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We help companies that sell to buy better
2020 LinkedIn SlidesheyProcurement 2020 Album©
www.heyProcurement.com
Copyright© 2020 heyProcurement (HeyCKW Pty Ltd ABN 28 631 566 697). All rights reserved. No part of this document may be reproduced or
transmitted in any form without the prior approval. Any quotation from this document must be attributed to the author..
Procurement Services and Advisory
Our ServicesWe provide ‘end to end’ Procurement services and advisory to
organisations, focusing on:
Procurement of goods and services: Category strategy development, tender and negotiation, contract development, dispute
management, post contract governance and contract renegotiation (following our framework the
PASSAGE©)
Procurement function improvement: Functional improvement, benchmarking, training and recruitment support
Selling and Business Development: Consulting support and advice to the
healthcare, mining, refining and smelting sectors. Our services support clients in sales and marketing,
tender strategy development, operational & process improvements (Lean), asset management,
outsourcing, supply chain and logistics risk management.
Our Framework
Why present a category management framework?
Procurement is a cyclical process, often project based where
contracts end with products and/or services looking to be re-
acquired.
The annual procurement plan, often approved by the business, is the starting point
for the procurement function.
In that context, procurement must partner with the budget owners, the outcome
owners and many other stakeholders with an interest in the result. This is best
executed under a clear and coherent framework.
P - Planning
We help companies that sell to buy better
2020 LinkedIn SlidesheyProcurement 2020 Album©
Tomorrows solutions are all around us.
Generate ideas now, but keep the process simple…
Copyright © 2020 heyProcurement
3 weeks 6 weeks 2 weeks 1 year
Determine base
performance and
identify
performance gap
Set Targets
Generate ideas
Evaluate ideas
Sell the ideas
Plan ideasImplement
and track
ideas
Communicate
• Explain the context and purpose
• Seek contributions from all areas
• Communicate progress/feedback on ideas
• Recognise contributions
SG*
*SG – Steering Group (Senior business leaders that own the process and result)
Simple process to generate ideas
SG* SG*
Simple reporting
2020 Q1…what was that all about…..
Copyright © 2020 heyProcurement
2020 Q1 Plan➢ Roll out 2020 Plan
➢ Develop L2, L3 and L4 planning tasks
➢ Align processes for 2020 (ICT and ERP etc)
➢ Refresh Fact Base for key categories
➢ People systems up date wrt STIP/ LTIP
2020 Q2 Plan➢ Review key contracts under contract
management framework
➢ Conduct C-Suite Relationship meeting
➢ Category Sign off for 2020 market approach
Boom………..Major
supply chain
disruption, War rooms,
SOS (Security of
supply). Teams move
from plan to react (full
contingency mode).
Also: flexibility
emerges, innovation,
new energy and new
relationships with a
taste of things to
come…..
Sustaining team
Improvement Team
Re-cut the Plan
Procurement Onwards…… post Corvid19
Strategic
Suppliers ‘In
the tent’
Analytics
Kill the
Committees.
Small
‘approval’
teams
Re-
Forecasting
Robust ‘In Country
Procurement
Strategy
Rapid refresh
of Category
Management
Supply Chain
review
Contract
Management
(a habit)
Budget
Transparency
Benefit
Tracking
Procurement
Training
(Users and
Practitioners)
Organisations will (and
should) look to Procurement
for:
1. leading indicators of supply
risk
2. on going monitoring of key
supplier ‘health’
3. an integrated and more
mobile buying process
4. a ‘Closed Loop’ approach to
contracts (not just sourcing)
5. monitoring added and
destroyed value
6. confidence and leadership
A - Analysis
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Supply Side Risk: Vulnerability Elements
1. Dependent on few key suppliers
2. Part of supply base financially unsecure
3. Lead time extensions
4. Quality issues (not to specification)
5. Poor adherence to agree schedule and order combination
6. Risk to supply due to government directives
7. Poor or no performance measures
8. Low supplier sophistication for planning and forecasting (S&OP)
9. Poor supplier transparency
10. Poor Low level of supply chain network
11. Accreditation claims
12. Minimal provision of manufacturing data
TYPICAL SUPPLY SIDE RISKS
Travel restrictions currently limit ‘go see’ checks for supply; Supply
Chain Risk Assessment now more important than ever!Copyright © 2020 heyProcurement
Risk Review: The mode you are in will change…
• Promote
• Produce
• Predict
• Purpose
• Portfolio
• Profit
• Plan
• Prepare
• Pilot
• People
• Protect
• Preserve
Today..Very
Soon…
Get ready to…
Further out..
