Procurement Leaders and CombineNet 2012 Webcast: Featuring CEVA Logistics' CPO
Can procurement really add value to logistics
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Transcript of Can procurement really add value to logistics
“Can procurement really add value to logistics?"
“Procurement can add value to logistics”
Craig Bunker
Agenda
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• Operating models where procurement adds value
• Procurement and logistics must have shared objectives
• How procurement can help logistics make a good case to finance
• Examples where procurement has added real value to logistics
Agenda
4
• Operating models where procurement adds value
• Procurement and logistics must have shared objectives
• How procurement can help logistics make a good case to finance
• Examples where procurement has added real value to logistics
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Procurement can play a role in multiple models
Procurement capabilities such as tender specification, e-auctions, negotiation, SLA’s and commercial agreements can deliver logistics functions huge savings
3PL and 4PL Operations
• RFP Specification and tendering• Supporting negotiations• Commercial structure• Service Level Agreements• Benchmarking• Improved working capital
In House Operations
• Fleet / asset specification• Whole life cost modelling• E-Auctions and tenders• Supporting negotiations• Commercial structure• Service Level Agreements• Improved working capital
Agenda
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• Operating models where procurement adds value
• Procurement and logistics must have shared objectives
• How procurement can help logistics make a good case to finance
• Examples where procurement has added real value to logistics
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Will procurement affect logistics’ ability to deliver good service?
Procurement don’t listen to what I want
Service is more important than price
– failed deliveries cost more..
I have good relationships with my
suppliers – they always bend over
backwards to give me what I need
Procurement don’t understand logistics
Service is more important than price
– failed deliveries cost more..
I don’t want one national supplier –
they wont care about us.
Procurement Logistics
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Will procurement affect logistics’ ability to deliver good service?
Procurement Logistics
Skills and ToolsBusiness
Requirements
Joint Objectives
Agenda
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• Operating models where procurement adds value
• Procurement and logistics must have shared objectives
• How procurement can help logistics make a good case to finance
• Examples where procurement has added real value to logistics
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Understanding Savings Levers
Procurement can demonstrate a rigorous approach which has covered every area of potential benefit
Acquisition Options Operational OptionsFuture Optimisations
Options
Capital Purchase
1. Fixed Chassis Pricing
2. Life-cycle Costing Review
3. Fleet Specification Review
4. Euro 6 Cost Mitigation
5. Transparent Cost Matrix
Hire Fleet
6. Evolution of Fleet Hire Model
7. Disaggregation of CAPEX / OPEX Elements for Hire Vehicles
8. Spot Fleet Creation
9. Ex-rental Transfer Opportunity
10. Mileage Balance for R&M Fleet
11. Fleet Modelling for R&M Fleet
12. Rebate for Early Termination of R&M Contracts
13. Parts Discount / Labour Rate Reductions
14. Managed Service Roll-out
15. VMU Expansion
16. Breakage Opportunity
17. Ancillary Parts Maintenance
18. Open Book Cost Modelling
19. Ancillary Body Supply
20. Ancillary Refrigeration Units
21. Ancillary Cameras
22. Ancillary Livery
23. Ancillary Fleetboard
24. Ancillary Tyres
25. Ancillary Windscreens
26. Ecofuel Trial
27. MPG Component Trials
28. Driver Training Initiatives
Cash Flow
Working Capital
ROI
RISK
BALANCE SHEET
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Speaking the language of finance
Procurement can demonstrate a rigorous approach which has covered every area of potential benefit Fleet Structure
Agenda
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• Operating models where procurement adds value
• Procurement and logistics must have shared objectives
• How procurement can help logistics make a good case to finance
• Examples where procurement has added real value to logistics
13
Examples where procurement has added real value to logistics
Sea Freight pricing• Benchmark RFP’s issued to challenge the
single supply situation• Alternative suppliers used to stimulate
competition• Savings negotiated through identification of
key cost components and negotiating on them individually
• 4% saving achieved against a proposed 4% increase
Fleet Whole Life Cost Modelling• Developed a whole life cost model for a
large fleet • Demonstrated the optimal life and
financing options• Created an internal ‘hire fleet’ of older
vehicles• Savings of >£1.5m per annum
Trailer Purchasing• 11.3% savings against the best negotiated
rate• 3.3 % from e-auction• 8% from post auction negotiations
Vehicle Maintenance• Project 1 – audited internal
maintenance processes and costs vs third party outsourced maintenance. Results drove savings of 10% within internal workshops through efficiency
3PL Commercial Structuring• Advised a major food manufacture on
their new 3PL contract. • Implemented a bonus based on key
service and operational KPIs• Bonus drove improved service levels of
1.8%