Building an IndirectStrategic Sourcing TeamDaniele Gorla, Director, Supply Chain, Strategic SourcingDecember 2015

PRIVATE & CONFIDENTIAL

• Who are we? - Overview of Shaw

• How did we get here? - The Supply Chain Management Journey at Shaw

• Indirect Procurement - Value, Challenges and Opportunities

• Building an Indirect Strategic Sourcing Team

• PEOPLE

• TOOLS

• PROCESSES

A successful journey begins with a visionA successful journey begins with a vision

2

Overview of Shaw Communications Inc.

Consumer Business Network

Services Media Business Infrastructure

Services

3

Overview of Shaw Communications Inc.Consumer

Internet Television Phone Satellit

e

• 1.8M Customers

• +250 Mbps

• +65K Shaw GO WiFi Access Points

• 1.1M Customers

• Customer Segmentation

• 1.8M Customers

• NGV and Comcast partnership

• TVE Strategy

• 820K Customers

• 210 HD Channels

4

• National fibre-optic backbone network providing data networking, video, voice and Internet services to North American businesses

• Growth opportunity and focus in F16

Overview of Shaw Communications Inc.Business Network Services

5

Overview of Shaw Communications Inc.Media• Conventional television network reaches almost 100% of

Canadians

6

Overview of Shaw Communications Inc.Media

• Strong portfolio of specialty networks focused around lifestyle/drama and women's category

7

Overview of Shaw Communications Inc.Business Infrastructure Services

Portland2

ft.

2 facilities50k sq.

ft.

Minneapolis1 facility

ft.

1 facility43k sq.

ft. Denver5

ft.

5 facilities 196k sq.

ft.

Dallas & Austin8

ft.

8 facilities 140k sq.

ft.

Salt Lake City7

ft.

7 facilities 101k sq.

ft.Las Vegas

3

ft.

3 facilities 58k sq.

ft.Phoenix

1 facility

ft.

1 facility 42k sq.

ft.

1 data centre1 market

20091999 2012 20142005

5 data centres2 markets

16 data centres 5 markets

23 data centres 5 markets

27 data centres 8 markets

How did we get here? Our Supply Chain Management Journey at Shaw

How did we get here? Our Supply Chain Management Journey at Shaw

Strategic Sourcing

Forecasting & Demand Management

PurchasingWarehousing & Distribution

8

Our Strategic Sourcing Structure at Shaw

9

Technology & Services

Network & Carrier

Customer Technologies

Corporate Goods & Services

What is Indirect Spend?

10

• Indirect spend consists of all materials and services that businesses need in order to operate

http://takesupplychain.com/2014/01/4-key-strategies-wrangling-indirect-spend/

The Value of Indirect $pend

11

• Estimates are that even a 5% reduction in indirect spend can translate to a 1%-3% impact on the bottom line

Why Indirect Spend Management is Such a Challenge?

12

• Diversity of goods and services

• Quantity and variety of suppliers

• Number of internal stakeholders

• Multiple purchasing channels

• Fragmented supply chain

• Lack of meaningful data

Highly Complex Area to Manage

13

• Low dollar, high volumes

• Consist of more “maverick” spend

• Lack of measured savings

• Difficult to evaluate

• Considered less strategic

Opportunities

14

“Sometimes when I consider what tremendous consequences come from little things, I am tempted to think there are no little things”

Bruce Fairchild Barton, American author

Although challenging, the potential impact on the business makes managing indirect spend worth the effort.

Process

People

Tools

PEOPLE TOOLS PROCESS

What do we need?

People

PEOPLE

We are redefining what it means to be a Procurement Professional

Today’s Procurement Professional needs to be versatile

17

• salesperson

• storyteller

• strategic thinker

• listener

• value creator

• analysis-driven decision maker

• change agent

• thought leader

• visionary

Partnership Best in Class Agile Adaptive

How do we get the most out of our teams while creating opportunities for growth?

18

Holistic Corporate Mindset

Internal Talent

Leveraging and

Development

Collaborative External

Partnerships

Retention

19

Performance Leadership Inventory

Annual Employee

Engagement Surveys

Training

Talent Management

Heat Map

Performance Development

Plan

Performance Leadership Inventory

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• Key projects/business initiatives that directly link to role mandates accountabilities and metrics

• Ladder up and align to your functional team commitments and ultimately to the organization

• Have clear measures of success that are:

üSpecificüMeasurableüAchievableüRelevantüTime-bound

we need to do;

Commitments are the “What”

we need to do; Leadership

Gaps are the “How”

we make it happen.

Engagement – What is it?

21

Engagement is a measure of an employee’s emotional and intellectual commitment to an organization.

Three behaviours characterize

engaged employees –

measured by 6 questions

They say great things about the organization

They plan on staying with the organization

They put in extra effort to help the organization succeed

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• Set of skills divided into four categories

• Core Behaviours

• Business Management

• Supply Chain Specific

• Technical Skills

• Specific set of target scores per role

• With slight modifications, it addresses all roles in Sourcing and Ops

Heat Map

Visual of Bench Strength

23

Actual measure of Supply Chain skillset

Development plans

Targeted training

Raising skillsets across the board

Talent ManagementProcess to Select High Potentials

Current Perfor-mance

FeedsPerfor-mance Trend

Feeds Potential Talent Rating

Green = High Potential

Blue = Valued contributor

Black = Plateau

Red = Manage Closely

Three Critical Elements

Track record of performance over

the past 12 months

Track record of performance over

3-5 years

Are they WILLING and ABLE?

Process

PROCESS

Process

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• Classification of Spend Data

• Spend Tree

• Category & Supplier Segmentation

• Category Strategies

• Identification of Cost Savings Opportunities

• Monitoring Systems

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Business Area

The Spend CubeDisparateData Sources

Oracle

AP feed

Input from categories-resulting in “supplier rules”

Data Mapping/Categorization

Category 1

Category 2

Category 3

Supplier Dimension

• Need to clean out data that doesn’t reflect true suppliers

Company Codes

§ Provides visibility into business hierarchy

Category Dimension

§ Organizes expenditures into sourceable commodity buckets

Classification of Spend Data

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Corporate Goods & Services Spend TreeCorporate Goods & Services Spend Tree

Level 1

Level 2

Corporate Goods & Services

Office Supplies ServicesMROFinance MarketingHuman

ResourcesCorporate

Travel FleetFacilitiesFreight,

Courier, MailTelephone-

Communications

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Corporate Goods & Services Spend TreeCorporate Goods & Services Spend Tree

Level 2

Level 3

Marketing

Digital Marketing

Promotional Products

Human ResourcesAdvertising Market

ResearchAgencyDirect

Marketing

The Accuracy Myth

“I have talked to a lot of different companies about this issue and often the mistake people make is in thinking that the data they get from their archives and ERP systems has to be perfect, they can’t do any analysis and can’t hold a sourcing event.

Nothing could be further from the truth. It’s true that data enrichment and data cleansing are never ending tasks, but one of the things I stress to people is that they are not doing spend analysis to create pretty charts or to impress people. They are doing spend analysis because they want to see where the money is going and they want to run sourcing events and leverage spend among fewer suppliers and get savingsfor their company, and they can do that even with relatively poor data.”

Jim Polak, PPG’s Director of General Purchasing, PPG (2000-2009)

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Category and Supplier Segmentation

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In addition to spend, categories should be classified according to strategic importance, allowing prioritization of sourcing efforts

Methodology:

• Category Segmentation Methodology

– Assess L2 and L3 categories in terms of Supply Risk/Complexity and Business Impact

– Result is a priority map to guide sourcing efforts and develop roadmap • Supplier Segmentation Methodology

– Assessment tool takes into account spend and rates the supplier based on additional weighted business impact levers:

• Supplier integral to business performance, do we have alternatives• Impact on profitability and quality• Value add to finished product / service• Impact on availability of substitutes

Supplier Segmentation

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Series1

Series2Series3

Series4Series5

Series6Series7 Series8

Series9

Series10

Series11

Series12

Series13

Series14

Series15

Series16Series17

Series18

Series19

Series20

Series21Series22

Series23Series24

Series25

Series26Series27

Series28

Series29

Series32Series33

Series34

Series35

Series36Series37Series38

Series390

1

2

3

4

5

6

7

8

9

10

0 1 2 3 4 5 6 7 8 9 10

Supp

lier S

pend

Business Impact

Risk Management Segmentation Model

Tier 1

Tier 2

Tier 3

Tier 4

Best Value Analysis

Area Examples of leading practice Potential/Proposed/Approach to implementation

• Reduce consumption

• Eliminate need

• Find alternative ways of meeting needs

• Policy changes

• Benchmarking usage and consumption across comparable organizations

• Select a partner(s) with a global footprint providing access to on shore/off shore resources and subject matter experts

• Implement a new program for Shaw as a whole for all S.I. services

• Consolidate spend

• Common specification

• Collaboration with other Shaw businesses

• A key component of this strategy is to consolidate spend across all Shaw businesses in Canada

• Improve specification

• Detailed specifications

• Lower cost specification (own brand?)

• Optimal service level

• Quantify spend volumes

• Value for Money – cost vs benefits

• Ensure all master agreements contain approved SLAs

• Track our spend with the preferred vendors

• Bring value and best practices to Shaw by engaging a partner who understands our needs

• Establish detailed rate cards to enable more accurate labour requests

• Re-structure relationships

• Develop strong relationships with key vendors

• Introduce vendor development programmes

• Review / establish service level agreements

• Introduce routine vendor monitoring and reporting

• Establish incentivized contracts

• Engaging in a partnership with preferred vendors

• Conduct quarterly vendor/business reviews

• Review potential for risk/reward model

• Conduct RFX to select one or more preferred vendors who will provide all S.I. Services to Shaw as a Preferred Partner

• Increase competition

• Price / performance benchmarking

• E- Auction

• Cost driver analysis

• Price harmonization

Category Strategy-System Integration Services

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Implementation Plans

Monitoring Systems

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• Annual Roadmaps

• Cost Savings Strategies

• Value Creation Forms

• Single Source of Truth (Savings Tracker)

