Roy Anderson EVP Procurement Services MetaProcure 470-514-3640 [email protected] Skills You...
52
Roy Anderson EVP Procurement Services MetaProcure 470-514-3640 [email protected] Skills You Need to Drive Value to Your CFO
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Transcript of Roy Anderson EVP Procurement Services MetaProcure 470-514-3640 [email protected] Skills You...
MetaProcure
Led by former Fortune 50 Procurement Officers and Executives
Certified Minority Business Enterprise
2
Procurement Transformation and Leadership in the following areas:
Leverage our experience to drive your success
Diversity Management
Programs
Strategic Sourcing
Source to Pay
Solutions
Independent Contractors
CFO Top Priority: Save Money
Save money without compromising service or quality.
Stay within the purchasing guidelines.
Capture savingsGenerated by eProcurement and re-direct to student programs, instead of leaving the extra money in department budgets to be spent elsewhere.
Establish savings goalsRelated to the pursuit of costs savings across all commodities
3
CFO Top Priority: Create Value
Do more with less
Illustrating our value as a departmentIn terms of cost savings, value generation, etc.
Look for Efficiencies across the board
Look for creative funding opportunities to fund projects
4
What is the Largest Challenge You Face?
Lack of Resources especially in terms of Personnel
Meetings
No budgetFor spend analysis software, etc.
No time/staff to compile information on our own.
Not enough funding or support to maintain what have; buildings, parking lots, roads and grounds.
Manage the daily grind while strategizing the new approach, which will effectively create savings.
5
What is the Largest Challenge You Face?
Getting the detailed data we needThen getting it into a format that we can make timely decisions and create useful reporting based on this information.
What types of reporting others are doing.
Boil down the rhetoric to know where my cost savings lie
Create value for end users so they utilize ProcurementEnd users think it is faster to order and pay by Pro-card
Until we prove there are advantages to routing orders through Procurement
6
What is the Largest Challenge You Face?
Accomplish savings
without alienating departments
7
Changing Income Statement
8
2000 2015
Net Sales $100,000 $100,000
Cost of Goods Sold $20,000 $35,000
Gross Profit (Loss) $80,000 $65,000
Employee Benefit, TAXES, WAGES $45,000 $25,000SGA $5,000 $5,000SUPPLIERS $10,000 $15,000 Total Expenses $60,000 $45,000
Net Operating Income $20,000 $20,000
Other Income
Year
Revenue
Cost of Goods Sold
Expenses
Income Statement
Supplier30%
Employee50%
2000
Supplier50%
Employee30%
2015
IT BPOHR Payroll, RPOCall CentersCustomer ServiceWeb DesignAccountingContract ManufacturingData EntryR&D
AdvertisingFacilities ManagementCreativeEngineering Mail RoomLegal ServicesSalesWarehouseLogistics
YOU MATTER
The University Imperative
10
After Sweet Briar College made its closure statement Mark Cuban tweeted
"This is just the beginning of the college implosion.”
Sweet Briar survived with a $12M infusion of cash from Alumni
5.3/yr.
Figures from a Different Perspective
11
1980 1990 2000 2010 20120
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
Degree-granting institutions
1980 1990 2000 2010 2012 Inc/decade
Degree-granting institutions 3,231 3,559 4,182 4,599 4,706 456
https://nces.ed.gov/fastfacts/display.asp?id=84
National Center for Education Statistics
The Mark Cuban Fix
12
Student Loans $1,351,868,086,916Credit Cards $882,600,000,000Auto Loans $750,000,000,000
CURRENT STUDENT LOAN DEBT IN THE UNITED STATES
collegedebt.com
Congress to cap student loans, the money's not available to universities"
"They have to either raise student aid or lower tuition”
or …… Radically lower expenses
or……. Fundamentally change the delivery of education
www.businessinsider.com/mark-cuban-sweet-briar-college-college-debt-bubble-crisis-2015-3
The $1 University Class
Evidence of a Poor Contract
Energy
Global Population uses 16 terawatts of electricity
That is the amount of energy our Sun delivers to the Earth
Every 88 minutes
5000 times more energy than we use
Abundance the future is better than you think
Energy
Solar energy costs have dropped 50% in the past year
What happens when it drops 99.99999%
When we have so much energy
It is unlimited
Abundance the future is better than you think
Transportation Fuel Costs Car Industry DynamicsDriverless cars (taxi’s, parking lots, not needed)Cost of PolicingSpace travel becomes cost effectiveVirtual classroomsMORE
PEOPLE ARE AFRAID OF
CHANGE
Mind Sets that block change
Not made here
Winner takes all
Not in my job description
Why are you making “waves”
Wait, That is MY JOB
17
Moat Builders
Moat builders
18
EMBRACE CHANGE
Change is a Given
BlockbusterTWALehmanDigital EquipmentChryslerWang LabsCompaq ComputerEnronKodakBear SternsRadio ShackTrump Resorts
Understand Their Point of View
Old School Thinking
Help Finance Help You Create Value!Pierre Mitchell Chief Research Officer Spend Matters (Azul Partners)
“Finance has a better relationship with top management and is seen as an asset where Procurement is seen as a necessary evil (stepchild) that everyone hides from and wishes would disappear. Finance could actually be the enforcer and get policy compliance and support.”
