Presentation #1

A New Buy-Side View of Collaborative Supplier Development

Marc Rosen, President & COO – Corporate United

Joanna Martinez, Chief Procurement Officer – Cushman & Wakefield

Mark Gillen, Director of Procurement – Under Armour

Andrea Morton, VP of Supplier Center of Excellence – Corporate United

Presenters:

©2014 SAMA Annual Conference

The Eyes See What the Mind is Prepared to Comprehend

Key Deliverables & Mobilizers 1

The Journey on the Buy Side

2

Collaborating to Achieve Different Results 3

Panel Q & A 4

AGENDA

Business Dynamic Many budget holders, which: • Have diverse needs • Multiple processes, often not

followed • Lack of procurement expertise • Have limited visibility of total

spend, preferred suppliers, contracts, related activity across business

Supplier Dynamic High volume of suppliers, which:

• Are across multiple categories

• More knowledgeable in category

• Have relationships in other functions and use to their advantage

Internal Pressures • Reduce headcount • Achieve more savings • Get more visibility & control over

spend • Reduce exposure and risk

Procurement Pressures

• 100’s of diverse categories • Constant evolution of markets and

technologies • Globalization • Regulatory compliance

Indirect Procurement Function • Has limited resources • Has limited buy-in from Functional

heads & senior leadership • Lacks market knowledge • Is reactive & time pressured • Lacks investment and technology

6

7

Category Management

Spend Analysis Sourcing Process

Procure to Pay Performance Management

1. Aggregate Data 2. Data normalization 3. Data classification 4. Review contracts 5. Identify

opportunities

1. Align with stakeholders 2. Determine Requirements 3. Identify Sourcing

Strategy 4. Determine baseline and

evaluation criteria 5. Implementation

1. PO Processing 2. P-card transactions 3. Open order management 4. Expediting 5. Dispute resolution 6. Master data updates

1. Supplier management 2. Demand management 3. Stakeholder collaboration 4. Category strategy 5. Stakeholder satisfaction

1. Continuous Improvement

Price

Starting point

Price Management

Supply Market

Competition

Volume

3

Current best practice

Ownership costs Obsolescence costs Inventory costs

Total Cost of Ownership

Acquisition cost

Purchase cost

Specifications

Emerging Trend

Price Risk & Sustainability

Usage & Innovation

Process & Working Capital

Total Value of Ownership

3

Risk Avoidance Revenue Enhancement

Ease of Doing Business Cost Avoidance

Levers

Overview of Under Armour, Inc. Founded in 1996 by former University of Maryland football player Kevin Plank, Under

Armour is the originator of performance apparel, footwear and - gear engineered to keep athletes cool, dry and light throughout the course of a game, practice or workout around the globe

Under Armour’s Mission: TO MAKE ALL ATHLETES BETTER, THROUGH PASSION, DESIGN, AND THE RELENTLESS PURSUIT OF INNOVATION

Listed on NYSE: UA Achieved $2.33 billion in revenue in 2013 Product offerings consist of apparel, footwear and equipment for men, women and

youth Distribution channels include wholesale accounts, and direct-to-consumer through

company managed stores and online at www.UA.com Over 7,000 employees worldwide

Evolution of the Indirect Procurement Function – “Old School” Purchasing vs. Strategic Procurement

“Old School” Purchasing • Myopic focus on cost reduction • Transaction-centric • “Anti-relationship” • Views suppliers as “vendors” who simply serve their organization’s needs • Ideas for improvement driven primarily by internal partners • Non-collaborative

Strategic Procurement in 2014 • Focus on Mutual Value Enhancement • Recognizes the benefits of value-engineering efforts in long-term partnerships • Embraces relationship-building, trust, and the creation of an emotional connection between the buyer’s

brand / product and the supplier’s account management team • Works with suppliers as true partners, driving toward mutually beneficial goals • Relies on suppliers as a major source of innovative solutions • Partners with suppliers’ Account Managers to increase the value-sum gained by all parties

What is the Definition of Value?

“Value is defined by Under Armour’s

Strategic Procurement Team as being a function of Quality, Service, and Price.”

