Group Procurement and Strategic Sourcing. Heinz Tanghe 14 November 2012

Transcription

1 Group Procurement and Strategic Sourcing Heinz Tanghe 14 November 2012

2 Group Procurement and Strategic Sourcing 1. Dimensions of Group Procurement 2. Forecasting Process 3. Some successes in more detail 4. How we handle volatility 5. FY13 priorities and targets

3 Group Procurement and Strategic Sourcing 1. Dimensions of Group Procurement 2. Forecasting Process 3. Some successes in more detail 4. How we handle volatility 5. FY13 priorities and targets

4 Purchasing spend split 570M 69.3% sales

5 Dimensions materials 16 plants > suppliers unique plant material codes (incl indirect suppliers) 20% turnover on plantmaterials quotes requested 5 references per quote inforecords created individual price requests 160M annual turnover negotiated Quarterly for raw materials

6 Organisation Managers - 4 Total spend - 570M Staff ratio - 1 to 8 Purchasers - 20 Administrators - 10 Average spend - 28M Av. Nb. of direct suppliers /buyer - 50 Average number of items Info records created Price requests answered Analysts - 2 Tracked indices: 100 (daily/weekly or monthly) Quarterly forecasting: plant-materials Monthly reporting KPI s/dashboard

7 Group Procurement and Strategic Sourcing 1. Dimensions of Group Procurement 2. Forecasting Process 3. Some successes in more detail 4. How we handle volatility 5. FY13 priorities and targets

8 Timetable for the year Prepared in April Fixed for the entire next Fiscal Year Detailed forecast on each individual plantmat Time Horizon 15 months Budget Forecast July Prepared in June High level forecast by material group Detailed level for key materials Time Horizon 12 months Prepared in September Detailed forecast on each individual plantmat Time Horizon 15 months Forecast October Forecast January Prepared in December High level forecast by material group Detailed level for key materials Time horizon 12 months

9 Prep. Macro Economic Discussion Feedstock Assumptions Validation Macro Economics Request all other Feedstock Assumption PLC Finance Exchange rates Validated feedstocks form the basis to start the forecast BOM Receipt of all Feedstock Assumptions Validation all Feedstock Assumptions Asian division Senior buyers Deliver Individual Budget files to buyers Receipt of individual budget files buyers China ETR SMT validated Feedstocks View on plastics, metal, paper, oil derivatives Market knowledge Consolidate spends per division Supplier info Final validation budget Share individual budget prices Prepare Budget and Comm Presentation Others ICIS Benchmarking on Market data Banks IHS Chemsult

10 Prep. Macro Economic Discussion Validation Macro Economics Request all other Feedstock Assumptions Consolidating forecast input from buyers BOM Receipt of all Feedstock Assumptions Validation all Feedstock Assumptions Deliver Individual Budget files to buyers Receipt of individual budget files buyers Consolidate spends per division Final validation budget Share individual budget prices Prep Budget and Comm Presentation

11 Prep. Macro Economic Discussion Validation Macro Economics SMT Validation of Forecast Request all other Feedstock Assumptions BOM Receipt of all Feedstock Assumptions Validation all Feedstock Assumptions Deliver Individual Budget files to buyers Are the variances logic compared to feedstock assumptions and market? Do the variances make sense versus previous forecasts Check consistency across different divisions Receipt of individual budget files buyers Consolidate spends per division Final validation budget What are the drivers behind the most important variances on material group spend Validated budget Check need for adjustments given high volatility on feedstock and market evolutions Share individual budget prices Prep Budget and Comm Presentation

12 Group Procurement and Strategic Sourcing 1. Dimensions of Group Procurement 2. Forecasting Process 3. Some successes in more detail 4. How we handle volatility 5. FY13 priorities and targets

13 Trigger Sourcing Strategy for WCE 13

14 Key Business Requirements BU North New trigger design Cost neutral, or cost reduction versus current trigger Move from snap-on neck to screw-on neck trigger BU Italy New trigger design Cost reduction versus current trigger Improved quality and service BU Spain Cost reduction on trigger Access to lower cost screw neck preforms 14

15 Challenges to Address Ieper factory requirement to switch from PET resin for trigger bottle production to PET preforms. Supply Chain requirement to switch Ieper to Screw neck triggers versus suppliers desire to utilise existing snap-on neck trigger assets. Commercial team requirement for a new trigger design, but for no increase in costs. Both BU North and BU Italy stated strong preference for a specific trigger following presentations by suppliers. Capacity does not currently exist in Europe for one supplier to take on the combined volume of Ieper and Bagnatica today (60M pcs) Maintain/improve costs, cash (payment terms/consignment stock), quality, lead times and service level. 15

