Benchmarking Your Strategic Sourcing Department Towards ... · Benchmarking Your Strategic Sourcing...
Transcript of Benchmarking Your Strategic Sourcing Department Towards ... · Benchmarking Your Strategic Sourcing...
Benchmarking Your Strategic Sourcing Department Towards Best-in-Class Performance 5/10/18 Kevin Konold & Corey Gustafson
2 February 2018
2
Agenda
1. Introductions
2. Deluxe Overview
3. Importance of Benchmarking
4. Benchmarking at Other Companies
5. Methodology
6. 2017 Benchmarking Categories
7. 2017 ISM Benchmarking Survey
8. Sourcing Top Priorities
9. Other Research Sources
10. 2018 ISM Benchmarking Survey
11. Questions
3 February 2018
3
Introductions
Kevin Konold • Kevin has been a strategic sourcing and procurement leader for over 25 years. He
has worked for Wells Fargo, Andersen Windows and Pentair. He has successfully implemented purchasing best practices in numerous organizations. Kevin is Director of Strategic Sourcing at Deluxe Corporation. Kevin has a BA in Finance from University of Wisconsin – Eau Claire and is a C.P.M.
Corey Gustafson
• Corey has been working in the Enterprise Strategic Sourcing area at Deluxe Corporation for 5 years and is currently a Senior Buyer managing several direct material categories. He has also been on the ISM – Twin Cities Board of Directors, Professional Development and Membership Committees for over 2 ½ years. In 2017, Corey was selected as one of the 30 under 30 Rising Supply Chain Stars by THOMASNET.com and ISM which showcases the talent and achievements of 30 emerging supply chain management professionals. Corey has a BS in Graphic Communications Management from the University of Wisconsin - Stout and is an active CPSM.
4 February 2018
4
39%
27%
34%
Deluxe Overview
Financial Services (FS) Small Business Services (SBS) Direct Checks (DC)
Leading provider of products & services to financial institutions
• Over 4,400 customers • Adjusted operating margin 18.3%
America’s leading direct-to-consumer check supplier
• ~5.1 million customers • Adjusted operating margin 33.5%
(30% of revenue)
43%
2%
55%
Marketing Solutions & Other Services
Forms, Accessories, & Other Products Checks
44%
18%
38% Revenue: $1.97B (~6.3% growth) Operating Income: $331M Adjusted Operating Income: $398M Diluted EPS: $4.72 Adjusted diluted EPS: $5.27 Operating Cash Flow: $338M
2017
(63% of revenue)
Leading provider of personalized products & services to small businesses
• ~4.4M customers • Adjusted operating margin 19.6%
$1.97B revenue company transforming to marketing solutions & other services provider that helps Small Businesses & Financial Institutions grow
(7% of revenue)
Marketing on demand solutions
Web design & hosting
Email marketing, SEM/SEO
Logo, payroll services, social
Fraud & security, eChecks
84%
5% 11%
B U
S I
N E
S S
S
E G
M E
N T
S
5 February 2018
5
MOS Mix Shift Evolution Timeline
Total Company MOS Revenue $427M $532M $617M $756M $910M to
$940M Continued Growth
MOS % of Segment
Small Business Services
28%
• Continued to grow marketing & web services
30%
• Continued to grow channels
• Added eChecks • Added c-panel
technology
32%
• Continued to expand cPanel/web hosting
• Rolled-out Payce Payroll in U.S.
• Expanded W2P capabilities & Inkhead acquisition
• Rolled-out Deluxe Marketing Suite (DMS)
34%
• Continued focus on Payments / Marketing Solutions & Web Services
• Optimize web services
• As MOS becomes largest revenue category in both segments & continues to grow, believe overall company growth should accelerate
• Checks become less impactful to total company results
MOS % of Segment
Financial Services
24%
• Expanded Deluxe Marketing Services (DMS)
• Added rewards & loyalty & treasury management solutions
37%
• Expanded treasury management solutions
• Added marketing data analytics
43%
• Expanded Treasury Management Solutions through Data Support Systems (DSS) acquisition
• Expanded Data- Driven Marketing Solutions through FMCG acquisition
55%
• Integrate acquisitions & grow Treasury Management Solutions & Data- Driven Marketing Solutions
• Drive more organic growth and make larger investments principally in Data-Driven Marketing and Treasury Management Solutions
2014
26%
2015
30%
2016
33%
2018
~45%
MOS percentage of Total Company Revenue
2017 38%
2020 ~60%*
* 2020 Goal
6 February 2018
6
Importance of Benchmarking
• Why we started benchmarking at Deluxe
• Review best practices at companies in different industries
• Continuous improvement
• Improve processes
• Increasing involvement with mergers and acquisitions
• Gain support from Executive Leadership Team at Deluxe
7 February 2018
7
Benchmarking Process at Other Companies
• Who currently has an established benchmarking process used at their company?
