Phelps Dodge Quadrem Progress and Next Steps Report
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Phelps Dodge Quadrem Progress and Next Steps Report
- 1. Phelps Dodge Corporation Quadrem Progress and Next Steps Jens Brown Sourcing Process Leader
- 2. Quadrem Progress and Next Steps •Discuss Quadrem activities and targets. •Keys to Progress •Quadrem Value Proposition •‘Site X’ – Real World Spend Analysis •Tools for Progress •Realization of Quadrem Benefits •Roadmap •Assumed Receipt & Catalog Integration •Tool Kit
- 3. Progress on Throughput and Transactions Throughput and Transactions $0.00 $2,000,000.00 $4,000,000.00 $6,000,000.00 $8,000,000.00 $10,000,000.00 $12,000,000.00 2001 Total 2002 Total 2003, Oct 1 Year USD 0.00 5000.00 10000.00 15000.00 20000.00 25000.00 30000.00 35000.00 40000.00 45000.00 50000.00 Transactions Total Dollars Total Count
- 4. Progress on Key Suppliers Catalogs 2002 – Q1 39% 2003 – Q1 80% 2003 – Q3 88% 2002 – Q3 55% •Significant progress on key suppliers – e.g. BOISE. •88% of Office Sup. spend now with BOISE. About 50% from eCatalog. •Leverages savings and relationship
- 5. Historic Price Volume Or CBE Price Sliding Scale Pricing Integrated Electronic Processes Product Standards Build Opportunities into the Supplier Relationship Market Basket Price
- 6. Key to Progress – Quadrem Value Proposition Getting to the next level is key! •Usable Application + Knowledgeable Users is only part of the Equation! •Site Manager commitment •Consistent message •Commodity Mgr determined savings by Supplier. Case in point – •Let’s use a ‘Site X’ Example of general spend analysis. •Simple exercise of mapping ProCard Spend on Quadremable items & suppliers to Quadrem
- 7. Department #1 •Dept. of 12 people - Five Pro Card users in Department •Average Spend $12,000 per employee on Pro Card •Used 20 different Suppliers •$10,000 Quadremable dollars •$10,000 x 10% = $1,000 Average Savings per Pro Card User over 9 Months. ‘Site X’ Example -Breakdown
- 8. ‘Site X’ Example -Breakdown Department #2 •Dept. of 12 people - Six Pro Card users in Department •Average Spend - $70,000 per employee on Pro Card •Used 40 different Suppliers •$60,000 Quadremable dollars •$60,000 x 4%= $2,400 Average Savings per Pro Card User over 9 Months.
- 9. ‘Site X’ - Lost Opportunity Immediate Lost Opportunity $1,000 Avg. Savings/Pro Card User Dept. #1 $2,400 Avg. Savings/Pro Card User Dept. #2 $3,400 Average Savings over period •$1,700 Average savings per Pro Card User •$1,700 x 120 ProCard Users = $204,000 Lost Opportunity for Savings for first 9 months. Savings Potential is Real •$189 x 120 Pro Card users = $22,680/MO •$22,680 x 12 = $272,160 per year Savings Potential •$22,680 x 3 = $68,040 4th Qtr. Savings Potential
- 10. ‘Site X’ - Challenge Throughput and Saturation • Direct relevant and appropriate spend • Continue with saturation success across all eCatalogs. • Engage local & national suppliers Savings Opportunity • Realize broader and measurable savings by driving ProCard users to Quadrem for appropriate suppliers. • ‘Site X’ Pro Card Spend (9 Month) = $2,515,000 • Quadrem Spend (9 Month) -- $88,000 • Area for improve within Delta $2,427,000
- 11. Tools for further progress •Use a formula approach similar to this – Fill in the blanks. •Know the suppliers and their offering. •eCatalogs can mean implemented savings for CBE awards. •Analyze ProCard spend, make relationship between current ProCard usage and those suppliers within Quadrem eCatalog.
