Marketplace as a Supplier - Transforming Indirect Procurement

1. MARKETPLACE AS A SUPPLIER TRANSFORMING INDIRECT PROCUREMENT ANDRES AGASILD CEO & CO-FOUNDER

2. INTRO We have been building indirect IT category marketplaces for 17 years and in 35 countries. Helping with the digital transformation in 20% of Forbes 2000 companies. Our focus is on the IT category, but key points are relevant to other areas of procurement with similar circumstances. We also feel that this discussion needs practical examples and real success stories. Markit is at the forefront and we will use examples and address the issues of using marketplaces. ANDRES AGASILD CEO & CO-FOUNDER “ “

3. B2B online marketplaces create self-service, digitally- sourced environments where multiple vendors can offer products or services to business customers, making transactions simpler and more transparent. “ “ MARKETPLACE AS A TECHNOLOGY MAKING A STAND TO DIGITALISE AND AUTOMATE THE CLASSIC PROCUREMENT PROCESS.

4. TRANSFORMATION TAKING ITS TIME INDIRECT SPEND CATEGORIES HAVE RESISTED THE TREND TOWARD ONLINE PURCHASES. NEW PRESSURES - AND OFFERINGS - ARE RESHAPING THE FUTURE OF INDIRECT PROCUREMENT. IN N O VATO RS EARLY AD O PTERS EARLY M AJO RITY LATE M AJO RITY LAG G ARD S THE CHASM THE EARLY MARKET THE MAINSTREAM MARKET GRAPH CROSSING THE CHASM by Geoffrey A. Moore

5. SPECIFIC NOT UNIVERSAL WHERE NEGOTIATION AND CLASSIC TENDERING IS TOO EXPENSIVE OR IMPOSSIBLE. PRODUCT COUNT IS HIGH, ITEM COST IS LOW AND TOTAL SPEND IS HUGE. AUTOMATED TENDERING AND DIGITAL PROCESS ARE PERFECT FOR THIS SCENARIO. COMBINATION OF RFQ AND MARKETPLACES BASED ON SPECIFIC SCENARIOS MARKETPLACES WORK BEST

6. IT EXPLOSION 80000 2007 2019 76 419 11 419 HIGH PRODUCT COUNT LOW COST OF ITEMS 2007 2019 2400 739 EUR 2 224 EUR TOTAL BASKET OF NOTEBOOK + DESKTOP + PRINTER + LCD UNIQUE PRODUCTS SOLD IN A CALENDAR YEAR SOURCE MARKIT, http://www.markit.eu

7. TAILSPEND IS MAIN SPEND PC AND RELATED USED TO BE 80% OF THE TOTAL IT HARDWARE SPEND, NOW IT IS HEADING TO 20% IT CATEGORY SPEND IS VERY SPLIT OVER A HUGE VARIETY OF PRODUCTS SOURCE https://www.spiceworks.com/marketing/state-of-it/report/ 2% 5%6% 6% 7% 8% 9% 9% 10% 12% 27% LAPTOPS DESKTOPS TABLETS & DEVICES NETWORKING PRINTERS SECURITY POWER EXTERNAL STORAGE TELEPHONY PERIPHERALS OTHER

8. PROCESS MATTERS Most significantly marketplaces provide CPOs with the means to offload the tactical, repetitive work that dominates procurement, so they can focus on more strategic activities. “ “ PROCESS IS UNDERVALUED BECAUSE IT IS UNDERMEASURED PRODUCTIVITY PER PERSON IS A KEY FACTOR FOR COMPANIES AND ECONOMIES

9. PROCESS MATTERS Most significantly marketplaces provide CPOs with the means to offload the tactical, repetitive work that dominates procurement, so they can focus on more strategic activities. “ “ PROCESS IS UNDERVALUED BECAUSE IT IS UNDERMEASURED PRODUCTIVITY PER PERSON IS A KEY FACTOR FOR COMPANIES AND ECONOMIES

10. PRICE SAVINGS IT IS NOT ONLY “BEST PRICE” BUT ALSO ABOUT CONSISTENT AND “AFFORDABLE” COMPETITION CONSIDER TOTAL COST OF PURCHASING, TIME SPENT ON TENDERS CAN BE HIGHER THAN SAVINGS BUT WHAT HAPPENS WHEN YOU ARE NOT LOOKING AND COMPARING?

11. PRICE SAVINGS IT IS NOT ONLY “BEST PRICE” BUT ALSO ABOUT CONSISTENT AND “AFFORDABLE” COMPETITION CONSIDER TOTAL COST OF PURCHASING, TIME SPENT ON TENDERS CAN BE HIGHER THAN SAVINGS BUT WHAT HAPPENS WHEN YOU ARE NOT LOOKING AND COMPARING?