Copyright © 2020 heyProcurement
S - Strategy
We help companies that sell to buy better
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H2 2020: Transformation in Isolation…..
1. Transformation
Two
2. Reduce Cost
3. Reduce Supply Chain
Risk
4. Reduce Contract
Management Leakage
5. Reduce Transactional
Activity
1. TRANSFORMATION (2) IN ISOLATION: Transformation
programmes that had somewhat ‘Dropped off’ pre-Corvid
are now back with vigour and Transformation II is shaping
(and testing) how teams and systems will ‘digitally’
function in a permanent ‘work from home’ mode.
2. SAVINGS: Procurement functions are in ‘cost reduction’
focused and likely to be in this mode to the end of 2020 –
savings targets are being closely monitored an is a key
lever.
3. RISKS: Buyers are paying special attention to supply chain
risk and inventory risk. The shock of Q1 2020 is still raw;
with near zero overseas travel activities such as problem
solving or inspections at off-shore factories a constraint
the focus on risk and quality is top of mind.
4. SCRUTINY: Increase scrutiny of existing contracts and
contract management is on the up with increased ‘desk
based’ reviews an easy task via Zoom or other platforms.
5. OUTSOURCE: The debate of ‘on shore/offshore’ will be
back; makes sense for low risk, low value and high and
transactional items to go off shore
Total Cost of Ownership (TCO):
Commercial
Specification Lever
Demand Lever
What you see and below….. What buyers will look at/ do:
• Bid competitively and negotiate
• Develop a fact base on spend and true product costs to gain a negotiations
insight
• Reduce supplier fragmentation to capture volume discounts
• Look to changes in supplier utilization, capacity, labor, and underlying
material costs. They will also work with suppliers on innovation
• Seek insights through internal and external data
• Optimize product specs to minimize total cost
of ownership and set up teams or be part of a Community of Practice
• Develop process to determine who can buy what, when, from where, and
how – spend control
• Run and provide guidance session to educate internal stakeholders
• Optimize process flows to reduce cost, e.g. logistical processes or
elimination of duplicated quality controls
• Implement tracking tools and reporting to ensure savings flow to the
bottom-line and be very focused on EBITDA impacts
• Optimize payment cycle to optimize reduction in unit prices vs. carrying
cost etc.
Process Lever
Buyers and sellers can benefit from working together to develop efficient and effective supply chains through
understating the TCO approach to business……...
Understanding the Specification:
• Review changes since the last RFP to the Scope/ Specification (what went
well/ not so well)
• Have changes within the industry occurred that may lead to improved
results by researching the specification
• Is there a clear breakdown for the ‘cost’ for a premium scope v’s a fit for
purpose scope?
• What options are offered by the Supplier?
• What’s are the trade off?
• Is the Scope/Specification bespoke or are there options?
Note: Challenging is never easy and often creates tension
between buyer and the internal user. It’s important that the
buyer respects the needs of the end user but should look to
‘call out’ any opportunities early too.
It’s not uncommon for the ‘Scope/Specification’ (across both services or goods) to be issued under tender to be
the ‘gold standard’. While challenging the Scope/ Specification is never popular with internal client asking the
question is not unreasonable of the buyer as it may lead to cost savings or even improvements.
Scope (a)Scope (b)
Cost to the
supplier to
produce the item
Opportunity post
specification
review
Potential Impact to price
Cost reduction due to
specification change
Some areas to review (not an exhaustive list)
S - Sourcing
We help companies that sell to buy better
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RFP: When is it used
Chaotic
Complex
Complicated
Simple
Request for Information
Expression of Interest
Request for Proposal
Request for Tender
Request for Quote
New
Mine
Supply
Existing
Mine
Supply
A - Agreement
We help companies that sell to buy better
2020 LinkedIn SlidesheyProcurement 2020 Album©
Instant Deal: Tips to get you going…..
Today everything is instant - food, communications, transport and many other items in our ‘instant world’ but ‘the deal’ has its own lifecycle. Often deals (sellers and buyers) are well planned but some are not and need to be executed NOW. If you can’t avoid the ‘instant deal’ consider the below:
1. Internal Sign Off
•Deals have as much complexity internally (sign off) as they do externally -look at ways to obtain pre approval by your management and get yourself some ‘time credits’. Inform legal as soon as possible.
2. Know the history
•Look at what ‘got us here (look at why this is urgent)’; you will need to know the background and implications of a sub optimal outcome.
