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E-Sourcing, Sievo, E- Procurement) Spend Analysis Supplier Market Analysis Development & Supplier Analysis Performance Management

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E-Sourcing, Sievo, E- Procurement) Spend Analysis Supplier Market Analysis Development & Supplier Analysis Performance Management Nordic Business Travel Supplier of the Year Jan Borg VP, ReseGeometri Nordic The Winner: Singapore Airlines Nordic Business Travel Lunch & Seminar 15.10.2009 Business Travel Procurement Nordic Business Travel Lunch & Seminar 15.10.2009 Mirja Kivimaa Co-chair, FBTA Travel Management Committee Travel Manager, Outokumpu Oyj Nordic Business Travel Lunch & Seminar 15.10.2009 Ann Cleveland-Oey 30 years of experience from travel industry and procurement: ± Global Sourcing Director, Indirect materials and services, Konecranes PLC, 2008- ± Category manager, Indirect procurement and Global Travel Wartsila Corporation, 2005 - 2008 ± Global Travel Manager, Wartsila Corporation, 1999 - 2005 ± Production Director, Member of Board,Toolo Travel 1985 - 1999 ± Hotel InterContinental, Helsinki, 1979 - 1985 Education: ± eMBA, TAMK 2009 ± ADP London Business School 2006 ± Reach, Wartsila Mgt Programme 2000 ± Iteronomi, Helia Porvoo 1983 ± High school graduate 1979 NBTLS October 15, 2009 Global macro economic procurement trends centralised 1960-70 de centralised 1980 globally centralised and categorised 1990 NBTLS October 15, 2009 Global macro economic procurement trends Procurement today is easier to handle across country boarders due to technological development and has become more global, yet leaving needs for both local and regional procurement as well NBTLS October 15, 2009 Global macro economic procurement trends Supply chain optimisation and product savings. Where does travel fit in this and why is this done? What are the benefits?? NBTLS October 15, 2009 WHY?? Strategy Cause -- Effect Results Strategic effect Logic Result Concentrate Get better price Cost savings Make clear policy Get people to understand Follow policy automatically Standard process Easy to follow, safe and Time saving // no effective redundancy // cost effective Follow up Make necessary changes Change with need, develop, Feedback Procurement as-is & to-be As-Is To-be Local tactical execution of own Category driven sourcing suppliers - little leverage. Strategic suppliers enable company Strategy and Sourcing Fragmented supplier base of growth and profitability thousands of suppliers One corporate voice towards suppliers Professional people network to leverage Governance Fragmented local responsibilities business volume, knowledge and resources No common way to co-operate with Harmonized key processes in suppliers Process procurement e.g. Supplier Base Mgmt Little process development Individual target setting based on No common KPIs and transparency of common KPIs supplier performance. KPIs and Target setting Scorecard based monthly reporting Little individual targets and measuring Regular feedback to suppliers Common spend analysis tools Independent local solutions Procurement IT Global contract database Typical Procurement organisational chart President / CEO Procurement CPO Executive Assistant Board Procurement Supplier Capacity Procurement Legal HR Development Development Management Controller RSD, NEA RSD, EMEA RSD, Americas RSD, SEA Program Sourcing 1 GSD, Steel and Structures 2 GSD, Mechanics GSD, Parts Subcontracting 3 4 GSD, Electrics 5 GSD, Indirect Mat. & Services 6 GSD, Service Parts & Services 7 GSD, Logistics CPO = Chief Procurement Officer GSD = Global Sourcing Director RSD = Regional Sourcing Director Typical Indirect Categories Indirect Categories External Operating Marketing IT Distribution Travel Cars Facilities Office Capex Labor Services Production Leased cars Temps Utilities Furniture Print Hardware Sea Airlines Consulting Equipment Marketing Sub- Software Air Train Maintenance Cleaning Supplies HR Packaging materials contractors Equipment Marketing Services Car rentals Catering agency Road Equipment Insurance Buildings Exhibitions & Fixed Hotels events Courier Rent Tax & Audit Advertising Mobile Postage Agencies Legal Restaurants & Data Other representation MRO materials and services Energy Special in indirect The volume in Euros is normally between 25- 60% of company purchasing volume The transactional volume of indirect is 80-90% of the company transactions (Barry, 2005) The administration of indirect is heavy; process needs to be defined and effective, tools need to be in place NBTLS October 15, 2009 Possibilities Outsource the whole business process of indirect globally (IT, people, process and knowledge) Build a category organisations into the company and do everything by yourself Take a mix, do both; some locally, some regionally, some globally NBTLS October 15, 2009 What does it mean for TRAVEL category?? Outsource the whole business process of indirect globally (IT, people, process and knowledge) Build a category organisations into the company and do everything by yourself Take a mix, do both; some locally, some regionally, some globally NBTLS October 15, 2009 How to make agreements?? Corporate with suppliers? Join a consortium, who buys for many? Outsource to Travel management company? Outsource to third party company? Use a global IT-platform, with ready negotiated deals in it? Go for the best best price of the day? NBTLS October 15, 2009 Jouni Malmivaara + 30 years of experience from Sourcing and Finance in Pulp/Paper/Engineering industry: ± Managing director of Nordic Source Purchasing consortium since March 2009 ± Vice Presindent of Sourcing in UPM-Kymmene Corporation since February 1996 ± CFO of UPM Woodworking and Joinery industry since 1990 ± CFO of Rauma-Repola Forest industry since 1987 ± Sourcing Director of Rauma-Repola since 1985 ± Purchasing Manager of Kajaani Oy since 1974 Education: - B. Sc in Economics (Turku School of Economics) - Several Leadership and Management courses (Rauma-Repola, UPM) - Several International seminars and courses in Sourcing and Procurement World Class Procurement today Jouni Malmivaara Chairman of the Procurement Forum of Finnish Association of Purchasing and Logistics Managing Director, Nordic Source JM/NBTLS October 15, 2009 Trends From . To . Cost Focus Value Focus Buyer Supply Manager Local and Regional Global and regional Functional approach Supply Chain Integrator Low Integration level Business Partner (Innovation with Suppliers) JM/NBTLS OctoberHighly 15, 2009 Integrated Corporation 18 Changed Agenda for Procurement Value Improvement: Value Chain Risk Mgt: -Business orientation -Single vs multiple -Improving customer Mgt sourcing value proposition -Performance based -Providing total Valu contr. service solutions e -Buyer dependence -Exclusive solutions -Supplier dependence -Alliance mgt -Financial position -Proprietary knowledge Materials Cost reduction: -Purchasing savings Cos -Doing more with less Risk -Aggressive sourcing t -e-Auctions -Contract mgt Buying Supply Chain Mgt JM/NBTLS October 15, 2009 19 JM/NBTLS October 15, 2009 20 1. Harmonised Sourcing Process Generate Sourcing Strategy Supply analysis Generate Engage Implement & Build fact base Ideas stakeholders Contracting Measure impact Sourcing Director Cross-functional team Regional/local staff Sourcing Manager Back Office JM/NBTLS October 15, 2009 21 Purchasing Process is in Place; Whatever we buy, we follow the process Strategy Internal Customer built and communicated demand Performance expected = Technology, R&D, Supply &KDLQ&RVW&65« Fact Base / Cross- (challenge the demand) Supplier / product functional team Selection knowledge Through RFQ, Selection management, be Criteria, Trials, Contracts upstream Supplier development to pave the way for better cost and better value in the future JM/NBTLS October 15, 2009 22 Strategic Sourcing Strategies and Tactics Volume Concentration Product Specif. Best Price Improvemen Evaluation t Sourcing Strategies Global, Joint Regional Process Sourcing Improvemen Relationship t Restructurin g JM/NBTLS October 15, 2009 23 Importance of Building Best Practice Strategic Sourcing Capabilities Vision Setting Strategic Vision/Plan Organisation CoDe Strategic TCO, Supplier economics Category strategies SRM Strat. IT Global Supply base Negotiating Tactical Demand Mgt Managing proposals Transact. Transactional Processes & Systems Support JM/NBTLS October 15, 2009 24 Buyer-6XSSOLHU5HODWLRQVKLSV¶ evolution Partnerships! JM/NBTLS October 15, 2009 25 World Class Excellence Model Establish world-class Supply Base Develop, Manage Develop Commodity Supplier relations Strategies INTEGRATED, Integrate Suppliers Insourcing Into Product/Process Outsourcing ALIGNED AND GLOBAL processing Integrate Suppliers Manage Costs Into Order Fulfillment Strategically across Supply Chain Supplier Dev. And Quality Mgt JM/NBTLS October 15, 2009 26 World Class Excellence (enabling processes) Develop Org. And Deploy Teaming Globalization strategies Establish globally Integrated, aligned, INTEGRATED, ALIGNED Sourcing Strategies AND GLOBAL and Plans Develop purchasing, Supply chain KPIs Establish HR develop. And Training Develop and implement IS/IT systems JM/NBTLS October 15, 2009 27 Category Strategy Development: a Five Step Approach 1. Strategy evaluation 2. Data Analysis 5. Implementation plan Continuous process 3. Goal 4. Strategy setting definition JM/NBTLS October 15, 2009 28 Main characteristics of world- class sourcing organisation High Rigorous target setting in TCO reduction and aspirations continuous improvement schemes Advantaged Thorough knowledge of supply market, supplier fact base economics and category TCO elements Category sourcing strategies based on profound Strategic fact base and is done by best available cross- focus functional experts Cross functional sourcing teams staffed
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