• Supply Chain Balanced Scorecard

Cost Reduction Cost Avoidance Value Enhancement

Corporate Metrics

Focus to Deliver Initiatives

Supply Chain F'16 Balanced Scorecard Corporate Vision

EBITDA FCF Measurable KPI TargetCustomer Experienc

e

Leading Technolog

y

Customer Profitabi

lity

Operational

Efficient

Inspired & Engaged Employees

Continuously develop people, processes and

tools

Health & Safety

Employee Engagement

Process and Tools Metrics

Utilize facts and data to maximize

supplier/ stakeholderrelationships/ mitigate

risks

Addressable Spend Covered by Category Strategies

Meet Opex Budgets

Strategic Supplier Reviews

Supplier On Time Performance

Quality-Baselining CPE Defects

Supply Chain Balanced Scorecard

Corporate

Focus to Deliver Initiatives

Supply Chain F'16 Balanced Corporate Vision

EBITDA FCF Measurable KPI TargetCustomer Experienc

Leading Technolog

Customer Profitabi

OperationEfficient

Inspired Engaged

Employees

Strategically drive cost while increasing total

Cost Savings/ Avoidance

Redeployment Production to Demand

(CPE)

Non-CPE Inventory

(NDC/CES Oracle

CPE Inventory Value

Satellite Inventory Value Optimization

Non-CPE Inventory Value Optimization

LEAN - Maturity tracker

LEAN - Maturity tracker

Supply Chain Balanced Scorecard

Shaw Strategic Focus F16 Corporate MetricsOur Customers

and Viewers

Our Customers

and Viewers

Leading Network and Content Experience

Leading Network and Content Experience

Exceptional

Customer &

Viewer Experienc

es

Exceptional

Customer &

Viewer Experienc

es

Leading Technolog

y

Leading Technolog

y

Customer Profitabi

lity

Customer Profitabi

lity

Operational

Efficiency

Operational

Efficiency

You Won’t Miss a ThingYou Won’t Miss a Thing

Supply Chain Vision - We deliver sustainable value enabled by world-class people and processes in collaboration

with our business partners

Supply Chain Vision - We deliver sustainable value enabled by world-class people and processes in collaboration

with our business partners

Inspired & Engaged

Employees

Inspired & Engaged

Employees

Inspired & Engaged

Employees

Inspired & Engaged

Employees

Free Cash Flow

EBITDA

Supply Chain Balanced Scorecard

Individual Commitments, Development Plans, and PLI’s

Connecting the Dots

Tools

TOOLS

Tools

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Opportunities by Business Value vs. Cost/Complexity

Opportunities by Business Value vs. Cost/Complexity

High

Low

Low

• Contract Authoring• Savings automation• Services Procurement

• Enhance visibility into Spend Data• Sourcing Workflow Approvals (Sharepoint?)• Contract Workflow Approvals• Easier Access to Contracts• Searchable Contracts

• Reduce Manual Invoice Processing• Reduce Cheque Issuance• One-Stop Purchasing• Automate RFx• Catalogues with Contract Pricing• Improve PO Data for Spend Analytics• Control Non-Catalogue Spend• Early Payment Discounts• Integration of Contracts/PO’s/Invoices• Increase Electronic Invoicing• Insight into PO Fulfillment

High

Cost/Complexity

Busin

ess V

alue

• Low: Little impact to organization and/or $ cost to implement (less complex)

• High: Large impact to organization and/or $ cost to implement (more complex)

Cost

• High: Meets defined goals

• Low: Partially meets defined goals or working towards goals

Business Value

LEAN

DEMAND MANAGEMENT

REGIONAL ALIGNMENT

ONE VOICE

CATEGORY MANAGEMENT

SUPPLIER RELATIONSHIP

TOOLS

SHAW

COMPETITIVE

ADVANTAGE

+

SUSTAINABLE

VALUE

DELIVER

PROCESS

FOCUS

PEOPLE, PROCESSES & TOOLS

PRIORITIZE

SIMPLIFY

STANDARDIZE

DEVELOP

STRATEGIC

SOURCING

OPERATIONAL

SUPPLY CHAIN

Change Management

42

Supply Chain

Celebrating our Successes

Celebrating our Successes

Looking Ahead…

Thank you!

Resources

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• Indirect Procurement Optimization – Unlocking areas of savings and value creation, EY experience

• The Procurement Organization of the Future, Planning for Growth, Managing Talent and Improving Supplier Collaboration, An Emptoris and ProcureCon White Paper

• The Indirect Spend, Dare to Strategize by KellyOCG Outsourcing and Consulting Group

• Four Key Strategies for Wrangling your Indirect Spend by Take Supply Chain

• http://www.ey.com/Publication/vwLUAssets/EY-Indirect-Spend-Thought-Leadership/$FILE/

• EY-Indirect-Spend-Thought-Leadership.pdf

• http://www.ey.com/Publication/vwLUAssets/EY-Indirect-Spend-Thought-Leadership/$FILE/EY-Indirect-Spend-Thought-Leadership.pdf

• For more information about Shaw, please visit www.Shaw.ca

• For more information about ViaWest, please visit http://www.viawest.com/