How You can Recover Hidden Cash Flow from Your Supplier Base

Transcription

1 How You can Recover Hidden Cash Flow from Your Supplier Base Director, Toni Quagliata September 14, 2017

2 Expense Reduction Analysts A Global Expense Management Company Finding extra cash flow within your supplier base and putting it back to work in your business

3 Agenda What s the Realistic Opportunity for You? What Obstacles are keeping you from getting it? How can you Overcome those Obstacles? Q & A

4 Is this Relevant to You? You re probably doing a good job of managing expenses Thinking it s still possible that you re leaving significant money on the table? Curious if you are, how much it might be, where it is, and how to get it? Some important initiatives may be underfunded? You could put Additional Cash Flow to good use

5 The Opportunity for Savings ERA s Experience with over 17,000 client projects tells us: Most companies are still leaving 10%-30% on the table across large expense categories 10% 15% 20% 30% What could Your Company do with an additional 20% added back into your budgets?

6 How is Overspending Possible? The Goal of any Supplier s Salesforce is to Win as much business as they can, at the Highest Margin they can. The Greatest Leverage comes from understanding your Suppliers Industries enough to know where their costs & margins live. Suppliers know it s Impractical to dedicate equal resources to less strategic, lower volume cost categories. Most companies lack the comparative market data to know what pricing & terms are really possible. There are many Misconceptions about Procurement Best Practices.

7 Top 10 Common Misconceptions 01 ONE Suppliers give similar pricing to similar clients and customers 02 TWO Your strategy and expertise in purchasing in one cost category will produce similar results in another 03 THREE FOUR National pricing agreements are always better than local or regional agreements with the same Supplier 04 Supplier loyalty translates to best pricing and service

8 Top 10 Common Misconceptions 05 FIVE SIX More volume always gets you a better deal 06 Getting three bids will get you to the best price 07 SEVEN EIGHT You re asking the right questions in your RFPs 08 Group purchasing will always get you the lowest costs

9 Top 10 Common Misconceptions NINE Lower price means lower quality and service TEN Lowest price is the same as lowest cost IS YOUR ORGANIZATION LIMITED BY SOME OF THESE BELIEFS?

10 How You Can Find Additional Cash Flow The Top 10 Best Practices that take you from Good to Exceptional EXCEPTIONAL GREAT BETTER GOOD

11 The Path to Exceptional: Getting Started 02 ANALYZE Analyze your actual purchasing history--- It s NOT what you think 01COMMIT Develop a strategy and a plan

12 The Path to Exceptional: Understand Yourself 03 DEFINE QUALITATIVE NEEDS Understand the qualitative requirements for each cost category It s NOT just about price YOUR BUYING ASSUMPTIONS 04UNDERSTAND Many of the assumptions & processes that drive supplier requirements are No Longer valid, appropriate, or necessary.

13 The Path to Exceptional: Understand Suppliers 05 SUPPLIERS & THEIR INDUSTRIES Understand each of your suppliers businesses and their industries like you understand your own Market Trends, Pressures, Cycles New Developments & Alternatives Terminology & Jargon Business Practices & Unique ways to Contract Cost/Price Drivers Pricing Benchmarks for Similar Companies, with Similar Spends, in Other Geographies Their True Differentiation Among Their Competitors

14 The Path to Exceptional: Re-evaluate 06RE-EVALUATE Re-evaluate your current supplier relationships with these new insights 07 GO TO MARKET Go to market with written bids, proper frequency and ask the right questions

15 The Path to Exceptional: Execute 09 DECIDE, 08NEGOTIATE Negotiate More Effectively Leverage all your new insights Separate negotiator & relationship owner Use pricing & terms behavior benchmarks Help the supplier save money Know all the contracting options IMPLEMENT, MONITOR Implement quickly This is equivalent to a cash leak! Fight Price Creep Many mistakes many line items and human error Processes---e.g., Off-contract purchasing Publish pricing & SKU changes Rebates, incentives, credits, etc. Suppliers have many methods to recover margin Continue to Optimize over time

16 The Path to Exceptional: Sustain it 10 CHANGE THE CULTURE Embed a real expense control mindset into the company culture Mindset first techniques, policies and procedures second Is no cost sacred? Do they spend money like it s their own? Do they understand the Impact on the company, e.g., $1M Saved = $5M-10M in Sales? Are cost-saving suggestions encouraged and pursued? Are they integrated into your reward systems?

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18 Next Steps As Promised: High-Level Assessment No Fee for Attendees Could You be Leaving Money on the Table? If so, Want to Know How Much? Where it might Be? How You Can Get It?

19 Expense Reduction Analysts Topic: How to Recover Significant Cash Flow from Your Supplier Base Date: Thursday, September 14, 2017 Location: AFPA 2017 Desert Summit, Phoenix, AZ Speaker: Toni Quagliata, Director, Expense Reduction Analysts Attendee Name Company Address Phone Check if You are Interested in: Following up on ERA s Special Offer Learning more about ERA Services ERA Blog & Case Studies Y TIO N

20 Question & Answers