Key Steps in Driving Mutual Value Enhancement through Collaborative Supplier Development

Step #1 – Identify a core group of suppliers to engage in robust partnership development efforts

Step #2 - Identify a baseline of mutual value that has been historically achieved

Step #3 - Identify individuals in each organization who are accountable for success

Step #4 – Develop a cadence for tracking progress of initiatives, and measuring value achieved vs. baseline

Step #5 – Begin implementation of collaborative supplier development program

Step #6 – Communicate results and celebrate victories

Step #7 – Sustain ongoing results

About Cushman & Wakefield

• Cushman & Wakefield is one of the world’s largest commercial real estate services firms. • The company was founded in 1917 and the firm’s major shareholder is Exor, the investment arm of

the Agnelli Family. • Cushman & Wakefield currently has 250 offices in 60 countries, employing 16,000 professionals. • Cushman & Wakefield was named the exclusive leasing agent for 1 World Trade Center, the Freedom

Tower, by the Port Authority of New York and New Jersey. • The Corporate Investor and Occupier Services (CIS) Division manages investment and owner-

occupied properties across the globe.

On the tactical side… • If you’re responding to an RFP online

– Register in advance – Practice – Ask questions if given the opportunity

• Ask how responses will be weighted • Don’t try to upsell before we’ve done the first deal • People are expecting us to deliver (sometimes unrealistic) cost reductions. If

that’s not possible, help us understand the value proposition. • “Years of experience” is not a value proposition

Help me make a decision… Innovation? What sets you apart from your competitors? What value do you add that

no one else does?

Portfolio Analysis Tool

Relative Market Difficulty

Relative Spend

Critical Strategic

Acquisition Leverage

From a strategic viewpoint…

• Do what you say you are going to do • Use the knowledge that you gain from working

with the firm to help us make improvements • Take a Supply Chain view – there are

opportunities upstream and downstream. • The more embedded you are… the higher the

hurdle rate to change • Give us that Innovation – help us bring something

new, to our clients. Increase the Value Proposition.

1. Building stronger more committed supplier relationships for CU and our members

2. Collaborating with suppliers to reinforce their value and increase their ability to retain customers

3. Increasing customer satisfaction by

supporting their contract and performance management initiatives Delivering CONTINUOUS VALUE to our stakeholders

BEING VIEWED AS STRATEGIC PARTNER Small Steps that can Make a Big Impact

• The Business Review as we know it is dead • Need to move from operating as tactical vendors to

strategic partners through understanding TCO • Take a Business Advancement Meeting mindset &

strategy • Change doesn’t happen overnight, but you can take

small steps NOW to get there

23

- The customer does not bring additional stake holders to the

meeting - They are not interested in hearing

about new products & services - They usually just have me email the

business review

- The supplier does bring anything new to the meeting

- Reviews are not supported by the suppliers management team or SMEs

- I am not sure the suppliers understand our business and its

goals & objectives

The Business Review Impasse

The voice of the suppliers The voice of the customer

4 Small Steps to Developing a Business Advancement Strategy Now

1. Data Dump

• Send data in advance • Spend time during the meeting on more strategic agenda

items

2. Education • Demonstrate interest in knowing about customers company &

department goals and objectives • Apply the knowledge to be creative on ways to innovate new

solutions.

3. Transparency • Begin profitability discussions which strike at the heart of

sustainability • Demonstrates a level of partnership that goes well beyond

tactical procurement initiatives.

4. New Value • Continue to bring value that goes beyond just lowering the piece price

1. Cost Driver or Program Improvement

2. Define existing and desired state 3. Make suggestions on how to move to best in class

Generic Utilization

Specialty Management

Network Utilization

Wellness Programs

• Recommendation 1 • Recommendation 2 • Recommendation 3

• Recommendation 1 • Recommendation 2 • Recommendation 3

• Recommendation 1 • Recommendation 2 • Recommendation 3

• Recommendation 1 • Recommendation 2 • Recommendation 3

Current Position

Best-in-Class

Current Position

Best-in-Class

Current Position

Best-in-Class

Current Position

Best-in-Class

Solution

Impact

Disruption / Cost

Solution

Impact

Disruption / Cost

Solution

Impact

Disruption / Cost

Solution

Impact

Disruption / Cost

4. For each suggestion, present the solution, the relative price / efficiency impact, and the “pain” in achieving the result

How do you continue to bring value to the table that goes beyond just lowering the piece price?

A New Buy-Side View of Collaborative Supplier Development

Marc Rosen, President & COO – Corporate United > mrosen@corporateunited.com

Joanna Martinez, CPO – Cushman & Wakefield > Joanna.Martinez@cushwake.com

Mark Gillen, Director of Procurement – Under Armour > mgillen@underarmour.com

Annie Morton, VP of SCOE – Corporate United > amorton@corporateunited.com

Presenters: