4. eps’ Game Changing Value Reducing OpEx 10% has exponential impact on margin and shareholder value 4 $3Bn in Revenue would be required to replicate $200Mn in operating profit eps improves EPS e-procurement services (eps) ILLUSTRATIVE
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7. eps enables & optimizes leveraged buying 7 Lighting Requirement Store A B. Bid Requirements Lighting Requirement Store B Lighting Requirement Store C Lighting Requirement Store D Re-lamping Requirement Store A, B Lamp Servicing Requirement Store A, D Store A Store C Lamp Servicing Requirement Store C, B Store D Re-lamping Requirement Store C, D Store B ILLUSTRATVE eps improves EPS e-procurement services (eps)
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9. $200K $165K Vehicles Savings of 10% + have been achieved across most categories Size of Bubble : (Relative Value Generated from ebids) $1.5M $1.75M $2M $2.25M 5% 10% 15% 20% 25% 30% 35% 40% 45% $250K $500K $750K $1M $1.25M % Savings Bid Value $62K Energy 9 $780K Store Shelving/Fixtures $240K Store Re-model $27K Store Const’n $119K DSL Service $550K Store Lighting Services $120K PoS H/W, S/W* $48K Roofing $52K HVAC 50% $90K Pkg Supplies $140K Temp Labor $150K Wireless $212.5K Office Supplies Print Services $266K Media Services $150K DMARC Extensions& Service eps improves EPS e-procurement services (eps)
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11. in 2. Administer e bid 1. Design project 3. Due Diligence & Award Capture Value Draft Specs QA & Format RFQ Prepare Suppliers (Conduct Pre-Event Site Tours; Distribute Samples) Contact Low Bidders 1 5 Answer RFQ Questions Distribute RFQ to Suppliers Perform Due Diligence Award Contract Negotiate Contract 3 4 1 2 3 4 eps’ process Authorization is needed to begin supporting you eBid Managed Service step Client responsibility 0. Plan projects 3 Review and sign eps engagement authorization Analyze Spend Opportunity Conduct eB id Event 8 Distribute Event Access Code to pre-Qualified Suppliers 1 2 Engage Buyers; Confirm eBid Readiness 3 Confirm RFQ 2 Prepare Suppliers for eB id Event 6 Research suppliers Confirm Specs 5 4 Conduct Market Check 6 Cut Blanket Purchase Order 5 7 Sequence eBid events 4 Purchase Review 2 Define eBid scope (objective, volume, current price, switching costs, incumbent suppliers, service level, T&Cs, event & award timeline) 4. Lessons Learned 6 12 * If the award threshold price and specs are not met, a client need not award Go/ No-Go 1 eps improves EPS e-procurement services (eps)
In an auction, buyers are bidding the price up…..the seller benefits with each uptick In a reverse auction, sellers are bidding the price down…..for each price change downward the buyer is benefitting. For example, what had been previously a $100K/ year store fixtures buy is now to be awarded through a reverse auction. Sellers who meet a buyer’s qualification criteria will compete for that business as specified and typically bid it down 16%+ (to $250K or $83K/year or less). Sellers are motivated to participate in reverse auctions because: 1. it’s a lower cost of new sales for them 2. They have a commitment of revenue (usually a multi year term) that they did not previously have 3. They have the lifetime of the award to make changes to their internal processes to recapture any margin lost 4. Incumbents participate, if requested, because they do not want to lose the business they had Following the event, the buyer may request samples, request a modified production run, interview low bidders, visit factories and are free to select any supplier who meets their criteria regardless of price. Of course they will usually begin the vetting of suppliers based upon price.
In 1a the impact on profit margin from reducing COGS or OpEx by 10% is valued both in terms of $ and %. In 1b the impact of an improvement to operating profit , after taking into account taxes and when factoring in PE, is shown on market capitalization and stock price Most impressive, at the bottom, the amount of revenue needed to replicate the same amount of operating profit generated through cost reduction is identified
There are three primary elements of value the managed service generates: It identifies and pre-qualifies a critical mass of suppliers to participate in an event including incumbents It optimizes the bid’s structure by identifying and taking into account all bid variables including: market demand, direct material (and labor) price fluctuations, exchange rates, payment terms, length of contract etc. The dynamic of suppliers competing against each other in a transparent environment itself identifies market pricing Clients post bid and during due diligence have the opportunity (and now the time) to evaluate all bidders and identify (and negotiate) additional savings
The key to the optimized leveraged buy is: a governance structure so that the one supplier can be selected by all participants i.e. if multiple suppliers are selected the value created is sub-optimized structuring the bid so that the individual operating company’s needs can be met by the one supplier is selected
DMARC Extensions & Service includes cabling, computers, PoS service for <amount withdrawn> outlet stores Store lighting also includes installation
November 4, 2011 Copyright Tactica (Asia) Ltd-Kymmene Group
Advanced, customizable, multi-panel screen that enables buyers to have full control and visibility over their events from one location Can be configured to display multiple actions such as Event Log, Supplier Tracking, Supplier Messaging, Bid List (Standard, Unit and History views), Bid Graph and Collaboration November 4, 2011 Copyright Tactica (Asia) Ltd-Kymmene Group
November 4, 2011 Copyright Tactica (Asia) Ltd-Kymmene Group
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