A Primer on Building and Executing Category Strategy

Transcription

1 A Primer on Building and Executing Category Strategy McDonald s Dennis Timpanaro Sourcing Director Mike Satlak Procurement Manager

2 A Primer on Building and Executing Category Strategy Fall SIG Summit 2015 October 2015

3 Category Management & Strategy Setting the Stage Building your Strategy Fame and Flops

4 McDonald s Facts & Figures 3

5 Global Sourcing & Procurement I didn t invent the hamburger. I just took it more seriously than everyone else. We [McDonald s] take the hamburger business more seriously than anyone else. ~ Ray Kroc 5

6 Category Strategy Benefits With all the critical procurement work to do at McDonald s, why would you devote time to making a category strategy?! 6

7 Category Strategy Benefits Being more strategic increases our ability to deliver value and has earned procurement a role on the biggest company initiatives 7

8 Category Management The home of category strategy We define Category Management as a set of all-inclusive activities that are strategic in nature, cyclical in process, interdependent among a variety of external factors, and have a clear focus on performance and results. Benefits 1Strategy CM Enables: Integrated Base of Knowledge Message to Supply Base Set of Goals and Targets Integration of Supply Management, Sourcing, Engineering, Innovation, Marketing, IT, Finance, Global Strategies and Initiatives Right people engaged at the right times for any new developments or changes to current state Ability to drive design improvement or cost reduction activities faster and more effectively by having the right people engaged at the right times Consolidate Efforts and combine redundant activities between functions Standardization of Processes and Tools 8

9 Category Strategy Table of Contents Category Management Process Spend Analysis Category Segmentation Category Strategy Supplier Relationship Management Supplier Tiering Governance and Reporting Continuous Improvement Category Overview Current State Spend Profile Stratification of Subcategories Baseline Spend Incumbent Supply Base Category History Risk Assessment Global Alignment Market Analysis Industry Trends Environmental & Sustainability Competitive Benchmarking Strategy Development Business Objectives Overview of Opportunities Category Strategy Supply Base Strategic Vision Strategic Lever Deep Dive Execution Plan Execution Plan Overview Initiative 1 Initiative 2 Executive Summary How can you gather this type of information? 9

10 Setting the Stage Tier 1 Categories (Strategic) Critical to category operations and to achieving long-term goals Supplier Partners Full Strategies Sourcing Supplier Mgmt. Engineering Marketing Menu IT Category Strategy Global Markets Innov ation Operations Innovation Tier 2 Categories (Significant/Foundational) Important to category operations Medium Spends Lean Strategies 10

11 Building Your Strategy Market Analysis 11

12 Building Your Strategy Strategy Development 12

13 Building Your Strategy Executive Summary Current Spend: $33,643,234 True Refrigerati on, 8% Bohn/Heat craft, 12% Kason, 4% Traulsen, 7% Master Bilt, 18% Norlake, 44% Kolpak, 7% Key Category & Supplier Statistics Supplier Profile Over 20 general contractors serve the system. 4 are approved Top three suppliers make up 46% of spend. Replacement cycle is tremendously long so parts are an important input to overall cost of ownership. Business Goals and Objectives Products Walk-in Box Launch LED lighting options and drive conversion Evaluate new insulation for possible greater R values Walk-in Refrigeration Test new CO2 refrigerant at one store Convert to scroll compressors Reach In Work with suppliers to make sure product ready Key Strategy Initiatives Expected Results Timeline Supply Base Management Technology/Materials Breakthroughs Supply Base Walk-in Box Eliminate Master Bilt Reach In Create preferred and secondary supplier tier structure Key Market Dynamics and Trends Sustainability Continued push to use less energy Net Zero Energy Federal Regulation: Safety Door locks Refrigerant Move to environmentally friendly Design New designs to maximize storage and layout Consolidate supply base (Master Bilt) in for Walk-In Box suppliers wile mitigating risk to Walk in refrigeration. Begin to manage reach in refrigerators with by evaluating and support top 2 suppliers. Test environmentally friendly CO2 refrigerant Work with suppliers to develop and launch new higher R value insulation to reduce energy usage. Develop interior system to human proof keeping food 1 away from walls Start: Q Complete: Q Start: Q Complete: Q Service and Parts Improve scroll compressor parts pricing with conversion of 1st built product Launch LED conversion kits Start: Q Complete: Q

14 Sometimes, it doesn t work 14

15 Flops Where have you struggled? a) Getting started b) Finding a structure c) Researching d) Achieving buy-in 15

16 Common Challenges Training Your Team Legacy Thinking Lack of Understanding Not Invented Here Stakeholder Agreement Participation / Ownership 16

17 When it Works Seating & Décor Seating & Décor Company and departmental goals united with procurement Led to significant value initiatives: 1,000 s of SKUs consolidated Custom items down: 70% to 20% 6-60% savings thru negotiating and value engineering Why did it work? Up-front agreement, collaboration, living document 17

18 When it Works Enterprise Software Enterprise Software Created a mini-governance process to develop and execute strategy First true global view of category Valuable outcomes: Created new purchasing model Simplified annual ordering process Negotiated extended support to mitigate security risks and save Why did it work? Collaboration, thinking creatively to change trends, strong data/info 18

19 Recap Where to begin? Want to try ONE thing to get started? Pick a category and write out the key stakeholders you ll need to engage 19

20 Dennis Timpanaro Sourcing Director Mike Satlak Sourcing Manager 20

21 Evaluation How-to: Why? Your feedback drives SIG Event content By signing and submitting your evaluation, you are automatically entered into a prize drawing How? Option 1: App 1. Select Schedule 2. Select Schedule by Day 3. Select Day 4. Select Session 5. Scroll to Description 6. Click on the Evaluation link Option 2: Browser 1. Go to 2. Select Session (#49) COMPLETE & SUBMIT EVAL

22 Session #49 A Primer on Building and Executing Category Strategy Dennis Timpanaro McDonald s Sourcing Director Dennis.Timpanaro@us.mcd.com Mike Satlak McDonald s Sourcing Manager Michael.Satlak@us.mcd.com Download the App: bit.ly/sigcaapp Tweet: #SIGfall15

23