- 12. Future of eCatalogs & transactions Time, Complexity, (Risk) CostTime, Complexity, (Risk) Cost InteractiveSophisticationInteractiveSophistication TradingTrading ImprovementImprovement FullyFully TransactionalTransactional Brochureware:Brochureware: (Informational only)(Informational only) Web Interaction:Web Interaction: Relevant & SecureRelevant & Secure InformationInformation
- 13. Future of eCatalogs & transactions Time, Complexity, (Risk) CostTime, Complexity, (Risk) Cost InteractiveSophisticationInteractiveSophistication TradingTrading ImprovementImprovement FullyFully TransactionalTransactional Web Interaction:Web Interaction: Relevant & SecureRelevant & Secure InformationInformation Brochureware:Brochureware: (Informational only)(Informational only) 5% 60% of Quadrem eCatalog Suppliers 25% 10%
- 14. Realization of Quadrem Benefits •How PD utilizes Quadrem today is the ‘Tip of the Ice Berg’. •Beginning of savings and compliance based on eCatalog sup. •Other Buying Organizations are paving the way •Quadrem Hosted BuyerQuadrem Hosted Buyer •Low $, High Transaction VolumeLow $, High Transaction Volume •eCatalog expertise is growingeCatalog expertise is growing
- 15. Realization of Quadrem Benefits •How PD utilizes Quadrem today is the ‘Tip of the Ice Berg’. •Beginning of savings and compliance based on eCatalog sup. •Other Buying Organizations are paving the way •Quadrem Hosted BuyerQuadrem Hosted Buyer •Low $, High Transaction VolumeLow $, High Transaction Volume •eCatalog expertise is growingeCatalog expertise is growing •Extending capabilities, trackingExtending capabilities, tracking •Experience, Buying Org. tractionExperience, Buying Org. traction
- 16. Realization of Quadrem Benefits Assumed Receipt and Payment via MIMS •Anticipate the future incorporation of automatic / assumed receipt and streamlined payment methods – Reduce User Reconciliation. •Concepts include leveraging ‘ERS’-type processes to pay suppliers in a more automated fashion - Enhance process efficiency. MIMSMIMS QuadremQuadrem eCatalogeCatalog QuadremQuadrem Buying App.Buying App.
- 17. Realization of Quadrem Benefits Catalog and Content Integration with MIMS •Anticipate the future incorporation of eCatalogs into the MIMS Environment – LinkOne, Quadrem or other options are available. •Convergence of process and systems to be MIMS centered. •Broad opportunities exists with integration MIMSMIMS QuadremQuadrem eCatalogeCatalog QuadremQuadrem Buying App.Buying App.
- 18. Realization of Quadrem Benefits •How PD utilizes Quadrem today is the ‘Tip of the Ice Berg’. •Beginning of savings and compliance based on eCatalog sup. •Other Buying Organizations are paving the way •Quadrem Hosted BuyerQuadrem Hosted Buyer •Low $, High Transaction VolumeLow $, High Transaction Volume •eCatalog expertise is growingeCatalog expertise is growing •Extending capabilities, trackingExtending capabilities, tracking •Experience, Buying Org. tractionExperience, Buying Org. traction •Move process closer to suppliersMove process closer to suppliers (VHS, ASN, PO Change)(VHS, ASN, PO Change) •LeverageLeverage Quadrem HUBQuadrem HUB - Broad,- Broad, e-enabled supply-basee-enabled supply-base •Transaction efficiency/improvedTransaction efficiency/improved •Standardized method to transactStandardized method to transact with preferred suppliers.with preferred suppliers.
- 19. Quadrem Road Map and Approach •Continue with an approach that addresses both Global Supply Chain & Supplier oriented Values. •Understand where Quadrem, MIMS and other tools can be driven to maximize process opportunities. •Early supplier involvement – [Tool Kit Item] •Supplier Profile Form
- 20. Questions
Editor's Notes
- Discuss Quadrem activities and targets. Keys to Progress – Quadrem Value Proposition Explain the content centered approach and future business model. Quadrem evolution as we begin to transact electronically from MIMS.
