PROCUREMENT             TRANSFORMATION•   Background•   Spend Analytics (The Linchpin)•   Strategic Sourcing (The Result)•...
PROLOGUE             Procurement at the Utility•   Largely Transactional•   Minimal Value Add•   Reactionary•   De-central...
SPEND ANALYTICS   • Major Emphasis   • Metrics       – Score Card                              80%                        ...
STRATEGIC SOURCING                  BENEFITS• Improves Costs     –   Volume Discounts     –   Reduced Freight Costs     – ...
TOOLS FOR BUYERS• Spend Analytics     – Dollar Volume (plus Mission Critical Sourcing)     – Quantity of Goods vs. Value o...
SOURCING CAREER               DEVELOPMENT• Buyer (III, II, I, Sr.)• Contract Analyst (III, II, I, Sr.)• Strategic Sourcing...
TOOLS FOR PARTNERS•   Agnostic Sourcing Model•   Total Cost of Ownership Acquisitions•   Operational Assessments•   Market...
TOOLS TO IMPROVE                SUPPLIERS• Supplier Performance Management  Program• Operational Assessments• Score-cardin...
INTERNAL METRIC MEASURES•   Reduce Quantity of Suppliers•   Reduce Number of Touches by Buyers•   Reduce Aberrant (Rogue) ...
STRATEGIC SOURCING                 • “Herding Cats”                 • “Boiling Frogs”                (for next two years)1...
CHANGE MANAGEMENT                  • People (Skillsets)             • Processes (Standardization)                     • Te...
STRATEGIC PARTNERS FOR            CHANGE•   Accounts Payable•   Treasury•   Legal•   Risk•   Audit• CFO?• Wires?• Generati...
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Strategic sourcing change 2010

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2009 Strategic Sourcing & Procurement evaluation

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Strategic sourcing change 2010

  1. 1. PROCUREMENT TRANSFORMATION• Background• Spend Analytics (The Linchpin)• Strategic Sourcing (The Result)• Tools (For Buyers, Partners, Suppliers)• Metrics (The Sustainable Measures)• Change Management (The Process)• Allies (The Vehicle)12/02/2009 1
  2. 2. PROLOGUE Procurement at the Utility• Largely Transactional• Minimal Value Add• Reactionary• De-centralized (Approach & Process)• Like Driving With a Blindfold on• This Has To Change!12/02/2009 2
  3. 3. SPEND ANALYTICS • Major Emphasis • Metrics – Score Card 80% Strategic – Market Intelligence – Commodities Indexing to Exception Analysis • Marquee Leveraging! 85% (Mission Critical) • Cross-functional Teams • Initial Emphasis • Minimize Base • Automate! 15% to Tactical • On-line Catalogs, VMI, 3PL • P2P! 20% • Co-source? • Cross-functional Teams12/02/2009 3
  4. 4. STRATEGIC SOURCING BENEFITS• Improves Costs – Volume Discounts – Reduced Freight Costs – Increased Automation (fewer touches) – Reduction in Procurement Operational Costs• Improves Quality – Better Supplier Delivery Performance – Increased Supplier Assurance (lower risk) – Decreased Processing Errors – Better Contract Compliance• Improves Culture – Management by Exception – Strategic Partner to BUs – Visibility to Performance12/02/2009 4
  5. 5. TOOLS FOR BUYERS• Spend Analytics – Dollar Volume (plus Mission Critical Sourcing) – Quantity of Goods vs. Value of Goods – Supplier Rationalization (Leverage AEP Marquee)• Standardized Operating Procedures• Supplier Score-carding• Market Intel Tools (organic or purchased?)• Commodities Intel Tools• Technology Tools (EDI!, P2P, Web-based Transactions)• Cross-functional Teambuilding with BUs12/02/2009 5
  6. 6. SOURCING CAREER DEVELOPMENT• Buyer (III, II, I, Sr.)• Contract Analyst (III, II, I, Sr.)• Strategic Sourcing Analyst (III, II, I, Sr.)12/02/2009 6
  7. 7. TOOLS FOR PARTNERS• Agnostic Sourcing Model• Total Cost of Ownership Acquisitions• Operational Assessments• Market Intel (organic or purchased?)• Cross-functional Teambuilding with Buyers12/02/2009 7
  8. 8. TOOLS TO IMPROVE SUPPLIERS• Supplier Performance Management Program• Operational Assessments• Score-carding• Formal Standardized Corrective Action Plans12/02/2009 8
  9. 9. INTERNAL METRIC MEASURES• Reduce Quantity of Suppliers• Reduce Number of Touches by Buyers• Reduce Aberrant (Rogue) Spend• Reduce Non-blanket Spend• Reduce Rework• Improve Savings & Cost-Avoidance Metrics12/02/2009 9
  10. 10. STRATEGIC SOURCING • “Herding Cats” • “Boiling Frogs” (for next two years)12/02/2009 10
  11. 11. CHANGE MANAGEMENT • People (Skillsets) • Processes (Standardization) • Technology (0 for 3)12/02/2009 11
  12. 12. STRATEGIC PARTNERS FOR CHANGE• Accounts Payable• Treasury• Legal• Risk• Audit• CFO?• Wires?• Generation?12/02/2009 12

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