Stirling Consulting Group




Procurement: how to work
    with ‘em and win
             David Wilson
           dwilson@s...
Hatfields and McCoys Redux?

 “Procurement wants to pay less than enough” (Tara
       Comonte, Mediabrands COO & CFO)
  “...
Objectives

 Pull back the curtain on Procurement

 Identify what you might prepare to obtain a
  better outcome with Pr...
Agenda

 What’s going on?
 Procurement Overview
 Procurement Tools & Techniques
 Successful Negotiations
 Leverage th...
Agenda

   What’s going on?
   Procurement Overview
   Procurement Tools & Techniques
   Successful Negotiations
   L...
What’s going on?
                      CFO Pressures
            #1 Reduce operating expenses (74%)
             #2 Optimi...
Procurement business case



        $1                                                        80-95 cents




Source: Abe...
So what?
 Clients will continue to deploy Procurement

 In that context, position front-line teams to
    Leverage the ...
Your challenge - Redefine the balance of
power

 Gain visibility into client’s decision-making

 Harness client self-int...
Agenda

   What’s going on?
   Procurement Overview
   Procurement Tools & Techniques
   Successful Negotiations
   L...
What is (strategic) procurement?


An on-going process of reducing overall costs
 and managing supply risk, while improvin...
Procurement principles
 Rigorous
 Ethical
 Cross-functional
 Focuses on total cost (not just price), quality,
  servic...
Typical strategic procurement process

1.Analyze   2.Analyze   3.Develop         4.              5.         6.      7. Mon...
Procurement maturity levels



                                                         •Fully aligned
                   ...
Common procurement challenges

       Internal Challenge                                       External Challenge

       ...
Decision criteria


Cost    Quality Service Technology

        Innovation                  Other




              Confid...
Selection might look like this
High

                           FINALISTS
                                                ...
What else should you be looking for?


           Transition support
         Contract management
       Relationship m...
Agenda

   What’s going on?
   Procurement Overview
   Procurement Tools & Techniques
   Successful Negotiations
   L...
Procurement tools emphasize analysis to
drive strategy & tactics
                                                    Spend...
Procurement also pushes on its internal
clients to prepare
                                                      Needs
   ...
Agenda

   What’s going on?
   Procurement Overview
   Procurement Tools & Techniques
   Successful Negotiations
   L...
Successful negotiations
      Of the client                                       Of yourself

 Understand needs,        ...
Successful negotiations



            Prepare!




             Confidential. All rights reserved   24
               Sti...
Agenda

   What’s going on?
   Procurement Overview
   Procurement Tools & Techniques
   Successful Negotiations
   L...
You can have a beneficial relationship –
                     really!
Procurement does for you



                        ...
Let’s summarize

 Procurement is here to stay!
 Procurement analyzes, prepares, herds internal
  cats
 Savings for the ...
Questions?
     Contact David at
dwilson@stirlingconsult.com
               or on
     +1 602 952 8451


       Confidenti...
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Mirren Conference: Dealing with Procurement, David Wilson

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Mirren Conference: Dealing with Procurement, David Wilson

