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Point Of View Category Management v1.0 final
- 1. Category Management Marjolein Dijkshoorn Sydney, October 2012
- 2. Whereas Capgemini supportsclients with the improvement of the entire procurement strategy, organisation, processes and execution, this document will focus solely on category management STRATEGIC Defines procurements prime objectives to Procurement align and support the business strategy. Strategy Development Business alignment through the Procurement Board. Participants executive Governance & Organisation level. Development Category Planning TACTICAL Specific strategies and market approach for Commodity groups covering market and spend profiling, selection and Purchase Supplier switching. The commodity strategy will Demand Sourcing Relationship determine the optimum geographic Management Management approach. Alignment through Multi Functional Teams. Supply Planning & Control Participants functional level (e.g. HR, marketing, IT) Provision of Goods & Services OPERATIONAL The delivery of benefits through a compliant environment based on information, procedures and policies in IT People Knowledge & Information line with the strategy Managing the Enablers Alignment through compliance. Presentation Map
- 3. Category Management isthe management of a specific group of commodities with similar characteristics, with the aim to increase efficiency and realise cost savings Category Management Definition Category Management Benefits “the entire science of the procurement subject applied to 1. Savings. Category Managers can leverage expertise and insight a single genre of expenditure”. into a whole category as a means of driving value from a particular deal. In Category Management products or services that have similar 2. Consolidation of spend. When managing by category, characteristics and are bought from similar supply markets are consolidation opportunities can become apparent as well as well grouped together and treated as a discrete group or category. as opportunities to outsource. These categories are then more manageable from a procurement 3. Internal vs External alignment. It links customer requirements perspective because the items in a category require the same with supply market capabilities. supplier market intelligence, the same sourcing strategies and 4. Team work. It enables the business requirements definition or similar supplier relationship management programmes. specification to be developed so that it delivers best value. Defining your business requirements is a team game in that it The key elements of Category Management include end-to-end identifies both the user requirements and commercial management of the supply chain, acute market awareness, sound expectations. (if not expert) technical knowledge, good SRM and excellent 5. Leverage. It ensures that all relevant spend is included in the stakeholder relationships. Also, an understanding of actual category so that your leverage is maximised. 6. It reduces risk. Creating categories and putting them under the consumer needs – at the other end of the supply chain. proper management of experts enables you to spot any trends or developments that might create a commercial risk and do something to prevent or mitigate it. 7. Clear Responsibilities and Communication. It helps to build good communications across the entire value chain. Category Management gives you the visibility and opportunity to communicate the right message in the right way to the right people to get the result you want. 8. Trust. It builds trust and co-working across all of the value chain. 9. Comprehensiveness. It ensures that many supply options are considered rather than just the obvious one. Presentation Map CIPS Research 2011: State of the art of category management
- 4. Capgemini’s Procurement specialistsand Procurement as a Service™ provide a strong solution to compliment the clients Sourcing organization and Category Management approach CAPGEMINI PROCUREMENT STRATEGIC PROCUREMENT CATEGORY SUPPORT ON-DEMAND PROCUREMENT PLATFORM Strategic services that leverage Capgemini's Spend analysis, category intelligence, event The leading Sourcing and Category unique mix of procurement and industry management and supply risk analysis are the Management solutions to improve efficiency in sector expertise, as well as deep key activities in our category support offering. sourcing process understanding of client needs. The support function of Procurement as a • Spend Analysis Service provides services to the clients retained • eSourcing / event management Acting as an extension of the clients category managers. • Supplier Network procurement organization, Capgemini will • Contract Management perform strategic sourcing and category • Savings tracking management for assigned spend categories. • Project Workflow Strategic Procurement Category Contract Supplier Compliance Content Strategic Sourcing Management Management Relationship Management Management Management Category Support Spend Analysis Category & Market Intelligence Event Factory Supply Risk Analysis Presentation Map