- 300% More Transactions 450% Increase in Throughput YearTotal DollarsTotal Count 2001 Total$5,206.44 195.00 2002 Total$1,946,157.75 14252.00 2003, Oct 1$9,598,523.02 40114.00
- Significant progress on key suppliers – e.g. BOISE. 88% of Office Sup. spend now with BOISE. About 50% from eCatalog. Leverages savings and relationship
- Another aspect to consider is to build opportunities into the supplier relationship. By tailoring an agreement with a supplier to quantifiable performance indicators, we can build in long term savings that can occur over the agreement term. Commodity Managers are an integral part to drive the process of not only compliance to a particular provider, but also using Quadrem eCatalog for appropriate products. Build savings into the Contract Pricing and Approach: Sliding Scale or Tier Pricing Discounts based on electronic document exchange Discounts based on payment process
- Getting to the next level is key – what will it take to get to the next level? * Usable Application + Knowledgeable Users is only part of the Equation! * Site Manager commitment and consistent message that one-off savings with a particular supplier does not infer that that supplier is lower cost overall. Again, the consistent message should be firm compliance and a resounding message. * The aggregated savings of the historic/market basket of items, is the percentage of savings that should be considered. Savings are determined by Commodity Managers and Quadrem team. * In the long term, we plan to use the data warehouse and supplier catalog content to run historic and actual reporting to deliver on savings promises.
- Dept. of 12 people - Five Pro Card users in Department Average Spend $12,000 per employee on Pro Card Used 20 different Suppliers $10,000 Quadremable dollars $10,000 x 10% = $1,000 Average Savings per Pro Card User over 9 Months.
- Department #2 Dept. of 12 people - Six Pro Card users in Department Average Spend - $70,000 per employee on Pro Card Used 40 different Suppliers $60,000 Quadremable dollars $60,000 x 4%= $2,400 Average Savings per Pro Card User over 9 Months.
- Immediate Lost Opportunity $1,000 Avg. Savings/Pro Card User Dept. #1 $2,400 Avg. Savings/Pro Card User Dept. #2 $3,400 Average Savings over period $1,700 Average savings per Pro Card User $1,700 x 120 ProCard Users = $204,000 Lost Opportunity for Savings for first 9 months. Savings Potential is Real $189 x 120 Pro Card users = $22,680/MO $22,680 x 12 = $272,160 per year Savings Potential $22,680 x 3 = $68,040 4th Qtr. Savings Potential
- Throughput and Saturation * Direct relevant and appropriate Spend with preferred eCatalog suppliers through Quadrem. * Continue with saturation success across all eCatalogs. * Engage local & national suppliers when a fit exists and there is no existing agreement. I’ll talk about this in a moment with the a Trading Partner Profile form we’ve developed. Savings Opportunity * Realize broader and measurable savings by driving ProCard user to Quadrem for appropriate suppliers. *‘Site X’ Pro Card Spend (9 Month) = $2,515,000 * Quadrem Spend (9 Month)-- $88,000 * Area for improve within Delta $2,427,000
- Use a formula approach similar to this. Know the suppliers and their offering. Ecatalogs can mean implemented savings for CBE awards. Analyze ProCard spend, make relationship between current ProCard usage and those suppliers within Quadrem eCatalog.
- Transition from catalog challenges to catalog progress and focus on bringing more sophistication to Quadrem suppliers.
- Realization of Quadrem Benefits Quadrem Hosted Buyer Low $, High Transaction Volume eCatalog expertise is growing
- Quadrem Hosted Buyer Low $, High Transaction Volume eCatalog expertise is growing Extending capabilities and tracking of item usage (bin stock). Experience factor with our to-date usage of Quadrem tools, eMarketplace and MIMS. And, we can take advantage of many of the development and different flavors of integration taken on by other Buying organizations that are part of Quadrem.
- Assumed Receipt and Payment via MIMS Anticipate the future incorporation of automatic / assumed receipt and streamlined payment methods – reduce User Reconciliation. Concepts include leveraging ‘ERS’-type processes to pay suppliers in a more automated fashion - enhance process efficiency.
- Catalog and Content Integration with MIMS Anticipate the future incorporation of eCatalogs into the MIMS Environment – LinkOne, Quadrem or other options are available. Convergence of process and systems to be MIMS centered. Broad opportunities exists with integration – aligning business processes, transaction effienciency and
- Reduce transaction time, uncertainty & cost Focus on value-points in our shared business processes Share the benefits – hard and soft. Discuss and present EUR Shell report that Flavio used to quantify supplier numbers. Also introduce PD Trading Partner eBusiness Profile tool-kit (in binders).