s beena real wake up call to the savings that procurement has generated on paper and a lot of it is notincumbent savings, but has had a hard time of implementing. Being able to track effectiveimplementation is key. That goes back to contract management as well and the contracting process,which are huge hurdles regarding why we don’t see greater introduction of more suppliers despiterationalization programs; it’s painful implementing these suppliers. If you can streamline thecontracting & supplier management process then you have a much better shot of bringing newqualified suppliers on board, which can go for all types of spend. I think one of the travesties ofsupplier diversity is a lot of companies have punted to their tier one suppliers to manage supplierdiversity on their behalf and rolling-up those metrics because it’s hard to work with smaller suppliersif you’re trying to rationalize the supply base, but it doesn’t have to be. If you can automate a lot ofthese processes then you can get beyond having to add bodies to manage contracting vendor onboarding and the alike. Copyright © Iasta, All Rights Reserved
  47. 47. Q&A: As it relates to savings implementation, as atechnology provider, what is Iasta doing in themarket today?Scott: Iasta SmartAnalytics gets you places, as far as keeping track of suppliers, reporting onsupplier scorecarding information. I think our answer over the last few years has been a littledifferent than just technology. We are seeing Iasta’s Client Strategy Group, Iasta AccelerationCenter, human factors and our industry experience become a big deal in how we’ve helped ourclients regarding savings implementations over the last several years. Copyright © Iasta, All Rights Reserved
  48. 48. Q&A: You suggested to skip the obstacles and goback later. How do you prioritize which source-able spend categories to tackle first?Joanna: Do some detective work and understand the pain points in the organization. Ask yourself,“What’s working?” “What’s not working?” In one business I was in, travel spend wasn’t working. Althoughit wasn’t a large spend category compared to the others, making an improvement there helped us getsome credibility and use it as a spring board for other projects. In other place- financial services, it was aproblem getting financial reports out on time, which is an issue because there’s a government/FCCmandated schedule by which reports need to be mailed out to shareholders. Even though a lot of that ismoving to the web there are still certain things where physical copies have to be made. So that was a bitof a supply chain problem we fixed. It’s that kind of thing… just asking in the organization and acceptingthe fact that it might be small. I was at a CPO roundtable a couple of weeks ago and the question cameup relative to marketing spend and there were lots of people around the table who were effectivelyrunning the marketing spend for their companies. There were 2 dozen people there and 1 person said hewent right to the senior person and started with the hardest, most difficult, complex project first. Everyother person in the room, including the really big name companies with successful sourcingorganizations, said the opposite. They said they started with the pain point areas, and even though manywere modest, they built from there. Copyright © Iasta, All Rights Reserved
  49. 49. Q&A: Dealing with how procurement can workwith finance, what key words can be used to buildcredibility and speak the financial language toensure successful collaboration? How important isthat in terms of driving value?Jason: 1) Empathy the exact role and what they’re after- you need to understand how / whatFinance is being measured on. Someone in AP is going to be incentivized differently than someonein treasury. Figure out what their goal is in more effective supplier relationships, implementingsavings and working capital. You’ve got to think of yourself as that internal consultant/ psychologistto understand what they’re after. 2) Skill set/ knowledge. Being able to read a balance sheet,understand a PNL and how companies are measured more broadly, being able to articulate whatenterprise value is, etc. It’s critical. If you don’t have an MBA, it’s not an issue, you can learn thesethings. But having a basic knowledge on the finance side and managerial accounting side is veryimportant as well. And that’s just finance. If you’re going to engage the general counsel/ CMO,having the empathy in those areas is just as critical. I don’t want a generic consultant. I wantsomebody who knows marketing. I want someone who knows legal to walk me through that. If your spend is high enough, hire someone within or bring in someone as a specialist on a full time basis. There is no substitution for that. Copyright © Iasta, All Rights Reserved