- 5. Today, Capgemini BPOmanages over $12.5B AUD spend with the majority being indirect spend categories. Our knowledge in these categories will enable us to bring acceleration to the clients sourcing process CAPGEMINI CATEGORY TREE 1 2 3 4 5 6 7 8 9 10 11 12 OFFICE FACILITY REAL ESTATE PROFESSIONAL HUMAN IT & COMMUNI- FINANCIAL MARKETING TRAVEL LOGISTICS MRO PRODUCTION MANAGEMENT SERVICES RESOURCES CATION SERVICES EQUIPMENT 1.1 2.1 3.1 4.1 5.1 6.1 7.1 8.1 9.1 10.1 11.1 12.1 Office Supplies Cleaning Services Contractors & Management Recruitment Hardware Banking Services Commercial & Conferences & Air Transportation Spare Parts Material Handling Renovation Consultants Production Print Meetings Equipment 1.2 2.2 3.2 4.2 5.2 6.2 7.2 8.2 9.2 10.2. 11.2 12.2 Furniture Security Rents IT Consultants Training Peripherals Auditing Communication Hotels Road Transportation Hand Tools Production Equipment Consultants 1.3 2.3 3.3 4.3 5.3 6.3 7.3 8.3 9.3 10.3 11.3 12.3 Office Machines Canteen Property Engineering Employee Benefits Software Insurance Media Rental Cars Rail Transportation Protective Gear & Test & Measurement Consultants Clothing Equipment 1.4 2.4 3.4 4.4 5.4 6.4 7.4 8.4 9.4 10.4 11.4 12.99 Subscriptions Electricity Development Legal Services Employee Recognition IT Services P- card Services Events & Exhibitions Train Sea Transportation Lab Supplies Other Capital Consultancies Equipment 1.5 2.5 3.5 4.5 5.5 6.5 7.99 8.5 9.5 10.5 11.5 Literature Water and Waste Brokers Temporary Labor - Fleet Cars Telecom Other Financial Advertising Agencies Travel Management Courier and Small Lubricants Water Admin Services Package Services 1.6 2.6 3.99 4.6 5.6 6.6 8.6 9.6 10.6 11.6 Coffee & Other HVAC Other Real Estate Temporary Labor – Payroll Services Data Com Market Research Air Warehouse - 3rd Air and Gas Vending Skilled Party Space 1.7 2.7 4.99 5.99 6.7 8.7 9.7 10.7 11.7 Paper Waste Management Other Professional Other Human Phones Systems Promotional T&E Card Customs Services Chemicals Services Resources Merchandise 1.99 2.8 6.8 8.8 9.99 10.8 11.8 Other Office Landscaping Services Accessories Sales Services Other Travel Freight Bill Auditing Cutting Tools Services 2.9 Snow Removal 6.99 8.9 10.9 11.99 Services Other IT & Marketing Consultants Storage Systems Other MRO Communications 2.8 8.99 10.99 Mailroom Services Other Other Logistics Marketing 2.99 Other Facility Mgmt/Maintenance Presentation Map
- 6. Strategic Procurement managesspend savings and supplier performance through our global network of category managers as well as local experts Service Delivery Model TRANSACTIONAL DELIVERY HUBS • Activities which require close access to the client, such as stakeholder management, sourcing wave planning, REGIONAL / GLOBAL OFFSHORE CATEGORY SUPPORT and complex category sourcing are DELIVERY DELIVERY MARKET CENTERS INTELLIGENCE performed locally SPEND ANALYSIS • Strategic sourcing and category ENGLISH LANGUAGE EVENT (RFx) FACTORY management activities are performed NEAR-SHORE STRATEGIC GLOBAL onshore / onsite and offshore based on DELIVERY SOURCING PROJECT SOURCING category complexity, stakeholder ENGLISH SOURCING LITE alignment client requirements. Typical LANGUAGE PROJECTS ratio is 50% onshore / 50% offshore • Local delivery is supported by our regional and global category managers who provides sourcing strategy LOCAL DELIVERY expertise ( onsite / onshore) • Category support such as spend analysis CATEGORY SUPPORT LANGUAGE and reporting are performed by local CENTRIC MARKET INTELLIGENCE SPEND ANALYSIS procurement specialist or performed in STAKEHOLDER MGMT ONSIGHT English from India ON-SHORE SOURCING & PROJECT WAVE PLANNING STRATEGIC SOURCING SUPPORTS PROJECT SOURCING OVER 37 SERVICE MANAGEMENT LANGUAGES Presentation Map
- 7. Capgemini takes acomprehensive view of Category Management SP1.0 SP2.0 SP3.0 SP4.0 Procurement Strategy Category Category Category & Planning Planning Development Management 1.1 Assess client environment 2.1 Profile category 3.1 Mobilize 4.1 Manage demand Continuous improvement 1.2 Perform spend analysis 2.2 Create category strategy 3.2 4.2 Manage supply initiative Idea generation & Define, assess initiatives & 1.3 2.3 3.3 Compliance initiative 4.3 Manage savings & compliance opportunity identification prioritize 1.4 Goal & objective setting 3.4 Strategic sourcing initiative 4.4 Manage stakeholders 3.5 Initiative implementation 4.5 Manage risk 4.6 Manage supplier 4.7 Project based sourcing • Spend Profiler • Business Intelligence • eSourcing • Workflow Tools • Spend Profiler • Supplier Positioning • Workflow • Business Intelligence • Business Intelligence • Supply Preferencing • Business Intelligence • SLA and Operational Reporting • Five Forces • Contract Management • Contract Management Workflow and issue resolution infrastructure Intelligence • Category Packs • Category packs • Spend analysis • Cross client processes • Cross-client best practices • Rfx Templates and scenarios • Category intelligence packs • Category specific KPI´s • Supplier listings • Contract templates • Benchmarking • Benchmarking • Supply market intelligence • Quarterly analysis Presentation Map