“Budgets, control investment priorities, and is the basis for profitability.
Future Think
23
Help Finance Help You Create Value!Pierre Mitchell Chief Research Officer Spend Matters (Azul Partners)
That partner, equipped with a clear understanding of the value of moving non-core process to suppliers, and using supplier capabilities to the fullest is the fastest way to drive faster market response, lower cost & risk, and improve LOB performance.”
Yogi Berra
“Baseball is 90 percent mental. The other half is physical.”
24
The CFO’s Input
Galagher Jeff, CFO for Walmart’s US eCommerce business of the World’s largest company.
Responsible for driving insights, growth strategies, and financial stewardship for Walmart’s fast-growing eCommerce organization.
https://ieondemand.com/divisions/cfo/events/274/presentations/strategic-finance-the-benefits-of-integrated-finance-and-strategy?mkt_tok=3RkMMJWWfF9wsRonsqTOc%2B%2FhmjTEU5z16u0uXa6%2Bi5x41El3fuXBP2XqjvpVQcNkNL7LRw8FHZNpywVWM8TIKdQQt9l1IAzmCmk%3D
25
CFO Role
26
Alignment of Metrics to Strategy
Measure:
#1 Did we meet their Goals?
Savings
Compliance
Customer Enthusiasm for our results?
CFO Role
27
Partner with the Business
Take the lead on BIG initiatives
CFO Role
28
Challenge the Status Quo
Data Driven Decisions
29
-- 81 unique records; 57 different rates
-- Range: $50 - $140/hr.
-- Rate Card: $75/hr
-- 25% of $5.5M spend is at $60/hr. and lower
Data Analyst – Expert: Bill Rates
$75./hr rate card
Optimization - Labor Strategy
……………. More common distribution ____________ Actual distribution
Potential Opportunity: Alter spend distribution and reduce cost by $285,000 (4.1%)
$ .864M
$2.2M
$2.7M
$1M
Hire
Off shore
Contract Labor
Financial Services Example
CFO Summary
31
Need a seat at the table
Be famous for business value
Solve business problems
Have the right talent
Simplify
CFO Summary
32
Need a seat at the table
Be famous for business value
Solve business problems
Have the right talent
Simplify BUT……….
WE HAVE TO ELIMINATE
THE TRANSACTIONAL
TO DO THE STRATEGIC
GALAGHER JEFF, CFO FOR WALMART’S US ECOMMERCE
HOW
"Not everything that is faced can be changed.
But nothing can be changed until it is faced." - James Baldwin
35
Wireless Laptop on the Beach in Maui
36
JOB DESCRIPTIONS
It’s About the People
38
“Innovation has nothing to do with how many R&D dollars you have. When Apple came up with the Mac, IBM was spending at least 100 times more on R&D.
It’s not about money. It’s about the people you have,
how you’re led, and how much you get it.” [Fortune, Nov. 9, 1998]
Top 10 Skills in 2015
Kay Bayen ([email protected]) is people development adviser at the European Institute of Purchasing Management, based in Archand, France
39
Lower Impact- Negotiation- Cost Management- Transaction Process
Rising Impact- Strategic Thinking- Team Work- Market Knowledge- TCO- Influencing- Change Management
How We Measure Procurement Value
Last Century
Corporate Executive Board 2013 The Evolution of Procurement Performance.pdf
Last Decade
Current Effort
Next Generation
The Transformation Roadmap
More
than
a Q
uarte
rly R
evie
w
Embed
ded V
alue,
cro
ss fu
nctio
nal g
oals
Based
on b
usines
s im
perat
ives
The Ta
ble
Embed
ded in
LOB pla
ns
Long t
erm busin
ess plan
s
Decision Point
Supplie
r Risk
Manag
ement
Supplie
r Innova
tion
Supplie
r Colla
boration
Strate
gic So
urcing
RFP Purchas
e Ord
er
Invoice
3 years 2.5 years 2 years 1.5 Years 1 year 180 days 90 days 30 days 30 days late
Pre A
P Gro
up
Tran
sact
ional
Tea
m
Three
bids
and a
buy
Seven
ste
p pro
cess
The transactional space The next generation strategic spaceInternal Team Focus
Want to Change the World? Start with a City
Cities are the level of society that will address many of the economic, social and environmental challenges facing the world today
42
Bruce Katz, VP and Director, Metropolitan Policy Program at The Brookings Institution
DetroitTake risks. Solve problems.
