Chris Eyerman Senior Director Denali Sourcing Services Mobile: (412)

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2 Chris Eyerman Senior Director Denali Sourcing Services Mobile: (412) Alan Veeck Vice President Denali Sourcing Services Mobile: (412)

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4 The Procurement Bottleneck The Era of Category Management is NOW Mindset: The 3 Category Manager Imperatives Retooling for better Category Management 4

5 Expanding Procurement s Value for The Global 2000 since 1996 Sourcing, Contracting, Supplier Management, Analytics, Managed Source to Pay Programs 3 year growth rate: 194% 5

6 Source + Contract + Manage Some common constraints? Resource Constraints Skillset and Toolset Limitations Poor Stakeholder Awareness No Standardization of Work (inconsistency) Low Knowledge Capture/Reuse Value Add Focus 6

7 TODAY Source + Contract + Manage Stakeholder Management STRATEGIC 20% of time spent on these activities Category Management TACTICAL 80% of time spend on these activities Procurement Execution 7

8 TOMORROW Source + Contract + Manage STRATEGIC should be retained by client; spend 80% of time on these activities! Stakeholder Management Category Management TACTICAL should be out-tasked to most efficient and effective team Procurement Execution 8

9 Source + Contract + Manage Tier 1 >$1M STRATEGIC 6-STEP STRATEGIC SOURCING STRATEGIC DRIVE OPTIMAL SAVINGS STRATEGIC QBRs for TOP 10 SUPPLIERS Tier 2 >$100K NON-STRATEGIC SOURCING DESK NON-STRATEGIC SOURCING DESK, SOWs NON-STRATEGIC MONITOR Tier 3 <$100K NON-STRATEGIC SELF-SOURCING, CATALOGUE, P-CARD NON-STRATEGIC STANDARD TERMS & CONDITIONS NON-STRATEGIC STAKEHOLDER MANAGED 9

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11 In conclusion: our major contract expires tomorrow, we have no idea what we want and no knowledge of the market. It is time to pass this across to the Procurement team 11

12 salesperson general manager change agent analysis-driven decision maker strategic thinker storyteller thought leader listener value creator visionary 12

13 1. Sets the overall vision and strategy of the company and communicates it to all stakeholders. 2. Recruits, hires, and retains the very best talent for the company. 3. Makes sure there is always enough cash in the bank. CEO should delegate all other tasks to their team. CEOs can and often will do a lot more than these three things, and that s OK. But if you cannot do these three things well, you will not be a great CEO. * Fred Wilson, AVC (blog): 13

14 1 KNOW YOUR STAKEHOLDERS Be with stakeholders - spend time (real/mental) with them every day Intimately know their business objectives (AQSCI), the key enablers and barriers to those objectives; where value is created Establish true alignment with stakeholders establish shared goals, earn trusted advisor relationship Sell your vision - fully aligned and integrated with stakeholders Bring new opportunities to the table vs. react to requests or issues Plant seeds with Stakeholders this is an evolution; start one project at a time; build reputation, trust Your category knowledge will grow with time, and your credibility with stakeholders 14

15 2 UNDERSTAND YOUR CATEGORIES Get dirty with the data - become intimate with your category Get to true insights - go beyond data the so what s Drive and curiosity to seek insights and develop strategies Be intentional regardless of the depth and category maturity Be in the market study market drivers/trends, talk to suppliers, participate in market events, read Network with category peers in other organizations Understand your suppliers capabilities, performance, why you use them, leverage them Knowledge grows with time but should not delay execution 15

16 3 DELIVER RESULTS Sense of urgency to deliver on goals (savings, stakeholder needs) Know your targets by month/quarter, and have a plan to get there Eliminate extraneous work - Make sure that all activities link directly to executing against intentional strategies Don t get hung up on templates, data analysis or status quo Challenge business as usual If not now, then when? Leverage all available resources to reach your objectives Press sourcing strategies for greater value (go to auction?) Sustain the value by managing supplier relationships and performance 16

17 Researching totally new suppliers that can participate in your RFP Conducting spend analysis to understand your purchase price variance in IT services you have been purchasing over the last 5 years Writing an RFP for a competitive bidding process to determine a preferred supply base for your sheet metal purchases Organizing an impromptu supplier meeting to address ongoing performance issues 17

18 Securing a global supply base that meets company cost targets to manufacture a highly efficient vehicle to be the low cost leader in its market Developing a new call center capability in a low cost South American country to meet the localization and customer service needs of your organizations growing South America presence Meeting with your top IT service suppliers to brainstorm on how they can support a variable fee structure to support your organization s unpredictable demand patterns Embedding risk/reward incentives in an important outsourcing contract to assure suppliers are vested in the success and outcome of the initiative that is a Top 3 priority for your company 18

19 SME Market Intelligence Execution Resources Spend Analytics Processes & Tools Training 19

20 Needs assessed at the CATEGORY level across entire enterprise - not just by Region, BU, Plant, Supplier, or Project level Specialization CMs are the Subject Matter Experts (SMEs) Challenges current state thinking and develops a portfolio of potential solutions Adopts best-in-class category approaches Becomes a category thought leader as their time with category grows Strong relationship skills Salespeople of Procurement Proactive versus Reactive Delivers or exceeds expected annual goals 20

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