Generating double-digit savings in an unstructured sourcing environment

Transcription

1 Generating double-digit savings in an unstructured sourcing environment Presentation for Ramirent CMD September 2011 Dino Leistenschneider, Director, Group Sourcing

2 This presentation shows the first results from Ramirent s sourcing development journey From To Transaction focus Value focus, sourcing as a major profit improvement lever Unstructured sourcing environment for indirect spend One company approach while ensuring strong local involvement Limited measurement of sourcing performance 12% savings and building of organizational capabilities 2

3 MEUR Ramirent has a history of strong growth accelerated by large acquisitions Net sales development, Acquires Bautas in Norway Acquires Altima in Sweden Starting point for sourcing development: Growth agenda had resulted to operations in 13 countries with uncoordinated sourcing operations 3

4 Now Ramirent has taken the first steps in its sourcing development journey Ramirent sourcing development journey Starting point Phase I Phase II Hiring of Group Sourcing Director Designing Sourcing Model Developing spend visibility Conducting opportunity diagnostics Implementing prioritized pilot cases 4

5 Starting point for sourcing development at Ramirent was rather unstructured Starting point / indirect spend Supplier base had a long tail Fragmented supplier base in many categories Manual ordering processes Few sourcing professionals 90% 10% 9000 suppliers 90% of suppliers represented 10% of total spend 10% Poor spend transparency No common spend categorization Agreement coverage and compliance is unknown, but probably mediocre 45% 55% Spend covered via agreements Spend not covered via agreements Focus had been in maintaining a steady state 5

6 Sourcing s role as a major profit improvement lever was acknowledged from the start Potential financial benefits Sourcing savings from indirect spend can boost ROI substantially (e.g. leverage 3-4) and other benefits: Freeing time in the outlets for customer facing work Improved quality and availability of the purchased products and services Supplier related risks better managed 6

7 Ramirent launched an initiative to transform its organization from transaction to value focus From Price to Cost focus From TCO to Value focus (I) Transactional (II) Synergetic (III) Cross-functional (IV) Integrated Focus on unit price Main tool is renegotiation Limited agreement compliance Ambitious maturity leap aimed! Focus on cost and total category spend Broad range of sourcing levers utilized Agreement compliance monitored Best-in-class sourcing Focus on total sourcing cost Good contract coverage and compliance World-class sourcing Focus on supplier value Deep supplier relationships with mutual efficiency improvement projects

8 First step was to develop spend visibility and identify the most prominent opportunities 1 Data collection and baseline creation 2 Opportunity identification and prioritization G F E D C Spend by category SWE NOR High Benefit potential Prioritized categories B A Low Low Implementation difficulty High 8

9 Sourcing s target state was designed and first pilot cases selected for implementation Target state & roadmap were designed and cases selected for implementation Category work Target state Cases for Phase II MRO materials External labor Logistics Shop & signage renewal Starting point Development of capabilities & tools Building of organization, capabilities and tools 9

10 MRO case resulted to significant supplier base consolidation through competitive bidding Phase II case Maintenance, Repair, Operations (MRO) materials External labor Key levers used Competitive bidding with incumbent and new suppliers Supplier base consolidation Changing demand, using alternative products Logistics Shop & Signage renewal >10% savings 10

11 External labor case used competitive bidding and pricing model harmonization as key levers Phase II case Maintenance, Repair, Operations (MRO) materials External labor Key levers used Competitive bidding with incumbent and new suppliers International supplier base consolidation Harmonizing the pricing model and quality requirements Logistics Shop & Signage renewal >10% savings 11

12 Logistics case resulted to a major change in the operating and pricing models Phase II case Maintenance, Repair, Operations (MRO) materials External labor Key levers used Changing nature of demand and pricing model Improving logistics efficiency through process development Competitive bidding and supplier base consolidation Logistics Shop & Signage renewal ~20% savings 12

13 Shop & signage renewal investment case leveraged best value country sourcing strategy Phase II case Maintenance, Repair, Operations (MRO) materials External labor Key levers used Best value / low cost country sourcing Competitive bidding and international volume consolidation Changing nature of demand Logistics Shop & Signage renewal >20% savings 13

14 Phase II delivered strong financial savings and various other tangible benefits Phase II results Maintenance, Repair, Operations (MRO) materials Results External labor Logistics Potential financial savings ~12% savings compared to baseline -12% Other benefits Improved quality of certain key products Improved availability of external workforce and logistics capacity Shop & Signage renewal Baseline Result Freeing time at depots for customer service Basis for future sourcing development 14

15 Combining focus on tangible results with capability building is the key to sourcing success 1. Deliver tangible results. Emphasizing sourcing s role as a major profit improvement lever 2. Build organizational capabilities. Transforming the organization from transaction to value focus 3. Maintain the momentum with a phased roll-out. Establishing a one company approach while ensuring strong local involvement 15

16 Dino Leistenschneider Group Sourcing Director Tel. +46 (0)