IMPLEMENTATION OF AN ESOURCING TOOL IN A GREENFIELD ORGANISATION. eworld Ilse Claus (Group Procurement Manager)\

Transcription

1 IMPLEMENTATION OF AN ESOURCING TOOL IN A GREENFIELD ORGANISATION eworld Ilse Claus (Group Procurement Manager)\ 1

2 Agenda AGENDA Short Introduction to Short Milcobel Introduction to Milcobel Procurement: Where do we come from? E-Sourcing Tool: Why? Expected Benefits Procurement: Where do we come from? Challenges in the Implementation Process Stakeholder challenges and their feedback regarding the tool Current Status - Realised Benefits Stakeholder Challenges and their Feedback to the Tool Current status Realised Benefits Taking esourcing to the Next Level: E-Sourcing Tool: Why? Taking Expected esourcing Benefits to the Next Level: Strategies to be Strategies to maximise results depolyed over the next 12 months to maximise results Challenges in the Implementation Process Questions & Answers Milk. Our craftmanship, our future 2

3 Short Introduction to Milcobel 3

4 Key Figures 2015 Belgium s n 1 dairy company Annual turnover: approximately 1 billion Annual milk collection: approximately 1,2 billion litres (actual 2016 = 1,4 billion litres) Cooperative owner structure: 2,700 dairy farmers (+300 ex-rfc since 1 February 2016) Specialised in: cheese (consumer & industrial), powder, butter and cream, liquid dairy products, ice cream Ca. 2,000 employees 8 locations 4

5 Situation vs Target 5

6 Procurement Milcobel Dairy: < 2015 SITUATION < 2015 TARGET No Transparency Reactive Ad hoc Acceptance of the situation Purchasing: Everyone in the organisation Only operational purchasing serve the factory GAP Visibility Proactivity Right balance: e.g., quality versus cost Central approach Dedicated Category Buyers Courage to change Procurement involved at right time Cross-functional approach HOW TO CLOSE THE GAP? Spend Map Choose your battles Contracts/Procedures in place Tools in place Training - Professionalise Show value: gain trust Setting right expectations 6

7 Procurement Milcobel Dairy: Today Tomorrow Maturity Levels of a Procurement Organisation Van Weele 7

8 E-Sourcing Tool: Why? 8

9 E-Sourcing Tool: Why? (1) Admin workload Easy follow up of RFQ Fixed deadline Send reminders via system Follow up if supplier has logged in and submitted their offer Q&A via platform Uniform quotations Force supplier to answer in your way Consolidation of answers by the system system summarizes results Historic data available on one platform Start from another exercise no need to start from scratch Acceptance by supplier prior exercise: NDA, T&C, etc. 9

10 E-Sourcing Tool: Why? (2) As a method to force category buyers in the agreed workflow From making a phone call to the known supplier professional RFQ with several suppliers Invite internal stakeholders to follow RFQ Transparency Create trust and buy-in Increase credibility Remote follow-up possible Category buyers working from different locations, online follow up of RFQs possible by Procurement Manager 10

11 Challenges in The Implementation Process 11

12 E-Sourcing Tool: Challenges in the Implementation Process (1) Challenges within Procurement Procurement team without experience Is this tool really helping save time? No procurement experience in general No experience with an e-sourcing tool 12

13 E-Sourcing Tool: Challenges in the Implementation Process (2) Doing e-auctions is not fair towards suppliers There is only one supplier who can deliver what we need Stakeholder challenges and their feedback regarding the tool All information visible to invited stakeholders Also downsides > clear framework necessary You can use esourcing for other categories But not this one as it is VERY special and more complex than others! 13

14 Current status with Procurement Team, Processes and Tools 14

15 Current Status With Procurement Team, Processes and Tools Procurement Team Milcobel Dairy Routine in organising RFQs and using the e-sourcing tool 60% of the addressed spend via Scanmarket (4/2015-5/ mio ) o esourcing system even used for RFIs in order to update master data, update specifications, etc. First e-auctions done with good results Other tools Contract templates ready ERP re-setup: project defined Procedures described implementation soon Mintec: market intelligence Reporting 36

16 Current status realised benefits Approximately 25% time saved on average tender process Less need for face to face meetings, less mail follow up, etc. Realised savings of the RFQs done via Scanmarket 17% costs savings in average More transparency than traditional processes E-sourcing platform as a tool to help implementing a workflow 37

17 Taking esourcing to the Next Level Aim to achieve: Greater Savings Greater efficiency Greater credibility Greater visibility Greater compliance More spend under management 38

