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Value Republic
Where less is more
content
• Reality of today
• Common opportunity gaps
• 3 ways to close the gap
• Value Republic:
• Who we are• How we can help you• References
Reality of Today
Difficult Economic Climate
Ambition :
at least maintain EBITDA
Increase Sales/Margins
Reduce Expenses
Find new opportunities for optimization
Decreasing sales
due to the crisis
The quick wins
have already been
captured
Common Opportunity Gaps
Budgeting- Taking historic budgets and volumes for granted
- Lack of transparency and methodology
- Lack of consistency between departments
- No shared responsibility
Savings- Lack of consistent calculation methodology
- Uncontrolled reinvestment
- Between 2-3% of the global spend
Return on Investment- Lack of measurement
- Insufficient supplier management (e.g. SLA’s, KPI’s)
- No or little understanding of the value
- Often > 1 year
Organization- Purchasing coverage (60%) by procurement department
- Lack of resources and expertise (especially Indirect)
- Lack of compliance to procedures
- Misperception of Procurement internally
Ways to Close the Gap
Positive Impact on
EBITDA
1. Optimizing Volumes
2. Optimize prices
3. Effectively reinvest savings
1. Optimizing the volumes
Stop Spending
BuyAlternative
Buy Better
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1.1 SPEND MANAGEMENT
Spend Price Volume= X
• Spend Management is a combination of controlling cost and volume
requires the entire organization to justify each € spent
controlling costs without controlling volume is only a partial
solution, because it reflects only the effectiveness of Purchasing
• Spend Management uses a methodology that provides the
transparency necessary to actively manage the spend: Zero Based
Budgeting (ZBB)
Responsability of
purchasing
Budgeting policies
and processes
1.2 BENEFIts of SPEND MANAGEMENT
SPEND MANAGEMENT
Shared responsibility
Supports the organization in
monitoring processes and performance
Convert non revenue generating
money into revenue generating
money directly impacting the bottom line
Gives full transparency of
indirect costs
Allows a thorough understanding of
expenditure
1.3 Press articles
“Having each expenditure or item justified as to need or cost: Zero-based budgeting requires its practitioners to justify every dollar they spend.” (Wall Street Journal)
“An approach to corporate, annual plan, budgeting in which all departmental annual budget requirements must be estimated and justified from the ground up, rather than by adding a percentage allowance to last year's approved budget or actual expenditure.”
(Wideman Comparative Glossary ofProject Management Terms)
2. OPTIMIzing prices
• E-auction
• E- catalogues
• Automatisation of Procurement Procedures, including governance, social responsibility, ...
E Tools
• Change the perception of Purchasing
• Develop a cost awareness among internal customers
• Address unexplored categories in Indirect (Marketing, Training, Insurance, ...)
Purchasing coverage
• Specific Procurement Procedures by category
• Usage of professional tools to support procedures
• Monitoring of consumption
Policies and process
Identified and validated savings
3.Reinvestment of savings
Capturing savings
ReinvestmentIntegration in
financial results
Value Republic
•Who We are
•How we can help you
•References
A service company
- Advice on Buying and Budgeting
- Procurement Center
- Training Academy
A networking place
- Quarterly Parliament Meetings
- Bi-Monthly Senate Sessions
- Yearly State of the Union
A state
- Led by the continuous search and creation of value
- Composed of citizens with strong professional and ethical skills
Who we are
Who is Value Republic
• E-sourcing tool
• E-sourcing Strategy
• Sourcing Event management and
setup
• Training
• Tale spend
• On top projects
• Long term suppliers
• Flexible manpower
• Profit sharing
• Consultancy
• Interim Management
• Procurement training
• Spend Management
• Core working Capital Management
Budgeting Procurement
E-Solutions2Source
2Source activity
In practice
Your spend = Our spend
Build Understanding of Requirements and Current situation:
- Current Requirements
- Existing contracts and agreements
Negotiation on the base of:
- Total cost of ownership
- Service Level Agreements
- Respect of business ethics
Recommendation including:
- Cost
- Quality
- Supply Base view
Our Remuneration is on the base of Savings achieved!
References
We happily bring you in contact with one of our clients on request
Your advice, your thoughts for a next step?
?