Telling the Sourcing Story: Driving Stakeholder engagement from startup to maturity. March 9, 2017

Transcription

1 Telling the Sourcing Story: Driving Stakeholder engagement from startup to maturity March 9, 2017

2 Rent-A-Center Background NASDAQ: RCII The largest operator in the United States rent-to-own industry Stores offer high quality, brand name durable products such as major consumer electronics, appliances, computers, and furniture and accessories under flexible rental purchase agreements Allows customers to obtain ownership of the merchandise Approximately 21,000 employees 4,288 locations Annual revenues $3.0 billion in 2016 Headquarters: Plano, Texas, Country office in Monterrey, Mexico Rent-A-Center Lines of Business Our various businesses are Located in all 50 US States, Puerto Rico, Canada, and Mexico - 2 -

3 Pre Spend Management Organization Assessment (Circa 2009) Challenges Procurement of approximately $600 million of indirect spend was decentralized Lack of visibility into invoice detail; analyzed by reviewing general ledger account detail Over 20,000+ active suppliers; 80% of spend with 300 suppliers Utilized two P2P tools in 18 months prior to July 2010, no S2C tools Adoption End user experience was challenged in searching products and site navigation User adoption was below acceptable levels; complaints were frequent Integrating supplier catalogs was not an easy and efficient process Invoice Processing Streamlining PO backed invoices were entered into ERP by hand 1 Million non PO backed invoices annually No approval workflow for non PO backed Invoices Net Payment terms on invoices due to process flow timing Risks Overpayment of product without strategic sourcing; payment of late fees No central repository for contracts Lack of consistency requesting NDAs and lack of MPA templates No consistent sourcing tools or processes utilized - 3 -

4 Example Documents Outcome Major Activities RAC stakeholders have completed the scoring process and identified SAP, Oracle, and Ariba as the best full suite providers, and Emptoris as a leading single process provider. General Company Information Source to Contract Procure to Pay Spend Analysis & Reporting Supplier Management Technical Full Suite Upstream Only Downstream Only Oracle SAP Ariba Ketera Emptoris BravoSolution Basware Lawson N/A N/A N/A N/A Considering the strong performance of the full-suite providers and the relatively weak performance of the niche providers, the team has not included Aravo and JPMC in this assessment. Note: RAC stakeholders include M. Wilding, T. Fuller, P. Hall, J. Whitehead, B. Corley, N. Stevens, J.Chanani, M. Douglas, J. Arnette and R. Salvans The RAC Transformation Approach The RAC team assessed our spend needs and capabilities, developed the future state vision for the Spend Management Organization (SMO), and created the options that the Technology Steering Committee assessed to make the final recommendation Initial Project Steps Next Phase As Is Assessment Strategy Development Technology Selection Implementation Maturity survey SMO vision development Needs assessment prioritization Process and technology assessment Implementation scenario development Scenario ROI analysis Implementation prioritization Formation of steering committee RFP development and distribution Response analysis Technology selection RAC solution design Solution implementation User training Business and technology needs identified Technology Business Case created Solution and vendor recommendation developed Technology implemented Tech Selection RFP Scoring Results Maturity model assessment and gap analysis Technology cost / benefit assessment Technology demo scripts Technology RFP evaluation Example implementation roadmap - 4 -

5 Technology Strategy Development RAC had limited spend management technology in place; However, further investments were required to reach the desired to-be state Business Case 1 RAC had no Sourcing and Contracting technology in place 2 The eprocurement technology was at a low maturity and required an upgrade to support new process paths if not replaced 3 RAC had very limited spend reporting capabilities, and no Supplier Management technology 4 Beyond basic electronic forms, the Travel and Expense (T&E) analysis, audits, and reporting were at a low level of maturity Technology Scope - 5 -

6 Technology Selection Process The RAC technology selection team conducted a 4 step process to identify the right technology solution to meet our needs Sourcing Process Vendors included in initial assessment Vendors included in capability assessment Vendors receiving RFP Vendors that provided demonstrations 1. Market Research 2. Detailed Analysis 3. RFP 4. Demo Analysis Conducted high level market analysis of 44 suppliers Perform functionality review and financial assessment Down select to 19 supplier that could potentially meet RAC needs Conducted capability assessment and detailed financial analysis Down selected from 19 to 11 suppliers that would receive RFP Developed and distributed detailed RFP consisting of: 6 sections 275 questions Evaluated responses and identified 4 suppliers that best met RAC s needs and provided competitive pricing estimates Developed seven page script and executed detailed vendor demos Identified best-fit solution and implementation scenario for RAC Added a 5 th supplier to the process - 6 -

7 Spend Management Transformation Strategic Sourcing Execution Program Transformation Timeline Transitioning from a project to a sustainable Source to Pay model and Spend Management Organization Project Timeline Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Wave 1 Sourcing Wave 2 Sourcing Continued Sourcing Events based on Multi-year Roadmap Wave 3 Sourcing SMO Design Technology Selection Technology Implementation Technology Utilization and Improvement Source-to-Contract esourcing & Contracting Procure-to-Pay eprocurement & einvoicing Travel and Expense Reporting PMO and Change Management Source to Pay Model Established - 7 -