18 Greater Savings - eauctions Scanmarket: Analysis of tens of thousands of eauctions 17 years experience Advanced Strategies training: Direct correlation between number of suppliers and savings generated: for every extra supplier taking part in an English Reverse eauction there is an average further 1.1% saving (cut-off point 8 suppliers) On average only 75% of suppliers invited to take part actually will take part, therefore always invite a larger number than your target number 39

19 When to use eauctions Use of eauctions should be limited to commoditised products only WRONG! 1) Scanmarket s 3C model: Compelling Spend Competition Clear Specifications 40

20 When to use eauctions Best Practice companies utilise the eauction tool for all categories within Krajlic s Portfolio model and not just the easy Leverage products: Non-critical: Low complexity/low Category spend - Utilize eauction tools to run negotiations with suppliers with a minimum of time and resource consumption Leverage: Low complexity/high Category spend - Utilise eauctions to exploit the market, as you have both buying power and a large spend to operate with Bottleneck: High complexity/low Category spend First priority is to minimise the risk, which should be considered prior to the utilisation of any eauction tool Strategic: High complexity/high Category spend - Large spend which could be exploited, however indepth strategy analysis should be made to make sure the high complexity is taken into account 41

21 Which type to use...an eauction is an eauction is an eauction - WRONG! 2) Correct type of eauction must be used and set up correctly English Reverse Japanese Dutch 42

22 eauctions Continued Japanese eauctions: Suppliers siloed No visibility of the activity/presence of any other supplier All start off with an opening bid (importantly, starting prices can be completely different from each other s) Suppliers invited to accept lower and lower bids, suggested by the system (set decrements and time interval between bids defined by supplier). Once supplier fails to accept X bids in a row, they are out of the eauction Perfect for: competition is low - even if there is only one supplier suppliers are offering products/services that differ considerably in quality/cost strategic categories where company has a strong preference for a particular supplier when buyer is sourcing not taking best bid as final decision 43

23 eauctions Continued. Dutch eauctions: Start off with the same starting bid (15-30% lower than RFQ price) System will suggest higher and higher bids (again set increments and time intervals are defined by buyers) First supplier to accept a bid wins the eauction High pressure eauction for suppliers and yield s amazing results Ensure participants are approved suppliers only Perfect for: Equally qualified suppliers but no competition (e.g., where one supplier s bid is 10%+ lower than other bidders) Perfect for allocating specific projects to framework suppliers Commoditised products/services where there is no preference 44

24 Supplier activity Sounds obvious, but the more supplier activity, the greater the savings. Therefore, aim to maximise supplier activity by: Communication Preparation Training/Conditioning Functionality Use of Scanmarket s traffic light system: not winning, winning, and toindicate close (within a pre-defined percentage to the best current bid) Chat function 45

25 Advanced functionality- erfx and eauctions Build all pertinent parameters into both erfx and eauctions: To calculate TCO: Rebates Transportation Other charges To maintain supplier relationships and to ensure best overall value is achieved: Quality differences Service levels Lead time Warranty Suppliers are happy that other factors other than price are being taken into consideration Give long-standing excellent suppliers an advantage by adding a switching cost levy to other suppliers 46

26 Advanced functionality erfx and eauctions continued. Scanmarket s dynamic parameters: erfx Suppliers can select payment terms and enter their best price. The system will add pre-defined levies based upon the option they have selected: E.g., 3 payment term options 30, 60, 90 days 30 days = +2%, 60 days = +1%, 90 days = +0% eauction Suppliers can, in real-time, change payment terms, lead time, etc., and their current and future bids will be amended accordingly based upon the pre-defined levies 47

27 Other reasons for eauctions Contrary to popular belief, eauctions are not solely used to generate savings. They are also used for: Avoiding cost increases Quickly and easily determining true market value Bolstering and diversifying your supply chain (get 2 nd and 3 rd choice suppliers to improve pricing for future dealings) 50

28 Ramping up use of eauctions Together with Scanmarket, we have identified that 65% of our sourcing projects planned for the next 12 months are suitable for eauctions, based upon the 3C model As we are able to quickly transfer the info from the erfx module straight into the eauction module, we can very easily run those eauctions without impacting resource 51

29 Thank you for listening Please stop by the stand to pick up a copy of the presentation: All slides from today s presentation Plus bonus slides covering more advanced esourcing strategies we plan to deploy to achieve: Greater efficiency Greater compliance Greater visibility Greater level of spend under management 52