12. RELEVANCE A MARKETPLACE IS ONLY VALUABLE WHEN IT HAS ENOUGH MARKET COVERAGE

13. RELEVANCE A MARKETPLACE IS ONLY VALUABLE WHEN IT HAS ENOUGH MARKET COVERAGE

14. REAL. TIME. APPLES. DATA QUALITY, RELIABILITY AND SPEED ARE CRITICAL FOR “MARKETPLACE TRUST”

15. ACCOUNTABILITY MARKETPLACES LACK THE DIRECT ACCOUNTABILITY OF SUPPLIERS. CONTRACTING, ONBOARDING, ORDERING, INVOICING, RETURNS, WARRANTY, SPOC, COMMUNICATION. MORE COMPETITION MEANS MORE SUPPLIERS, WHICH IN TURNS MEANS MORE OVERHEAD HOW CAN YOU CONSOLIDATE AND EXPAND YOUR SUPPLIER BASE AT THE SAME TIME?

16. ARE YOU EXPANDING OR CONSOLIDATING? EXPANDING OR CONSOLIDATING YOUR SUPPLIER BASE? 0 5 10 15 20 25 30 35 40 45 Expand signiﬁcantly Expand slightly No change Consolidate slightly Consolidate signiﬁcantly 43% 28% 16% 9% 4% SOURCE DELOITTE: 2020 Chief Procurement Officer Flash Survey

17. MARKETPLACE AS A SUPPLIER OPEN MARGIN, OPEN BOOK, RELEVANT SUPPLIER BASE WITH FULL TRANSPARENCY - CREATING A MARKETPLACE EFFECT. MARKETPLACE BECOMING A SINGLE SUPPLIER WITH FULL SUPPLIER ACCOUNTABILITY. ALL AVAILABLE INFORMATION ABOUT DELIVERY, INVOICING, RETURNS AND SUPPORT. WE NEED THE BEST OF BOTH

18. OPEN PRICING OPEN TRANSACTION FEE, NO HIDDEN OR ADDITIONAL COSTS

19. OPEN SUPPLIER BASE ALL RELEVANT SUPPLIERS, FULLY VISIBLE AND PRE-QUALIFIED

20. OPEN SUPPLIER BASE ALL RELEVANT SUPPLIERS, FULLY VISIBLE AND PRE-QUALIFIED

21. OPEN BOOK FULL DOCUMENT LEVEL TRANSPARENCY FOR ALL TRANSACTIONS

22. REAL CASE OF SAVING TIME AND MONEY DANFOSS GROUP (1,5 BILLION EUR IN 100 COUNTRIES) MANUFACTURES PRODUCTS AND PROVIDES SERVICES USED IN COOLING FOOD, AIR CONDITIONING, HEATING BUILDINGS, CONTROLLING ELECTRIC MOTORS, GAS COMPRESSORS, VARIABLE-FREQUENCY DRIVES AND POWERING MOBILE MACHINERY. DANFOSS PROCUREMENT EMPLOYS MORE THAN 500 PEOPLE WORLDWIDE THAT AIM TO INCREASE SUPPLIER PERFORMANCE, DEVELOP ACTIVE PARTNERSHIPS TO EXPAND BUSINESS OPPORTUNITIES AS WELL AS MINIMISE COMPLEXITY AND ANNUAL COSTS.

23. DANFOSS SUCCESS 15% SAVINGS PER YEAR 1 DAY TIME GAIN PER WEEK PER PERSON FROM 130 SUPPLIERS DOWN TO 1 DELIVERY TIME FROM 28 TO 2,75 DAYS

24. 2020 FIRST HAND EXPERIENCE SPEED AND FAST DELIVERY SAVING LIVES ACTUAL SHORTAGES VERSUS VISIBILITY SHORTAGES URGENT SPEND WITHOUT COMPARING SAME TEAM, DOUBLE THE WORK

27. 2020 IMPLICATIONS FOR MARKETPLACES 50% < 10% GOOD / VERY GOOD VISIBILITY T1 T2+ ONLY 50% OF PROCUREMENT LEADERS HAD HIGH OR VERY HIGH VISIBILITY INTO THEIR TIER 1 SUPPLIERS, WHILE 90% RATED THEIR VISIBILITY INTO THEIR EXTENDED SUPPLY NETWORKS AS MODERATE TO VERY LOW. YOU CAN’T MANAGE WHAT YOU CAN’T SEE INVESTING IN: ACCELERATING DIGITIZATION UPGRADING SYSTEMS HINDSIGHT IN 2020 APPROXIMATELY 18% OF REGRETTED NOT ACCELERATING DIGITIZATION FAST ENOUGH THROUGH INVESTMENTS IN UPGRADED SYSTEMS THAT ENHANCE VISIBILITY AND ANALYTICS CAPABILITIES. SOURCE DELOITTE: 2020 Chief Procurement Officer Flash Survey

28. MARKITPLACE NOW! CREATES MARKITPLACES AND TRANSFORMS PROCUREMENT TRANSPARENCY

29. TAKE THE CHASING OUT OF OT PURCHASING WWW.MARKIT.EU