Rising to a Competitive Advantage with Finance, Procurement, and Supply Chain

FedEx Services Biswajeet Panigrahi Category Management Principal

RapidRatings Pete Tantillo COO & CFO

#SIGfall19 Rising to a Competitive Advantage with Finance, Procurement and Supply Chain

Biswajeet Panigrahi Category Management Principal FedEx Services

Pete Tantillo COO & CFO RapidRatings Agenda

What We’re Covering Today

• Introductions

• Increasing prevalence of supplier disruption & where financial health fits in

• Understanding CFO priorities

• 4 Steps to improving the CFO-CPO-Supply Chain relationship

• How FedEx incorporates these concepts – 7-Step Category Management Life Cycle – Vendor Risk Management Workflow

We provide the most sophisticated analysis on the “With RapidRatings… we doubled the scope financial health of public and of suppliers that we had in our program and private companies in the world. we eliminated manual work by Our analytics software predicts — Director of Supplier Risk Management, financial outcomes for your most Philips important suppliers. We are transforming the way the world’s leading companies manage enterprise risk.

We are RapidRatings. MILLION COUNTRIES

Number of company Number of countries financials analyzed to in which we’ve rated fuel our algorithms private companies

Supplier disruptions cause lost revenue and higher operational costs

Main Cause of Disruption1 Disruption is Pervasive and Impactful2

42%

31% suffered a supply chain of disruptions 29% 29% disruption in the past occur at 22% 56% 12 months 52% Tier 1

A failure of a A failure at one A weather / Regulatory Financial problems logistics link in of our facilities environmental compliance at a supplier of organizations our global in our internal event impacting a issues at a experienced a supply chain supply chain supplier supplier 62% financial impact

1 – ProcureCon. Direct Benchmarking Survey 2 - BCI (Business Continuity Institute). Supply Chain Resilience Report. 2018

Top 5 Supply Chain Red Flags

Managing risk

Operational efficiency and cost optimization

Driving profitable revenue growth

Improving the CPO & CFO Relationship (+ Supply Chain)

“It has become increasingly clear that, for an enterprise to achieve operational excellence within both its procurement and finance operations, the CPO and CFO must enjoy the benefits of a healthy inter-departmental partnership and achieve alignment on cash management, savings, and P2P performance,” CPO Rising points out in Five Ways to Improve the CPO- CFO Relationship.

Four steps to make that happen: 1 2 3 4

Leverage centralized Collaborate on Establish shared Optimize data for informed ongoing risk goals and values information sharing decision-making management

Start by establishing shared values and goals across departments

• Get the right people involved from supply chain, finance and procurement 1 • Understand roles and responsibility around supply chain risk ownership and accountability • Understand commonality and differences in goals Establish shared • Rally around shared key risk indicators and measures goals and values • Create an effective process across the enterprise by optimizing the governance process and information flow

Optimize information sharing across departments

• Establish hierarchy for “most impactful” suppliers using agreed upon criteria • Getting data is often a huge concern both from a process 2 and quality perspective • Don’t try to boil the ocean • Figure out how to report back what you’ve found Often times a heavy lift to get started; figure out the best bang for the buck

“We have 12 (maybe 13?) separate ERP instances”

Leverage centralized information data for informed actions

• Data is just data without action plans ! • Marry Financial Health risk with other key risk indicators 3 • Centralized or decentralized dashboards using consistent approach • Correlate financial viability of third parties with other already measured data Transparency into supplier risk increases effective decision making and actionability Missed demand forecast Technological Inferiority Increase in Quality Incidents and CAPAs Spend analysis & Deteriorating Financial Delivery Issues concentration Health

Foster open and informed dialogue with your suppliers from insights

• Create informed dialogue with your suppliers to strengthen relationships 4 • Dive into the issues causing supplier to be high risk • Publish mutually agreed upon action plans with clear accountabilities Take a collaborative • Execute and iterate ongoing risk management approach

Sales, marketing, IT, customer service, technical Document and business services and convenient support, and billing services for U.S. customers retail access to our transportation businesses

Rapid, reliable, time-definite delivery to more than 220 Air and ocean freight forwarding solutions tailored to countries and territories; the TNT Express acquisition customers’ needs; offering cross-border services, combines TNT’s strong European capabilities with the supply chain services, brokerage solutions, critical strength of the FedEx global network inventory and service parts logistics, and packaging lab services

$70 billion Revenues

450,000+ A leading provider of ground small-package delivery Team members services, providing cost-effective business and residential package shipping to the U.S. and Canada 15 million+ Shipments daily

220+ Leading U.S. provider of less-than-truckload (LTL) Countries and territories freight services across all lengths of haul, including reached priority and economy less-than-truckload (LTL) freight shipping FedEx Express Global Network

> 650 ~681 ~ 91,000 Our more than 450,000 team members help us connect 220+ Airports served Aircraft Motorized vehicles countries and territories and more than 99 % of the world’s GDP

FedEx │ Sourcing & Procurement 10/7/2019 14 FedEx Ground, FedEx Freight and FedEx Office Networks

FedEx Ground FedEx Freight FedEx Office ~ 619 ~ 373 ~ 2,100 Operating Facilities Service Centers Locations ~ 69,000 ~ 28,000 Motorized Vehicles Motorized Vehicles FedEx │ Sourcing & Procurement 10/7/2019 15 Global Citizenship

Economy Environment People We multiply economic We multiply efficiencies We multiply potential for growth by providing andinnovations that our people through a businesses with global deliver more with fewer safe, inclusiveworkplace access to customers and resources and and career development markets. environmentalimpacts. opportunities.

FedEx │ Sourcing & Procurement 10/7/2019 16 Sourcing & Procurement Organization Structure

VP, Sourcing & Procurement

Sourcing Procurement Disbursements

Supplier Operations Services Vendor Procurement Systems Relationship Categories Categories Administration Operations Support Management

FedEx │ Sourcing & Procurement 10/7/2019 17 Category Management Life Cycle

FedEx │ Sourcing & Procurement 10/7/2019 18 Vendor Risk Management

Category Risk Assessment

Business Continuity Planning (FedEx & Supplier)

Monitor & Manage Risk

FedEx │ Sourcing & Procurement 10/7/2019 19 Conclusion

Key Takeaways

Developing strong interdepartmental relationships founded on: • shared goals, • shared data and information, • actionable results and accountability, and • continuous improvement

Is instrumental to organizational improvement through: • operational excellence, • improved P2P performance, • mitigated supply chain disruptive risk, and • improved ROI and cash flow performance

RapidRatings Pete Tantillo COO & CFO [email protected]

FedEx Services Biswajeet Panigrahi Category Management Principal

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