Market Disruptive Solutions: Rethinking how Supply Chain Management Creates Value JLL Denver Clark Chief Procurement Officer Americas Jonathan Tucker Sr. Manager, Strategic Sourcing Yardi Mike Rooney Industry Principal sig.org/eval
Market Disruptive Solutions: Rethinking how Supply Chain Management Creates Value April 21, 2016 Denver Clark Chief Procurement Officer- Americas JLL
Denver Clark Chief Procurement Officer Americas Denver.Clark@am.jll.com Jonathan Tucker Sr. Manager Strategic Sourcing Jonathan.Tucker@am.jll.com Mike Rooney Industry Principal Mike.Rooney@yardi.com 3
Session Objectives Introduction and Background Explore the concept of supply chain value creation Review traditional approaches and thinking Share experiences of the session group Case Study: Tailoring your strategy to your business - JLL unique approaches 4
Who is JLL? 2015 gross revenue $6.0B S.F. under management 3.4B Only real estate firm listed seven years running Employees 58,000 Corporate offices 230+ LEED APs 1,300+ Six Sigma Green or Black Belts 390 Americas 7 countries 95 offices EMEA 27 countries 69 offices Asia Pacific 15 countries 64 offices Platinum 400 Best Big Companies 2006, 2007 and 2008 (U.S.) 2015, 2014, 2013, 2012, 2011, 2010, 2009 Global outsourcing 100 list JLL provides commercial real estate strategy, services and support to organizations around the globe 5
JLL Services Overview Full Spectrum of Commercial Real Estate Services Agency Leasing Capital Markets Corporate Solutions Facility Management Investment Management Investment Sales Lease Administration Project and Development Services Property Management Tenant Representation Transaction Advisory Services 5
Maximize JLL s Procurement Power Financial benefits for JLL & its Clients Productivity gains Differentiation advantage Total 3 rd Party Spend $ 30B Core Countries Estimated Addressable 75% Facilities Management Property Management All JLL Spend Project Management JLL Corporate 6
350 SCMP staff dedicated to sourcing, procurement and contract management activities VSC JLL Central Team Dedicated Client Accounts 7
Value Contribution Supply Chain Evolution and Value Cross platform business lines and geographies Centralized strategy, localized execution Key suppliers integrated with business Integrated across business Localized execution Formalized Category Strategies Deep Supplier Relationship Management Integrated by geography Momentum, applying leverage Build capabilities function & stakeholders Supplier Performance Management Localized decision-making Operational silos Transactional purchasing Stage 1 Stage 2 Stage 3 Stage 4 Level of Maturity 8
Traditional Approaches to Value Creation Generate savings and extract more value through effective buying Improve processes to gain productivity Implement rebate and supplier incentive programs Outsource Effectively to reduce overhead costs Align procurement and finance to manage cash effectively Leverage the Supply Chain to Create Growth 9
Supply Chain Value Generation Group Discussion and Sharing What approaches and strategies have you used? What has been most effective? 11
Supply Chain Value Extraction Market Disruptive Solutions Suppliers become partners and thought leaders Break the rules of traditional business relationships Share in risk and share in reward Competitors collaborate skin in the game 12
Supply Chain Value Extraction Market Disruptive Solutions Make technology your secret sauce Solve common challenges and gaps with unconventional solutions Brand your solutions Create new markets and demand 13
Supply Chain Value Extraction Market Disruptive Solutions Totally shift the buyer-supplier paradigm Buyers become customer of choice Suppliers become trusted advisors 14
Supply Chain Value Extraction JLL Case Study 15
JLL Case Study What were we solving for at the core? Transformation of the Supply Chain Management team and platform What is the Opportunity? - 3.4 Billion SF under management - $30 Billion in 3 rd party managed Spend - $12 B Project Spend (US) How do we get at it? - Increase centralized activities - Add new platform capabilities - Increase the size and talent on central team - Differentiate JLL in our industry Specific Areas of Development and Gap Closure addressed in 2015: - Leveraged Savings and Service Multi-Account Group Bidding MRO/Products Spend - Best in Class partnerships Supplier Relationship Management Supplier Advisory Councils - Differentiating Support and Value Improved Supplier Risk Management Platform Create new revenue generating services 16
JLL Supplier Advisory Councils JLL SCMP has formed and chairs strategic, collaborative councils of our most strategic suppliers in several key service areas as shown below. Janitorial Customer Satisfaction Strategy Alignment Security Guarding SRM Risk Management Council Innovation Exterior Services Corporate Responsibility Service Level Optimization Facility Trade Aggregator 17
Multi-Client (Group) Bidding Leverage many JLL managed sites Utilize advanced Sourcing technology Formal Project Management processes Deliver SME resources Centrally managed while maintaining local decision making and controls Reduce Supplier Cost of Sales Proven Results of 10-20 % Additional Savings > single portfolio 18