3. Develop NOAP (Negotiation on a Page)
•Develop a ‘NOAP’ (negotiation on a page). Circulate internally for quick review and make sure ALL are aware of the ‘instant deal’ (needs and risks).
4. Authority and Authorisation
•. Be sure the other party can transact on agreement too - talk to the right person on the other side.
5. Communication
•Keep your key internal stakeholders up dated frequently - more than you would normally. Up date the NOAP and have ‘legal’ ready to go.
Emotion in ‘motion’: it’s natural and OK…..
Copyright © 2020 heyProcurement
Relief
Hope
Despondency
Fear
Anxiety
Thrill
Excitement
Optimism
Optimism
Panic
Source: AMP Capital Investors 2009 Global Financial Crisis paper
Post RFP/ Tender Feedback:
Let the suppliers in the ‘tender’ know ‘why’ they were not successful. Where the ‘buyer’ asks for participation
and determines who has the tender package it’s incumbent on the buyer to close out the process and provide
the ‘why’ they were not successful.
• When the Buyer does provide feedback it’s
not the time for the seller to be defensive
or argue their point either.
• It’s predominantly a one way chat, which
may not be easy, but the alternative of
‘radio silence’ is even worse.
G - Governance
We help companies that sell to buy better
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Contract
Management
Framework
Governance and Oversight
Policy and standards that guide decisions and processes of the business
Documents: Contract Framework, Procurement Policy and Risk Management Framework
Guiding Principals: Governance, Transparency, Cost and Risk Management
Contract
Formalise the KPI
over the term of the
contract
Documents:
Contract (inc Scope
of Work) and other
site documents
Guiding Principals:
Accountability, Responsibility
(RACI model)
Contract Management Framework
Measure
How performance will be
measured including: Description
and targets
Documents: Performance KPI as
per the Contract or Scope of
Work
Guiding Principals: Predictability , Cost and
Risk Management
Monitor
The process of expectations as
to how information will be
reported, collected and used to
inform decisions
Documents: Contract
Management Meetings (agenda
and meeting notes inc Report
templets
Guiding Principals: Collaboration and
Partnership and Responsiveness
Manage
The actions, agreements and
plans to be taken to maintain
achievement of performance or
correct under or non-
performance
Documents: Performance Plans
inc: Improvement plan, recovery
plan and closure plan
Guiding Principals: Predictability,
Recognition and Responsiveness
Control of
risk and cost
management
<Name of Supplier>
<Success Story>
• Xxxx
• Xxxx
• Xxxx
• Xxxx
• Xxxx
• Xxxx
• Xxxx
• xxxxxxx
• xxxxxxx
Background
• xxxxx
• xxxxxx.
People Involved
Results achieved
For more information please contact [<[email protected])]
Picture
Graph/ other data table
E - Evaluation
We help companies that sell to buy better
2020 LinkedIn SlidesheyProcurement 2020 Album©
Back to basics…….check your invoices
Tips:
➢Now and again have a
detailed look at your
invoices, perform periodic
checks.
➢ Mistake are made as well as
other ‘additions’.
➢The PO may match to the
invoice total but that does not
mean it’s correct
➢Check the PO, GRN and Invoice
frequently
➢ Invoices are a good source of
information too
Colin is a procurement professional with over 30 years experience in the mining, metals and manufacturing sectors in both commercial and operational disciplines. Colin had a distinguished global career with mining and metals giant, Rio Tinto, based in Europe, Asia and Australia.
As a highly respected subject matter expert in procurement, Colin was responsible for high-spend strategic contacts for both Rio Tinto’s mining and smelting divisions where he applied his skill to ‘disrupt’ traditional supply lines by developing strategies that create competition and embed sustained long term value.
In addition Colin was part of a major commercial transformation team that achieved $1 Billion in cost savings at Rio Tinto Coal and its iron ore divisions.
Colin is the founder of heyProcurement© currently consulting into the healthcare, mining and metals sector.
Colin Lloyd WilliamsFounder and Director
Procurement Professional Direct and Indirect
Education:
1999 – 2002: University of Wales – MBA
1998 – 1999: University of Glamorgan, Wales -
Postgraduate Diploma in Management
2007 – 2008: Australian Institute of
Management - Diploma in Management
Relevant Experience:
• Strategic procurement
• Supply Chain Management
• Large scale corporate transformation
• Leadership and Management
• Sales and Marketing
• Operations management
• Asset management
• Category Management
• Facilitates Management
• Supplementary labour
• Raw Materials
• Operating Model Assessment
• Transformation Panel Advisor
• Transformation War Room Advisor