Simultaneously build a career …
and rebuild a city
Attributes of Out Performers
They focus on improving enterprise success, not just procurement performance.
They engage with stakeholders to understand and anticipate their needs and values.
They embrace progressive procurement practices and tools to drive results.
Transforming procurement to drive the enterprise agendaIBM Institute for Business Value 2014
Supplier View of Your Company
A lesson from a Sales Manager
Profits
Partnership, Drive innovation, Best people, ideas and practices
Loss
Action: Grow or Eliminate
High
Low
Customers WorstBest
Sub Standard Profitability
Action: Reduce Services
Fair and Reasonable ProfitsLow cost customer, Innovation enginePrimed for growthPartner to Drive TCO Target Profitability
The ROI Payoff
NAEP PROCUREMENT VALUE CREATION SURVEY
NAEP VALUE CREATION SURVEY
Total respondents: 40+ institutions
In 2014, Procurement groups with
eProcurement implementations,
generated an average savings rate of 12x their annual budget
Spend Under Management increased by more than 50%
46%
71%
BENEFITS OF AN ePROCUREMENT SOLUTIONS
Savings as a percent of spend under management tripled
P-Card spend as a percent of managed spend reduced by
~50%
11%
22%
Savings as a percent of Budget increased almost
four-fold
2%
5.6%
3.1x
11.7x
VALUE CREATION CHART
SAVINGS RATE
1% 2% 3% 3.4% 4% 5% 6% 7% 8% 10% 15% 22%
% OF MANAGED
SPEND
100%$10,0
00 $20,0
00 $30,0
00 $34,0
00 $40,0
00 $50,0
00 $60,0
00 $70,0
00 $80,00
0 $100,0
00 $150,0
00 $220,00
0
95%$9,50
0 $19,0
00 $28,5
00 $32,3
00 $38,0
00 $47,5
00 $57,0
00 $66,5
00 $76,00
0 $95,00
0 $142,5
00 $209,00
0
90%$9,00
0 $18,0
00 $27,0
00 $30,6
00 $36,0
00 $45,0
00 $54,0
00 $63,0
00 $72,00
0 $90,00
0 $135,0
00 $198,00
0
80%$8,00
0 $16,0
00 $24,0
00 $27,2
00 $32,0
00 $40,0
00 $48,0
00 $56,0
00 $64,00
0 $80,00
0 $120,0
00 $176,00
0
70%$7,00
0 $14,0
00 $21,0
00 $23,8
00 $28,0
00 $35,0
00 $42,0
00 $49,0
00 $56,00
0 $70,00
0 $105,0
00 $154,00
0
65%$6,46
0 $12,9
20 $19,3
80 $21,9
64 $25,8
40 $32,3
00 $38,7
60 $45,2
20 $51,68
0 $64,60
0 $96,90
0 $142,12
0
60%$6,00
0 $12,0
00 $18,0
00 $20,4
00 $24,0
00 $30,0
00 $36,0
00 $42,0
00 $48,00
0 $60,00
0 $90,00
0 $132,00
0
53%$5,30
0 $10,6
00 $15,9
00 $18,0
20 $21,2
00 $26,5
00 $31,8
00 $37,1
00 $42,40
0 $53,00
0 $79,50
0 $116,60
0
50%$5,00
0 $10,0
00 $15,0
00 $17,0
00 $20,0
00 $25,0
00 $30,0
00 $35,0
00 $40,00
0 $50,00
0 $75,00
0 $110,00
0
40%$4,00
0 $8,00
0 $12,0
00 $13,6
00 $16,0
00 $20,0
00 $24,0
00 $28,0
00 $32,00
0 $40,00
0 $60,00
0 $88,000
30%$3,00
0 $6,00
0 $9,00
0 $10,2
00 $12,0
00 $15,0
00 $18,0
00 $21,0
00 $24,00
0 $30,00
0 $45,00
0 $66,000
20%$2,00
0 $4,00
0 $6,00
0 $6,80
0 $8,00
0 $10,0
00 $12,0
00 $14,0
00 $16,00
0 $20,00
0 $30,00
0 $44,000
10%$1,00
0 $2,00
0 $3,00
0 $3,40
0 $4,00
0 $5,00
0 $6,00
0 $7,00
0 $8,000 $10,00
0 $15,00
0 $22,000
Average (Managers, Savers
Followers
)
Chart based on $1MM of Total Spend
Ardent Partners Market Average
MP Actual Performance
$80,000
University Survey Average
Average for
Leaders
$45,220
MetaProcure
Led by former Fortune 50 Procurement Officers and Executives
Certified Minority Business Enterprise
50
Procurement Transformation and Leadership in the following areas:
Leverage our experience to drive your success
Diversity Management
Programs
Strategic Sourcing
Source to Pay
Solutions
Independent Contractors
Questions?