  50. 50. Q&A: You probably needed executive leverage.Then again, it seems to reason that you use a lotof collaboration. Can you speak a little on that?Joanna: I think Jason was spot-on in his observation. There are a couple other points. 1) youneed to admit your expertise (or lack thereof) in certain areas instead of moving forward withsomething you know nothing about. It’s important to be honest. One of the things that helpedme in facilities management is I said early-on “I don’t understand anything about ‘this’ but I dounderstand ‘this,’ so how do we work together because I think I can help you in this way.” Ithink if you’re a decision-maker or the leader of the team, I’d encourage you to think abouthaving your team members co-located with your internal clients. I think there’s no substitutefor being there. Particularly when you’re trying to get a relationship up and going, if you canthink about “In my case, I have folks who are sitting with facilities management people, whoare sitting with the marketing community or other key decision-makers, and I don’t have alarge staff.” But by understanding they’re better off being as close to their internal clients aspossible to really get embedded in the organization by giving up that personal ego thing ofhaving your staff clustered wherever you are. It’s an important step forward in terms of gettingfolks engrained and through the natural course of your team, attending other people’s staff meeting, coffee pot chit chat sort of thing, etc. It’s another thing to get invited to the party and being involved in activities that are coming up. Copyright © Iasta, All Rights Reserved
  51. 51. Q&A: Continued… Scott: As a provider, over the last couple of years collaboration is a soft term that we’re starting to see more often. A lot of democratization of data itself, marketing data inside of the spend analysis tool (Smart Analytics), finance data lying right next to/ integrated with the spend analysis data. Data systems that used to be in their own silos are now not just being requested, but required to comingle with each other. User pools of the technology are as collaborative as we want them to, which has been a huge movement for us as a provider over the years. I think that speaks to the softer point of collaboration, we’re actually starting to see now, all of that data come together into one system which as a technical provider is something we hope to be helpful in. Copyright © Iasta, All Rights Reserved
  52. 52. Q&A: Clearly, what you’ve done has requiredinvestment on the software side. You’vementioned using category experts, or maybe evena 3rd party. How did you go about justifying ROI?Joanna: There’s less extent than you’d think. We didn’t go out to the big names in this space, thevery expensive/ established providers. In each case, we went with people. Without this being acommercial for Iasta, the reality is we went with companies that have the right tools that were aprice point that was palpable to the organization. Some of the very big names that have been outthere with the big ERP systems where everything is tied together, is not what you really need in alot of cases. Usually, something a lot smaller is a lot more digestible to the company. Another thing,in order to get category experts and things like that, you can do a lot of personal networking. I’vebeen in environments, financial services in the early 2000’s when there were lots of investigationsgoing on with financial services practices and money was very tight. Or real estate a couple of yearsago in the recession, where there wasn’t money to join large organization or go to expensiveconferences, you still figured out ways to do webinars like this to learn… to do other kinds ofnetworking things and lots of times you may know something about a category or someone else knows about legal spend, so you trade the information. Copyright © Iasta, All Rights Reserved
  53. 53. The End Thank you Copyright © Iasta, All Rights Reserved
  54. 54. Related ResourcesWEBCASTBuilding Blocks to Achieve Sourcing Credibility: Gain Fortune 500 Value with Mid-Market Resources  http://www.iasta.com/resourcecenter_webcasts_buildingblockstoachievesourcingcredibility.phtmESOURCINGWIKI ARTICLEContract Management 101  http://www.esourcingwiki.com/index.php/Contract_Management_and_ComplianceWHITEPAPERDynamic Procurement: The CPO as a Collaborator, Innovator and Strategist  http://www.iasta.com/resourcecenter_aberdeenbenchmarkstudies_dynamicprocurement.phtmWHITEPAPERSpend Analysis: The Nexus of Spend Management  http://www.iasta.com/resourcecenter_aberdeenbenchmarkstudies_nexusofspendmanagement.phtmIASTA INSIGHTS NEWSLETTERTaking Sourcing Beyond Auctions  http ://view.s4.exacttarget.com/?j=fe8d16757063027d7c&m=fea415707566017d76&ls=fdfa1672766c067477177170&l=fec5 Copyright © Iasta, All Rights Reserved
  55. 55. Global HQ European HQ 12800 N. Meridian St. Hartham Park Suite 425 Corsham, Wiltshire Carmel, IN 46032 SN13 ORP United States of America United Kingdom Operations: 317.594.8600 Operations: +44 (0) 870.199.4060 Sales: sales@iasta.com Sales: +44 (0) 1249.700726 eSourcing | wiki eSourcing | forumwww.eSourcingWiki.com www.iasta.com www.eSourcingForum.com Iasta Alliance Group www.Twitter.com/Iasta www.LinkedIn.com Copyright © Iasta, All Rights Reserved