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Nick Ford

Agenda for today

New models for procurement The Odesma delivery model

Harnessing people , technology & process improvements for successful procurement transformation

Case study

Summary and Q&A

Business demands on procurement teams – client viewpoint

Global Procurement Team Business Needs

FearsReduced

profitability and lower share price

Non-compliant behaviour

NeedsDelivered at the

lowest costEthical sourcing

WantsValue for moneyRealised savings that positively

impact the P&L

ExperienceCategory expertise

Strategic sourcing skillsGlobal market insightsTechnology and tools

FeaturesSavings that can be re-invested into

customer growth strategiesCommercial integrity

Risk managementSustainabilityCompliance

BenefitsSpend analytics

Market intelligenceCollaborative approach

with stakeholdersProtection of brand &

reputationSupplier leverage

Governance

Indirect Procurement: Co-creating value for the business at the lowest cost

New models for procurement – the dilemma

PAAS/In House

Combination

StakeholderProcurement

In-houseProcurement

Consulting/In House

Combination Procurement Outsourcing

What we do A highly experienced management team who

will focus on your business outcomes Your business…our expertise

We provide access to the best talent that is available to you when it is required. Faster delivery, scheduled SME support

Deploying market leading, easy to use technologies

A lean delivery model assuring efficient use of resources Fewer continuous overheads

Lower than market cost at c1% of spend managed; driving a high return on investment Our current rolling RoI across all clients is

greater than 20:1

Odesma offers true Procurement as a Service, bringing together leading subject matter expertise,

technology, governance and leadership in a way that is tailored to the needs and maturity of your

business.

Our customers, references and citations

Odesma has been awarded the prestigious Chartered Institute of Purchasing & Supply Annual Award.- Best procurement consultancy project of the year

Aggreko plc, (the $2bn leader in power and rental solutions) during 2015 instigated a global transformation program targeted at restructuring their business whilst reducing the overall cost of operations (£80m by 2017). Third party cost savings through procurement excellence comprised a significant element of this target (confidential), the supplier spend in the scope of this project was c$600m.

We were engaged to provide expert support to deliver savings, skills and technologies with the aim of developing momentum for the procurement excellence program, and significantly improving the standard of procurement capability in Aggreko.

In a 12 month period, the project has delivered its part of the publicly stated £80m cash saving target for 2016/17 delivering c 10 – 15% savings from the cost base under a quick win program. This has been achieved by completing over 300 sourcing initiatives and has delivered a ROI in excess of 20:1.

For Brambles, (the $6bn leader in palletisation), Odesma are currently managing over $500m of indirect spend across a number of global categories over an 18 month programme.

This is focused on improving third party value for money through savings delivery The programme also encompasses the delivery of market leading procurement technologies,

process improvement as well as skills transfer and enhancement of the existing Brambles global procurement team

Technology OptimisationTrained & Skilled Embedded Teams

Procurement Operating Model & Process Transformation

Measure, Benchmark and Optimise Processes

System gap analysis Implementation & change

management in line with the business strategy

Full engagement with the business stakeholders

Training academy supporting up skilling program

Expertise to fill gaps where necessary

Leading edge procurement Infrastructure

Self service e-sourcing and innovation tools

Benefits tracking, capture and dashboards

Increase Revenue

Improve ROI

Manage Risk & Capital

Ensure Compliance

Optimize Supply Chain

Reduce Costs

Business Outcomes

Harnessing people and technologies to deliver transformation

Re-engineering processes to create ways of working

Team Ways of Working

Team Ways of Working

Connecting SOPs

Case Study

An overview of the transformation program

Procurement ExcellenceImproving competitiveness by reducing overall supplier spend, including:

Leveraging global reach to form world-wide supplier partnerships, allowing the negotiation of better prices and better service from our suppliers

Reducing number of suppliers making the supply chain more efficient

Changing procurement systems having access to real time data for supplier management, benefit tracking and to introduce e-sourcing tools

Building purchasing team capability enabling teams to negotiate more effectively and build strategic supplier partnerships