- 8. Realizing savings andensuring client governance in all initiatives Idea Opportunity Identified Captured Realized Savings Status Strategic Sourcing Profile Create Qualify Source And Implement Contract Assessment Sourcing Sourcing Suppliers Award And Savings Category Strategy Initiative Types Compliance Identify & Develop Stake-holder Monitor Hypothesis Run Compliance Reports Quantify Implement. Implement Buy-in Progress Suppliers Approach Improvement Continuous Quantify & Finalize Validate Need And Stake-holder Monitor Identify Need Validate Recommendat Implement Develop Approach Buy-in Progress Opportunity ion A B C D Council Tollgates Stakeholder agreement on project Stakeholder sign-off on approach and Stakeholder sign-off on Project evaluation and transition to details for development project execution implementation plan and savings on-going maintenance Presentation Map
- 9. Capgemini‘s Spend Analysisprocess creates normalized, enriched data to enable sourcing and supplier optimization analysis Data Extraction & Data Cleansing & Analysis & Reporting Aggregation Classification • Extract data from source systems • Data cleansing , grouping & • Advanced spend reporting & • Load data into Spend Profiler classification analysis • Aggregate and map all data files • Classify transaction data to • Provision of cleansed and • Data validation checkpoint to hierarchy classified data extract ensure accuracy and • Conduct mapping workshops to • Final presentation view of Spend completeness of loaded data review classifications, exceptions, Analysis results and to ensure business accuracy Industrialized and automated process supported by Spend solution Presentation Map
- 10. For industrialized outsourcedcategories, Capgemini maintain a library of category know-how and insight to accelerate benefit delivery and opportunity size Market Characteristics Category Insight Historic Areas of Opportunity High Level Solution Overview session. 1st Presentation Map October 2009
- 11. Category Intelligence ismanaged by a dedicated Knowledge Manager or Procurement Specialist, and is proactively updated as part of the Sourcing Close process Category Tree Excerpt 2 6 FACILITY IT & MANAGEMENT COMMUNICATION 2.1 6.1 Cleaning Services Hardware Category 2.2 6.2 Intelligence Security Computer Peripherals Packs 2.3 6.3 Canteen Software 2.4 6.4 Electricity IT Operations 2.5 6.5 Water and Waste Telecom Water 2.6 Heating 6.6 Data Com Knowledge Leverage Knowledge Harvesting 2.7 6.7 Waste Management Phones & Accessories Profile Create Implement Qualify Source And Sourcing Sourcing Contract Suppliers Award 2.8 6.8 Category Strategy And Savings Mailroom Services Switchboard Hardware Sourcing Initiative 2.99 6.99 Other Facility Other IT & Mgmt/Maintenance Communications Presentation Map
- 12. Category Management andCompliance is used by Capgemini to ensure realized savings and create sustainable improvements Exceptions Compliance Capgemini Category Managers interact with Client Stakeholders to Management Strategy help: I A Reporting & Sourcing • Standardize specification/rationalize items Tracking H B Identify • Measure, manage and improve compliance Ring Capture • Gain earlier involvement in the sourcing and buying process Communicate Policies G Fence C Channel Planning Realize • Build people effectiveness, education programs • Increase efficiencies F D Category Communication E Channel Implementation Content Management Compliance Management Framework 3 to 6+ months based on Category Develop Develop or revise Identify key Design/ Design & deliver Define the performance commodity Create stakeholders Develop training/ sponsorship metrics & procedures & reporting and any implementation communications network for the targets policies to process / impact & communication to key commodity to drive address tools on them Strategy/plan stakeholders behavior compliance • Category managers drive and manage their specific compliance management framework and approach based on leading practices • Extensive communication with business units, suppliers and stakeholders to ensure unique business requirements are understood and incorporated • Category specific requirements are taken in to account for each given category Presentation Map
- 13. Capgemini will leveragethe clients existing technology and supplement, as desired, by our leading on-demand solutions TRUE PLATFORM PHILOSOPHY – Procurement technology AND procurement services ON-DEMAND DELIVERY – IBX Smart Cloud | on-demand or hybrid delivery | ISO-certified READY TO USE – Preconfigured | digitized assets | procurement-ready supplier community USER-FRIENDLY – Enhanced multi-channel, call-off, end-user interface SOURCE TO CONTRACT SOURCING SUITE SAVINGS TRACKER CONTRACT MANAGEMENT SUPPLIER PERFORMANCE SPEND ANALYSIS PROJECT WORKFLOW Collect Prepare Analyze & Define Project Negotiate Information Negotiation Award Presentation Map
- 14. Capgemini has broadCategory Management experience, globally and in the Australian market Presentation Map
- 15. Appendix Presentation Map