  1. 1. Stirling Consulting Group Procurement: how to work with ‘em and win David Wilson dwilson@stirlingconsult.com +1 602 952 8451 Confidential. All rights reserved 1 Stirling Consulting Group
  2. 2. Hatfields and McCoys Redux? “Procurement wants to pay less than enough” (Tara Comonte, Mediabrands COO & CFO) “Client procurement departments are challenging every aspect of our industry’s economics” (John Seifert, Head O&M North America) “Advertising agencies have to grow up. And quick.” (David Rae, Procurement Leaders) “Simplistic cost cutters vs. fluffy money wasters” (Unknown, Media Week) Confidential. All rights reserved 2 Stirling Consulting Group
  3. 3. Objectives  Pull back the curtain on Procurement  Identify what you might prepare to obtain a better outcome with Procurement  Show that not all the cards need be held by Procurement  Identify how you might leverage a relationship with Procurement Confidential. All rights reserved 3 Stirling Consulting Group
  4. 4. Agenda  What’s going on?  Procurement Overview  Procurement Tools & Techniques  Successful Negotiations  Leverage the Relationship  Q&A Confidential. All rights reserved 4 Stirling Consulting Group
  5. 5. Agenda  What’s going on?  Procurement Overview  Procurement Tools & Techniques  Successful Negotiations  Leverage the Relationship  Q&A Confidential. All rights reserved 5 Stirling Consulting Group
  6. 6. What’s going on? CFO Pressures #1 Reduce operating expenses (74%) #2 Optimize working capital (50%) #3 Increase profit (39%) CFOs with positive view of Procurement 2009 78% 2007 63% Source: Aberdeen Group, 11/2009 Confidential. All rights reserved 6 Stirling Consulting Group
  7. 7. Procurement business case $1 80-95 cents Source: Aberdeen Group, 11/2009 Confidential. All rights reserved 7 Stirling Consulting Group
  8. 8. So what?  Clients will continue to deploy Procurement  In that context, position front-line teams to  Leverage the relationship with Procurement  Negotiate a beneficial contract that achieves your goals and delivers against your standards  On-going management of clients’ contracts Confidential. All rights reserved 8 Stirling Consulting Group
  9. 9. Your challenge - Redefine the balance of power  Gain visibility into client’s decision-making  Harness client self-interest  Identify additional value Confidential. All rights reserved 9 Stirling Consulting Group
  10. 10. Agenda  What’s going on?  Procurement Overview  Procurement Tools & Techniques  Successful Negotiations  Leverage the Relationship  Q&A Confidential. All rights reserved 10 Stirling Consulting Group
  11. 11. What is (strategic) procurement? An on-going process of reducing overall costs and managing supply risk, while improving internal and external processes Confidential. All rights reserved 11 Stirling Consulting Group
  12. 12. Procurement principles  Rigorous  Ethical  Cross-functional  Focuses on total cost (not just price), quality, service, other criteria  Clear objectives  Objective decisions (to the extent possible)  Grounded in strategy Confidential. All rights reserved 12 Stirling Consulting Group
  13. 13. Typical strategic procurement process 1.Analyze 2.Analyze 3.Develop 4. 5. 6. 7. Monitor & Spend Market Approach Negotiate Award Implement Measure First 3 Steps Next 3 Steps Last Step • Baseline creation • Strategic and • Depends on economic organization • Not generally structure and visible to agencies evaluation, contracting maturity of Procurement • Generally visible & familiar to agencies Confidential. All rights reserved 13 Stirling Consulting Group
  14. 14. Procurement maturity levels •Fully aligned •Scale leverage •Engagement •Aligned across value strategies chain •Cross- •Innovation •Developing functional •Change mgt strategies •Policies •Relationship mgt •Projects •Silo •Strong •Contract mgt •Growing •Transactional support support •Tactical Confidential. All rights reserved Source: Corporate Executive Board research14 Stirling Consulting Group
  15. 15. Common procurement challenges Internal Challenge External Challenge Attracting supplier Getting right interest through behaviors compelling adopted proposition Harnessing Demonstrating Discovering true Managing supplier’s self- value of standing with commitment interest for mutual Procurement supplier gain Rectifying unintended consequences Source: Procurement Strategy Council research Confidential. All rights reserved 15 Stirling Consulting Group
  16. 16. Decision criteria Cost Quality Service Technology Innovation Other Confidential. All rights reserved 16 Stirling Consulting Group
  17. 17. Selection might look like this High FINALISTS Supplier E Strategic& Other Supplier F Supplier A Supplier C Supplier B Supplier D Low High Cost Confidential. All rights reserved 17 Source: A.T.Kearney Stirling Consulting Group
  18. 18. What else should you be looking for?  Transition support  Contract management  Relationship management Confidential. All rights reserved 18 Stirling Consulting Group
  19. 19. Agenda  What’s going on?  Procurement Overview  Procurement Tools & Techniques  Successful Negotiations  Leverage the Relationship  Q&A Confidential. All rights reserved 19 Stirling Consulting Group
  20. 20. Procurement tools emphasize analysis to drive strategy & tactics Spend Category Dynamics TCO Cost Drivers & Should cost Relationship Supplier Positioning Confidential. All rights reserved 20 Stirling Consulting Group
  21. 21. Procurement also pushes on its internal clients to prepare Needs Client Objectives Criteria Decision Weights Needs Contract Walk-away Confidential. All rights reserved 21 Stirling Consulting Group
  22. 22. Agenda  What’s going on?  Procurement Overview  Procurement Tools & Techniques  Successful Negotiations  Leverage the Relationship  Q&A Confidential. All rights reserved 22 Stirling Consulting Group
  23. 23. Successful negotiations Of the client Of yourself  Understand needs,  Understand needs, priorities priorities  Assess positioning,  Assess positioning, leverage points leverage points  Assess client view of  Enlarge the pie agency positioning,  Be objective leverage  Determine strategy  Assess Procurement  Know walk-away maturity positions Confidential. All rights reserved 23 Stirling Consulting Group
  24. 24. Successful negotiations Prepare! Confidential. All rights reserved 24 Stirling Consulting Group
  25. 25. Agenda  What’s going on?  Procurement Overview  Procurement Tools & Techniques  Successful Negotiations  Leverage the Relationship  Q&A Confidential. All rights reserved 25 Stirling Consulting Group
  26. 26. You can have a beneficial relationship – really! Procurement does for you Ethical process You do for Procurement Respect process Relationship mgt Prepare YOU Contract mgt Be known Advocacy Introductions Improvements Confidential. All rights reserved 26 Stirling Consulting Group
  27. 27. Let’s summarize  Procurement is here to stay!  Procurement analyzes, prepares, herds internal cats  Savings for the client can come in many forms  You hold some cards too  Procurement can help you Confidential. All rights reserved 27 Stirling Consulting Group
  28. 28. Questions? Contact David at dwilson@stirlingconsult.com or on +1 602 952 8451 Confidential. All rights reserved 28 Stirling Consulting Group
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