JLL Vendor Portal Comprehensive Supplier Screening and Risk Management Challenge: Quickly centralize and standardize the critical process of supplier screening, on-boarding, and COI assessment and monitoring across a huge supplier base and dozens of independent client teams Needed to close gaps rapidly dictated an industry partnership and innovative technology Very unique client facing environment dictated a new business model Existing budget had no money to develop a new type of program Solution: A market changing industry partnership with Avetta which provides technology and professional resources, JLL manages the program with internal stakeholders and develops unique compliance requirements Once successfully registered and screened, the supplier is eligible to work on any JLL accounts within a country provided that they produce a compliant COI for each client. Suppliers increase their exposure within JLL and more easily and quickly qualify for additional work with JLL Avetta technology investments, supplier funded platform, revenue share to JLL 19
Value Creation: Sourcing Services Creates direct revenue stream Expands current client relationships and creates new clients Grows business with strategic suppliers Expertise Industry Experience Functional Sourcing Expertise Contract, Relationship Management Supplier Screening Compliance Scalable Sourcing Services Performance Strategy Development Tools: SpendHQ, e-rfx Academy 2016 Unlock the Power of JLL
What is JLL Marketplace? One-stop shopping for commercial real-estate and FM Platform integrates strategic vendors into one integrated market place Technology is backed by fully leveraged contracted pricing with manufacturers and distributors Individual user accounts with personalization Favorites, saved GL codes, ship-to addresses, etc. User Interface based on end-user feedback - ease of use being top priority Consolidated invoicing one invoice per order form multiple suppliers - MRO - Jan/San consumables - Construction supplies - Office Products 21
Value Extraction Case Study Disruption with Edginess Complete Transparency JLL contracts directly with the manufacturer to get pricing. JLL contracts directly with distributor with margin transparency and uses selected manufacturer contract Distributor enables contract pricing with JLL Marketplace with the help of Yardi All sales information is made available to the partners JLL shares competitive baseline if pricing adjustments are needed 22
Value Extraction Case Study Disruption with Edginess Taking relationships from Transaction to Partnership Moving from unit price >>> program solutions Push to Customers vs Pulling in Customers Product purchasing from strictly cost to pure differentiation Transaction Partnership How this looks on JLL Marketplace Collaboration between 9 different fortune 500 manufacturers and distributors and Yardi, our solutions provider One price for all of JLL No more one off deals to buy a specific opportunity 23
Value Creation Case Study Disruption with Edginess Challenge Not all clients are the same, we can t make everyone happy End-user pushback I have my own relationships, I have been using my local guy for years, Supplier XYZ is too expensive Technology and Implementation Costs- sounds great but I don t have the budget JLL Marketplace Solution Complete transparency in communication with partners. Treat every lost opportunity as a learning experience and view correction as mandatory if reasonable, manage optics and messaging. Make integrations with suppliers vanilla. Moves conversation from a supplier program to a JLL Program. Also gives common cause amongst all partners to sell JLL vs their individual company Shared cost model. Have partners pay for the technology and a JLL program manager. Partners get compliance and exposure JLL gets free technology platform Yardi is made whole 24
Value Creation Case Study Disruption with Edginess Challenge Multiple players, how do you coordinate the transactions and share tactical support? JLL Marketplace Solution Yardi becomes the aggregation point. We even partnered to provide customer service, receivables, and implementation support. Only large corporate suppliers can do this, what about diverse partners? Yardi is a minority owned company. Yardi takes on the receivables and sends consolidated invoices to our clients. My partners only want to make an extra dollar Relationships are key, especially when your business depends on 3 rd party providers. Standing calls to catch up and making yourself available while demanding reciprocal treatment from supplier reps is a must. 25
Value Extraction Case Study Summary of Programs Implemented in 2015 Created a completely new and unique supply chain channel Disrupted current business models Created massive leveraging and new business opportunities generating revenue for JLL and partners Rapidly closed a gap with little JLL investment. Powered by an industry leading technology/partner with a fee share to JLL 100% supplier funded Brings consistency and efficiency to process for suppliers Supply Chain Value Creates tremendous value and opportunities for suppliers Annual fee model for participation Key KPI for success: supplier revenue growth Multi-client group bidding drives admin fees Sourcing Services and Consulting variable fee models create revenue Grows the business 26
Value Extraction Case Study Benefit Projections 2015 2016 2017 2018 2019 $1M $3M $5M $7M $10M 2015 Reflects Q4 Throughput Only Out year projections based only on growth of current programs 27
Supply Chain Value Extraction Closing Thoughts and Q&A Identifying the opportunities in your business Associating Revenue to true Value Add Solutions Broaden the view of who the client is Drive consistent change management and messaging internally and externally 28
Thank you Contact: Denver Clark Chief Procurement Officer- Americas JLL Denver.clark@am.jll.com 29
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Session #33 www.sig.org/eval Market Disruptive Solutions: Rethinking how Supply Chain Management Creates Value Denver Clark Chief Procurement Officer- Americas JLL Denver.clark@am.jll.com Download the App: bit.ly/sigorlando Tweet: #SIGspring16