- 16. Capgemini Credentials inStrategic Sourcing and Category Management (1/4) Client Engagement Aim and Approach Overview • A Global Strategic Sourcing programme looking at all areas of spend on a global basis, i.e..non-production, production, services and outsourced spend. Capgemini’s Strategic Sourcing methodology is being followed, key stages of which are; capability assessment, in depth commodity profiling of selected focus areas, sourcing strategy and implementation. • Rapid Sourcing Assessment; Segmented and analysed indirect spend. Identified overall value proposition and high opportunity areas. • Strategic Sourcing Commodity Pilots (in progress); Employed Capgemini strategic sourcing methodology for five commodity pilots: office supplies, travel, temporary labour, small package delivery, computer hardware and cellular phones (~7% of the indirect spend). Includes commodity profiling, strategy, demand management policy changes, RFPs/analysis, negotiating strategies, contracting and implementation plans. • Organization Blueprint; Created a Commodity Sourcing & Procurement vision. Designed CSP organization structure, roles & responsibilities, key processes, and a CSP policy. • Purchase-to Pay Future State Solution; Designed future state processes for travel, expense and capital purchases that streamlined the processes and incorporated the use of enabling e-procurement technologies. • Scoped the processes and determined the list of suppliers • Analysed the processes and developed improvement initiatives • Developed an invitation package to suppliers asking for a partnership relationship based on preferred customers prices and improvement initiatives • Analysed responses and developed pricing schedule and improvement initiatives • Rationalised suppliers, helped negotiate initial savings • Developed improvement agenda for future savings • Our involvement commenced with initial assessment of client company purchasing organization, process and technology capabilities as well as estimating potential savings opportunities across several commodity groups. • Strategic Sourcing engagement roll-out commenced with identification and implementation of “Quick Wins” opportunities, followed by traditional Commodity Sourcing comprising of direct material commodity groups totaling approximately $ 50 MM in spend and $ 100 MM in Indirect Spend. • Significant change management responsibility was entrusted on Capgemini to manage and communicate new sourcing process as well as train and transfer knowledge to their existing personnel. Capgemini also assisted in transforming the organizational structure as well as establishing the process to make Procurement as a required core competency for the Client. • Capgemini provided methodology, leading practice experience and knowledge, project management and coaching to all cross-functional teams involved. The first wave of the project focused on 4 commodity groups, such as Commodity Chemicals, Specialty Chemicals and Packaging Materials. Presentation Map
- 17. Capgemini Credentials inStrategic Sourcing and Category Management (2/4) Client Engagement Aim and Approach Overview • A Sourcing Assessment was conducted across Europe, Asia and the Americas, reviewing spend, opportunities and the current Procurement capability. This culminated in a Capability Development Plan, which included a business case for the implementation of a new organisation and supporting infrastructure changes which would be implemented in parallel to several short-term cost reduction initiatives. • A New Organisation Design was developed based upon the development of organisational design principles, the key Procurement processes and the business needs. Fundamental changes include the formation of multi-functional, Sourcing Group Teams which will operate above site level and on a regional / global basis; establishment of a Procurement Leadership team; closer integration with the New Product Development process; clear reporting lines to the executive and throughout the Procurement organisation; and senior executive alignment to key suppliers. This was supported by job profiles, RASI, recruitment processes, detailed resource plans and costs, and job evaluation (Hay Assessment). • Programme Mobilisation necessitated the mobilisation of multifunctional Sourcing Group Teams across the globe - 22 sourcing groups, over 170 full time employees, covering over £1 billion spend. This has been enabled through strong programme management covering communications, issue management, benefits tracking and formal reporting. • Programme Implementation involved all the sourcing groups in the development of terms of reference, conducted commodity profiling, developing sourcing group strategies and implementing initiatives to achieve annual benefits targets. Additional work has also been completed to maximise and ensure sustainability of benefits. • Strategic Sourcing Program • Designed and assisted implementation of program • Trained resources in all aspects of required sourcing capabilities • Assisted in delivering cost reductions from negotiation to component standardization to headcount reductions • Developed sourcing vision leveraging Capgemini ASE workshop • Developed and implemented commodity specific sourcing strategies • Assisted with implementation of Component Supplier Management software package • The objectives of the Strategic Sourcing Scoping engagement were to:- • identify those categories of indirect spend where a strategic sourcing approach could deliver realisable benefits • quantify the potential scale of those benefits • identify the techniques that could be employed to deliver those benefits • Capgemini were engaged to support the Global Purchasing department of this FTSE 100 Life Sciences company in its search to improve purchasing effectiveness of indirect spend. The objectives of the Strategic Sourcing Scoping engagement were to:- • identify those categories of indirect spend where a strategic sourcing approach could deliver realisable benefits • quantify the potential scale of those benefits • identify the techniques that could be employed to deliver those benefits Presentation Map
- 18. Capgemini Credentials inStrategic Sourcing and Category Management (3/4) Client Engagement Aim and Approach Overview • The engagement covered a turnkey eProcurement implementation in 10 months starting with package selection and business case construction through to the e-Enablement of 12 commodity groups across 40+ sites and encompassing 16,000 employees. The engagement combined supply chain, change management and package implementation skills to ensure the complete success and maximum benefits to Royal and SunAlliance. • Reviewed of 10 eProcurement point to point packages, according to the firms global requirements of purchasing goods and services resulting in a clear and objective recommendation. • Construction of a business case with demonstrable bottom line impact. • Implementation of three commodity groups across 5 business sites within 14 weeks as first stage pilot covering over 2,500 employees. • Full push/pull integration to SAP R/3 and Lotus Notes. • Strategic sourcing across all commodity groups to improve commercial arrangements, rationalise the supply base, standardise requirements and implement leading practice supply management techniques. • Management of implementation of Ariba across over 40 business sites covering 16,000 employees to ensure on time delivery of complete system to Royal and SunAlliance. • e-Enablement of 12 commodity groups, including services by end of engagement. • First Ariba client in Europe to adopt Ariba Network. • A High Level Sourcing Assessment was conducted reviewing spend, commodity suitability characteristics, and key business drivers for change. This culminated in a business case for the project and a shortlist of 6 commodities, including castings and plastic mouldings, which were then prioritised for implementation • Programme Mobilisation necessitated the mobilisation of an internal multifunctional work team, including purchasing, engineering, and administrative staff. The internal team, plus all relevant suppliers, were fully trained on the auction tool, the overall reverse auction process, and the expectations of all stakeholders. • Programme Implementation involved the development of terms of reference, dynamic commerce templates, event strategies, post event analysis, and planning to achieve benefits. Specific deliverables included: • supplier search and selection • demand specification • delivery of training programme • development and implementation of event strategies • post auction analysis Presentation Map
- 19. Capgemini Credentials inStrategic Sourcing and Category Management (4/4) Client Engagement Aim and Approach Overview • Related to this program, the airline wanted to maintain the culture and spirit of their employees in the midst of change. • An initial 10-week study was performed to identify specific recommendations for improvements. • Study identified four key areas where improvements would yield significant improvements and cost savings, based on initial process analysis and leading practices gap analysis. • Included a comprehensive commodity program and process and organizational improvements. • The final business cases and improvement portfolio projected savings to be over $8 million in the first year. • Capgemini used the recommendations from this study to conduct a 9-month implementation program. • A Strategic Sourcing Analysis looking at all areas of expenditure i.e. Programme-specific and Operating expenditure. Capgemini’s Strategic Sourcing methodology followed, key stages of which are; capability assessment, in-depth commodity profiling of selected focus areas, sourcing strategy and implementation. • Capgemini are provided methodology, leading practice experience, knowledge and coaching to the client team involved. • The Analysis has focused on 18 commodity groups, such as training provision, telecommunications, travel, print and stationery and IT equipment. • Quick win opportunities were identified and over £250,000 secured • Joint team formed with the client to implement the strategy Presentation Map
- 20. Contact information Susan Beeston Marjolein Vice President BTC – Business Consulting Dijkshoorn Insert susan.beeston@capgemini.com Insert Senior Consultant/ SCM contact Capgemini contact marjolein.dijkshoorn@capgemini.com picture 7/77 King Street picture Sydney, NSW 2000 Capgemini Australia 7/77 King Street Sydney, NSW 2000 Australia Presentation Map