16 Purchasing Strategy Engage with the Business Units and fully involve them in the selection of new trigger options. Maximise the volume available by offering to combine the Ieper and Bagnatica volumes with a single supplier. Focus upon 2 major suppliers the only European suppliers capable of delivering our needs Maximise the benefit of existing relationships Raise the threat to suppliers of loosing McBride business, and make the offer of a new trigger the entry fee. Raise the option of non EU supply with both (market assessment done by our Hongkong sourcing office) whilst managing Supply chain risk Currency risk. Push both suppliers to commit to invest in capacity whilst trying to maintain/lower trigger unit cost. 16

17 Benefits and Savings BU North and BU Italy have access to a new trigger design that is currently not on sale in Europe. The trigger is already in commercial production overseas, and therefore proven technology. Realised savings: Significant annual cost saving on the triggers and on the preforms PP price increase due 1 st July delayed to 1 st September Support for plant changeovers by two specific discounts Fastest to market Option to implement consignment stock at Bagnatica subject to the constraints of Italian law. No currency exposure, even for top up volume from overseas 17

18 Flexible Formulations McBride Group

19 Key Facts. Feedstock prices are very volatile especially in the 2-3 years, and this will remain so for the future. - 16/11/2012

20 Key drivers Conclusion There are 2 major feedstock routes: Petrochemical Oleochemical Prices of each feedstock individually can fluctuate a lot and this due to a number of parameters Prices of both Petrochemical and Oleochemical raw materials can increase, even if only 1 type of feedstock is going up Example : Crude Oil is increasing, but CNO/PKO stays flat. It is likely that also raw materials derived from CNO/PKO will increase if their market is healthy. In this case, we talk about the substitution effect. Producers of natural raw materials want to take advantage of the increases on the Petrochemical side How to become less dependent? - 16/11/2012 Flexible Formulations

21 The Principles Raw material prices are discussed on quarterly basis The volatility of feedstocks, and availability of raw materials can give us a different picture each quarter McBride would like to supply the targeted performance with the most favorable ingredients at any time We have created multiple formulations matching the target. McBride are able to react quickly when price / supply issues occur We have an alternative plan ready in case of shortages on the market Flexibility of customers McBride offers the targeted performance, within a well defined frame, agreed with the customer Only workable if purchasing can immediately (re-) act on the market dynamics during each Quarterly tender Detailed formulations traceable through lot numbers

22 Flexible Formulations SAS limited supply base AOS normally cheaper than SAS several suppliers SLES several suppliers Natural and synthetic types Several EO alcohol bases Washing Up Liquid

23 Overall impact Flexible Formulations Washing Up Liquid For Ieper we recently switched back to the initial formulation from For the other sites some further investigation is ongoing to get full validation

24 Conclusion Savings generated in 2011 Savings forecast for 2012 Cash flow improvement: Increasing purchasing power Other bodies identified, waiting on further test results Next categories under investigation: HDL, Personal Care, ADW THIS PROJECT IS AN EXCELLENT EXAMPLE OF TEAMWORK Special thanks to R&D, Purchasing, Commercial, Quality, Category Development, Production, Mixing, and many others

25 McBride European Distribution Multiple Objectives: Reduction of the overall freight spend and improvement of cash flow: Savings for transport Savings for warehousing Cash flow improvement Optimization of negotiation activities and allocations: Managed circa 100 suppliers, 1,000 transport lanes (Ieper to France), 2 quotation round event resulting in 20,000 prices received Standardization of processes

26 Group Procurement and Strategic Sourcing 1. Dimensions of Group Procurement 2. Forecasting Process 3. Some successes in more detail 4. How we handle volatility 5. FY13 priorities and targets

27 Oil

28 Oil

29 Ethylene

30 Palm kernel oil / Coconut oil

31 Group Procurement and Strategic Sourcing 1. Dimensions of Group Procurement 2. Forecasting Process 3. Some successes in more detail 4. How we handle volatility 5. FY13 priorities and targets

32 Priorities Reduce spend in real terms Reduce Business risk associated with procurement activities Improve the Business cash position Improve Supplier service to McBride Improve stakeholder engagement

33 Group Procurement and Strategic Sourcing THANK YOU