Implementing a new operating model for procurement

Program Management Team

Global Category Team

Provalido/ Market Dojo

D&B/ Sm

artcube

Best practice eSourcing & benefits tracking tools

Data Analysis & Market Insight tools

ManufacturingProcurement

Business Procurement

Regional/Local Teams

EMEA/NAM/AsiaPac

Governance via a Category Review Board structure

CATEGORY REVIEW BOARDS

BUSINESS SPONSORS

BUSINESS SPONSORS

BUSINESS SPONSORS

REGIONAL/ BUSINESS

PROCUREMENT TEAMS

EUR

REGIONAL/ BUSINESS

PROCUREMENT TEAMS

MEA

REGIONAL / BUSINESS

PROCUREMENT TEAMS

AMERICAS

CATEGORY LEAD, PROCUREMENT

NOMINEES & STAKEHOLDERS

CORE TEAM MEMBERS

(PROCUREMENT & BUSINESS)

PROCUREMENT PROGRAM AND PROJECTS

PROCUREMENT SPONSOR

BUSINESS SPONSORS

REGIONAL /BUSINESS

PROCUREMENT TEAMSSPACIFIC

Create sourcing programs

Upload projects as live initiatives

Customer Approval

Performance and Program Management

Savings Reporting & Tracking

Create governing dashboards

Savings forecast & delivered

Linking governance with performance management

Change management and program structure has been key to the success of the procurement transformation

Clear delivery processClear reporting process

Dedicated resourcesSupply market specialists

Alignment of personal and project objectives

Senior sponsorshipCascaded to all levels

Clear communicationsCover all stakeholders

Programme management

Clear delivery processClear reporting process

Dedicated resourcesSupply market specialists

Sustainable improvementAlignment of personal and project objectives

Senior sponsorshipCascaded to all levels

Programme management

Clear project vision

In 2014/15 they had a significant spend with a very decentralised supply base across 64 locations supported by logistics coordinators with significant purchase order volume

There were no formal contract arrangements – PSL’s/Frameworks/Engagement arrangements

Mainly spot buying on the day to support sales and operations

The criteria when choosing a broker or carrier was not defined i.e. relationship, price, service performance and the cost plus pricing model did not drive an aggressive freight negotiation process

There was no standard process for freight quotations inside the business i.e. some may allocate work to certain suppliers while others may carry out quotations with multiple vendors

Pricing benchmark did not exist

“Signature project” – US Freight

Please provide 1 500kW Machine first thingtomorrow

Let me check that we have one available and call you back

We have one available I will make sure it is there first thing in the am

Can you get me 1 500kW machine to Dallas first thing tomorrow from Houston

Absolutely will be $xk

Awesome thanks for that can you make sure I receive the invoice in 24 to 48 hours

Broker

The freight and sales process prior to the program was a “worst case” scenario

The previous freight landscape

Time

Cost

Of F

reig

ht p

er M

ile

Today Year 1 Year 2 Year 3 Year 4

Range Of

Spot Market

Do Nothing Trajectory

The Projects Recommended Trajectory

The spot market is the price of the route at that time in the industry when delivery is almost immediate

eTendering

Move away from spot buying to rapid e-tendering

The new strategy

Maximised savings through increased competition using eTenders and centralisation in national logistics

Status – Implemented

Develop logistics pricing methodology for sales to increase profit margin

Status – Implemented

Engage with the business to deliver savings in local logistics

Status - Ongoing

3 months eTender pilot

National eTender Results over 12 months

The results

Ran over 1400 bids/tenders this year Savings range was staggering – had big

impact on freight bill in North America Invested in team to now manage national

logistics centrally and solution implemented

Built up freight data base which is now used in sales costing and budgeting

Completely changed the Op Model for freight within region

Ran over 250 bids with sales/ops support Reduced baseline cost/mile significantly Large savings over the 3 months period Built the business case – exec sponsor

Procurement freight leads to customer success

In addition, they have now completely transformed their freight business through to their end customers

Transition to the National Team National Loads > 250 miles~ ~10,000 Transactions per year Primarily trades, large events, MR

To remain at Local Area Logistics Local Loads < 250 miles ~35,000 Transactions per year Primarily customer deliveries

The key learning’s from the procurement transformationprogram

Executive level sponsorship

Gaining the involvement and trust of internal stakeholders

Well defined governance structure and project plan

Clear leadership roles, objectives and performance targets

Use of strategic sourcing processes and analysis tools

Cross-functional team with global/national delivery skills

Tailored approach that emphasises enhanced value delivery

Selecting partners with the right cultural ‘fit’

An external and internal Communications plan

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Thank you - Questions