• Who is responsible for benchmarking? Is there an established team?
• How often do you benchmark?
• What resources do you use for benchmarking?
• Key findings?
8 February 2018
8
Through The Years – Methodology
Data from company interviews
ISM Survey
Hackett Group/CAPS
Research
Analyze & Benchmark
Data from company interviews
Hackett Group/CAPS
Research
Analyze & Benchmark
Benchmark Committee was
formed
Data from company interviews
Analyze & Benchmark
9 February 2018
9
2017 Benchmarking Target Categories
10 February 2018
10
2017 ISM Benchmarking Survey
Manufacturing, 65%
Pharma/Biotech/Medical,
18%
Professional Services,
12%
Education, 3%
Retail, 3%
65% of respondents are in manufacturing as Deluxe
3%
12%
3% 3%
21%
6%
41%
9%
3%
41% of respondents are comparable size as Deluxe
11 February 2018
11
2017 ISM Benchmarking Survey
15%
9%
41%
26%
6%
3%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
Not Measured
0-1.49%
1.5-3.0%
3.1-5.0%
7.1-9.0%
9.1-12.0%
What is your annual cost savings as a percent of spend for the direct category?
12 February 2018
12
2017 ISM Benchmarking Survey
29%
12%
32%
18%
3%
6%
0% 5% 10% 15% 20% 25% 30% 35%
Not Measured
0-1.49%
1.5-3.0%
3.1-5.0%
5.1-7.0%
7.1-9.0%
What is your annual cost savings as a percent of spend for the indirect category?
13 February 2018
13
2017 ISM Benchmarking Survey
44%
32%
12%
12%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
Not Measured
1-2.4%
2.5-4.9%
5-9.9%
What are your annual cost avoidances as a percent of spend for the direct category?
14 February 2018
14
2017 ISM Benchmarking Survey
50%
21%
18%
12%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
Not Measured
1-2.4%
2.5-4.9%
5-9.9%
What are your annual cost avoidances as a percent of spend for the indirect category?
15 February 2018
15
2017 ISM Benchmarking Survey
56%
44%
Do you have a spend analytics tool?
Yes No
16 February 2018
76%
24%
Do you have a Sourcing Center of Excellence?
No Yes
2017 ISM Benchmarking Survey
17 February 2018
17
2017 ISM Benchmarking Survey
0%
0%
0%
3%
6%
17%
18%
24%
38%
94%
Increasing Diversity Spend
Insourcing
Regulatory Compliance
Outsourcing
Sustainability
Spend Analytics
Innovation/Automation
Cost Avoidance
Risk Mitigation
Cost Savings
Similar as Deluxe, 94% of respondents rated cost savings as one of their top priorities Respondents selected top 2 priorities
Sourcing Top Priorities
18 February 2018
18
2017 ISM Benchmarking Survey
Supplier Risk Analysis
19 February 2018
19
Sourcing Top Priorities
20 February 2018
20
Other Research Sources
• CAPS Research (review 2017 cross-industry report)
• Hackett Group
• Gartner
• GEP
21 February 2018
21
2018 ISM Benchmarking Survey
• Survey will be released tomorrow, 5/18. • Peg will send out email with link to survey on ISM-Twin Cities website.
• Please complete survey and encourage connections are other ISM member
companies to participate.
• Review 2018 survey questions.
• Contact Corey Gustafson for individual benchmarking opportunities.
22 February 2018
22
Questions