Market Disruptive Solutions -...

Rethinking how Supply Chain

Management Creates Value

Market Disruptive Solutions:

JLL

Denver ClarkChief Procurement Officer – Americas

Jonathan TuckerSr. Manager, Strategic Sourcing

Yardi

Mike RooneyIndustry Principal

sig.org/eval

Market Disruptive Solutions: Rethinking

how Supply Chain Management Creates

Value April 21, 2016

Denver Clark

Chief Procurement Officer- Americas

JLL

Proprietary & Confidential 3

Denver Clark

Chief Procurement

Officer – Americas

[email protected] [email protected] [email protected]

Mike Rooney

Industry Principal

Jonathan Tucker

Sr. Manager

Strategic Sourcing

Proprietary & Confidential

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?

Americas

7 countries

95 offices

EMEA

27 countries

69 offices

Asia Pacific

15 countries

64 offices

2015 gross revenue

$6.0B

S.F. under management

3.4B

Employees

58,000

Corporate offices

230+

LEED APs

1,300+

Six Sigma Green or Black Belts

390

Platinum 400 Best Big Companies

2006, 2007 and 2008 (U.S.)

2015, 2014, 2013, 2012, 2011, 2010, 2009 Global outsourcing

100 list

Only real estate firm listed seven years running

JLL provides commercial real estate

strategy, services and support to

organizations around the globe

5


JLL Services Overview

• Agency Leasing

• Capital Markets

• Corporate Solutions

• Facility Management• Investment Management

Full Spectrum of Commercial Real Estate Services

• Investment Sales

• Lease Administration

• Project and Development Services

• Property Management• Tenant Representation

• Transaction Advisory Services

5


Maximize JLL’s Procurement Power

Facilities Management Property Management

Project Management JLL Corporate

All JLL Spend

Financial benefits for JLL & its Clients

Productivity gains

Differentiation advantage

Total 3rd

Party Spend $ 30B

Core Countries Estimated

Addressable

75%

6

350 SCMP staff dedicated to sourcing, procurement and

contract management activities

JLL Central Team

Dedicated Client Accounts

VSC

7


Stage 3Stage 2Stage 1 Stage 4

• Localized decision-making

• Operational silos

• Transactional purchasing

• Integrated by geography

• Momentum, applying leverage

• Build capabilities – function &

stakeholders

• Supplier Performance Management

• Integrated across business

• Localized execution

• Formalized Category Strategies

• Deep Supplier Relationship

Management

• Cross platform – business

lines and geographies

• Centralized strategy, localized

execution

• Key suppliers integrated with

business

Val

ue

Co

ntr

ibu

tio

n

Level of Maturity

Supply Chain Evolution and Value

8


Traditional Approaches to Value Creation

Align procurement and finance to manage cash effectively

Generate savings and extract more value through effective buying

Implement rebate and supplier incentive programs

Improve processes to gain productivity

Leverage the Supply Chain to Create Growth

Outsource Effectively to reduce overhead costs

9


Group Discussion and Sharing

What approaches and strategies have you used? What has been most effective?

Supply Chain Value Generation

11


Supply Chain Value Extraction

Market Disruptive Solutions

Suppliers become partners and thought leaders

Share in risk and share in reward

Competitors collaborate – skin in the game

Break the rules of

traditional business

relationships

12


Solve common

challenges and gaps

with unconventional

solutions


Market Disruptive Solutions

Make technology your secret sauce

Brand your solutions

Create new markets and demand

13


Supply Chain Value ExtractionMarket Disruptive Solutions

Buyers become customer of choice

Suppliers become trusted advisors

Totally shift the

buyer-supplier

paradigm

14



JLL Case Study

15


JLL Case Study – What were we solving for at the core?

• What is the Opportunity?- 3.4 Billion SF under management

- $30 Billion in 3rd 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

Transformation of the Supply Chain Management team and platform

• 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

• Security Guarding

• Facility Trade Aggregator

• Janitorial

• Exterior Services

SRM

Customer

Satisfaction

Strategy

Alignment

Risk

ManagementInnovation

Corporate

Responsibility

Council

Service Level

Optimization

JLL SCMP has formed and chairs strategic, collaborative councils of our most strategic suppliers in

several key service areas as shown below.

17


Multi-Client (Group) BiddingLeverage 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

19

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

Academy 2016

Unlock the Power of JLL

Value Creation: Sourcing Services

Industry Experience

Functional Sourcing Expertise

Strategy Development

Tools: SpendHQ, e-RFX

Contract, Relationship

Management

Supplier Screening

Scalable Sourcing Services

Expertise

Compliance Performance

• Creates direct revenue stream

• Expands current client relationships

and creates new clients

• Grows business with strategic suppliers


What is JLL Marketplace?

• 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

One-stop shopping for commercial real-estate and FM

21


Value Extraction – Case StudyDisruption 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 StudyDisruption with Edginess

Transaction

Partnership

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

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 StudyDisruption with Edginess

Challenge JLL Marketplace Solution

Not all clients are the same, we can’t make

everyone happy

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.

End-user pushback – “I have my own

relationships”, “I have been using my local guy

for years”, “Supplier XYZ is too expensive”

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

Technology and Implementation Costs- sounds

great but I don’t have the budget

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 StudyDisruption with Edginess

Challenge JLL Marketplace Solution

Multiple players, how do you coordinate the

transactions and share tactical support?

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 3rd 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

• 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

Supply

Chain

Value

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



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


JLL

[email protected]

29

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Rethinking how Supply Chain Management Creates Value

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Denver Clark


JLL

[email protected]

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