8 Source to Contract Software P2P Software RAC s Source to Pay Process Map A B P2P Software - Catalogs - Requisitions - Service purchasing System Uses Source to Contract - Sourcing - Contract Management - Spend Analytics - PO s (cxml, , fax) - Approvals - Invoicing Process Flow C Integrations - ERP - P-Card - Travel booking - eprocurement system P-Card Software ERP System The end-to-end solution is targeted to enable 60-70% of spend under PO and/or Contract - 8 -

9 SMO Overview Key Sourcing Objectives Reduce the company s indirect expenditures while increasing the quality of service Align our company with market best practices to increase operating efficiency Reduce risk to the company s operations by enabling contracts with suppliers Six Step Sourcing Process The Sourcing Process Cost Baseline Project Work Plan Award Decision Process Category Specifications Total Cost Model Supply Market Analysis Supplier Qualification Guide RFIs (as appropriate) Category Charter Sourcing Strategy & Action Plan Bid Packages (as appropriate) Negotiation Strategy (as appropriate) RFP Scoring Value Capture Form Supplier Contract SMO Vision Statement We, the Spend Management Organization, partner with our internal customers and suppliers, to lead RAC in realizing value and maximizing efficiencies in each non-merchandise category. We will remain flexible and responsive while we develop creative solutions to meet the needs of all RAC stakeholders

10 Spend Management Sourcing Strategy In addition to reducing costs, RAC will utilize the below methodology to contribute in achieving full category potential value Figure out what we need to buy.. Opportunity Summary Source good or service in a competitive environment... Gain business compliance Work with supply base to gain further reductions RAC Strategy = Reduce Demand % Increase % Decrease in % Compliance + Spend Under x Contract x to New + Management Costs Contracts Process / Collaboration Cost Reduction Objective: Rationalize Requirements / change Policies Improve Governance Model Effective Total Cost of Ownership Sourcing Improve Compliance Management Process and Purchasing Redesign

11 Sourcing Engagement Stakeholders are to engage their respective category manager, who will request information of the procurement activity to understand the category landscape, if existing agreements are in place and related attributes to determine the best sourcing process that meets the business requirements. The sourcing processes have been identified to support stakeholder needs Sourcing Process Identification <50 Total 100 Total Hours Total Hours Time Consulting Category spend that is less than $250K in annual spend Stakeholder led, SMO assisting and providing feedback Sourcing Initiatives (Varying levels of six step process) Category spend that is less than $1M, but more than $250K in annual spend Additional support and effort are needed to assist with market analysis, internal process opportunities, and or competitive sourcing event SMO will lead the initiative Sourcing Projects (Full Six Step process) Category spend that is more than $1M in annual spend Suppliers and categories that are deemed to be strategic to the business in meeting strategic goals and objectives SMO will lead the project Other procurement activities include supplier contracting, NDA s, SRM

12 Savings Source to Contract Process and Continuous Management 1. Assess Opportunity 2. Assess Internal Supply Chain Six Step Process 3. Assess Supply Market 4. Develop Sourcing Strategy 5. Implement Sourcing Strategy 6. Institutionalize Strategy Six Step Results Actual Result Beyond The Six Steps Loss of Opportunity Change Management Assist stakeholders with communication plans, implementation plans, and other transition documentation Performance Tracking and Reporting Monthly reporting to calculate business statistics and ensure program is tracking to plan Technology Enablement Automate processes where possible to eliminate manual process Category Management Strategy Assess market conditions and contracts to ensure best practices and cost effectiveness Organization and Governance Time 6 Reoccurring meetings with stakeholder to align on market changes and future projects Supplier Relationship Management Supplier Relationship Management (SRM) is a methodology that includes tools, processes, skills, and resources to guide and support interactions with RAC s supplier community, including: Supplier Relationship Management Features Supplier Relationship Management Outcomes A systematic methodology to manage suppliers Periodic measuring and monitoring Roles, responsibilities, policies, guidance, and support for use of a consistent SRM approach A framework for supplier performance measurement Control and development of suppliers, additional savings opportunities Reduction of risks (e.g. Public Personal Information - PPI)

13 Stakeholder Touch Points Stakeholder Category Reviews Established regular category reviews with business leaders for category alignment and monitoring o Breakdown of historical spend by sub-category and supplier o Provide contract landscape o Sourcing plan o Review sourcing results Provide executive overview of activities and results Category Roadmaps Developed a plan to address individual category spend and associated savings plan Align on engagement type and timing for each category creating a multi year roadmap Be flexible, adjust plans according to business needs Listen for and to Stakeholder feedback

14 Success Factors and Lessons Learned Success Factors Visibility to spend and decision making through formation of Procurement Leadership Council, consisting of CEO, COO and CFO Stakeholder category reviews and integrating their feedback Keeping the end in mind when sourcing and targeting savings, i.e. ensure you know how you are going to measure and track savings and other Key Performance Indicators (KPIs) Engage other enabling organizations such as IT, Security, Legal and Audit early in the sourcing process Data integrity conducted peer reviews, internal challenges, learn from each other via show and tells Transparency of successes and failures tracked results, provide remedies to resolve gaps Lesson Learned Become a practitioner before you step into engage, speak their language Progression of trust - establish a multi phase approach, crawl/walk/run, look for quick wins and understand level of change management Take time to learn how stakeholders view their suppliers and capabilities Establish the right communications cadence and audience for periodic status updates, category events and organizational results