Sales institute11 01 19 v3 [read only](1)
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Transcript of Sales institute11 01 19 v3 [read only](1)
Sales Institute
David Coffey – The Clearview GroupDavid Coffey The Clearview Group
Stephen Pitcher – Provide Consultants
19TH 201119TH January 2011
AgendaAgenda Introduction – Who we are
1. What is Purchasing /Procurement1. What is Purchasing /Procurement
1. When does it start?
2. What are the different levels of procurement maturity within clients organisations
3 What challenges does procurement face3. What challenges does procurement face
4. Outline ways to identify the procurement behaviours of clients
2. Procurement Practices
1 What do they do1. What do they do
2. How do they plan, identify strategies
3. What tools do procurement use
4 What does this mean for you4. What does this mean for you
5. Identify ways to engage with different levels of procurement
3. How do suppliers respond
1 How to categorise procurement functions1. How to categorise procurement functions
2. Category and Supplier Management
3. Tools for suppliers
4 T Ti4. Top Tips
Introduction
David Coffey – The Clearview Group – [email protected] / 087.137.0798
David has extensive experience building, managing, and transforming strategic procurement functions across David has extensive experience building, managing, and transforming strategic procurement functions across both the public and private sectors.
• The Clearview Group : Co-founder (2005 to date), a procurement services company
• Supplierforce: Chief Services Officer, with responsibility for professional services delivery.
• Takeda Pharmaceuticals North America, Inc (Chicago): US Head of Procurement ($1.2B in supplier spend)
• ABN AMRO North America, Inc (Chicago): VP of Corporate Planning and Strategic Sourcing ($1.7B in supplier spend)spend)
• PricewaterhouseCoopers US (Chicago): Senior Strategy Consultant
Stephen Pitcher – Provide Consulting Ltd – [email protected] – 086 6235551Stephen Pitcher Provide Consulting Ltd [email protected] 086 6235551
Stephen has worked in senior Procurement roles in the UK and Ireland for PLCs such as Allied Domecq, First Leisure and Hibernian/Aviva . He was a founder member of the Aviva International Procurement council. He founded Provide Consulting after leaving Hibernian and provides procurement services to a variety of SME and Corporate clientsvariety of SME and Corporate clients
3
Traditional Purchasing gCharacteristics
Focus on short‐term savings
Tactically oriented vs. strategically focused
Focused on Tangible Goods FocusShort-Term
Pre‐ Defined Specifications
Deal Driven (Adversarial) RelationshipsCommunication
No consistent measures to assess performance
Communications not consistent
Performance
Relationship
Suppliers lack knowledge of Group OPNs.
Procurement Characteristics Today
Focus on total cost of ownership
Increased Focus on Service
Strategically vs. Tactically oriented
FocusShort-Term
Long-Term
Consistent assessment of performance
Clear direction in relationship developmentCommunication
p p
Improved communication
E h d k l d f b i
RelationshipPerformance
Enhanced knowledge of company business practices
Procurement Defined
Procurement is the process of creating d t i i l d i and sustaining value and managing
external spend and activities through:• 40-60% of a company’s cost
base
• the acquisition of goods and/or services • at the best possible total cost of
ownership
• significant impact on margins
• Complex - thousands of ownership, • in the right quality and quantity, • at the right time, • in the right place
Complex thousands of suppliers with many more relationships
C l h i g p
• and from the right source • for the direct benefit or use of the
procuring organisationgenerally via a contract
• Constantly changing environments (business, markets, people, regulation, compliance etc.)• generally via a contract. compliance etc.)
6
The capability of your clients and target companies will vary
PROCUREMENT CAPABILITY – WHERE ARE YOUR CLIENTS & PROSPECTS?
7
Behaviours of Procurement Function along the Capability Curve – a look at levels 1 to 3
TRANSACTIONAL1. Tactical2. No/Limited sphere of influence3. Weak relationships with business4 Focus is on execution process
COMMERCIAL1. Follow process ‐ tenders2. Not independent thinkers – follow process3. Limited sphere of influence4 Suspicious
PROACTIVE1. Strategic – think in a business context2. Ear of CFO/CEO3. Commercially, analytically strong4 Subject matter experts4. Focus is on execution, process
5. Not commercially savvy6. Limited decision making7. Distracted with day to day
4. Suspicious5. Blinkered, somewhat narrow vision –
process and price6. Traditional negotiation and supplier
management methods – challenge,
4. Subject matter experts5. Independent, self directed6. Influence, may in fact control7. Open‐minded, progressive8. Broader, more holistic view
aggressive7. Short term approach
9. Receptive to ideas10. Relationship builders, leaders11. Change managers12. Thinkers ‐ innovation
Traditional Challenges
Managing Procurement is challenging......and it has only become more so
Traditional Challenges
• Purchasing vs. Procurement –perceptions
• Lack of executive awareness
• Deliver savings
• Budgets reside outside of purchasing / Shift from competitive advantage to
titi i l• Budgets reside outside of purchasing / procurement
• Lack of procurement expertise in the business unit
competitive survival
• Massive pressure building on the purchasing function
business unitNew Challenges
• Massive upheaval in global markets
• Look to cost base and procurement for sustained profitability
• Contracting revenues
• Market share is under threat
R d d fit bilit d
• “Doing more with less”
• Same quality / service for less
Manage and drive value• Reduced profitability and competitiveness
• Supply chain risk – company f il
• Manage and drive value
failures
Procurement What do they do?
The Sourcing Cycle
Value Creation Value Capture
PerformanceManage
Define UserRequirements
Profile theCategory
SourcingStrategy
Tender &Award
ImplementContract
3-5 months 3-5 years
• Best practices
• Order to chaos – categories, segmentation
• Prioritise – categories, suppliers, resources – to deliver value
• Cycle, not an eventy
• From tactical/short term to the strategic/long term
• Information rich – business solutions
• Plans solutions• Plans, solutions
• Process + Management
• Collaborate and engage – stakeholders and suppliers
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Cost Drivers ReviewCost Drivers Review
Supplier C tSupplier Customer
Tariff(Unit Cost)
SpecificationCosts
UsageCosts
Costs
Infrastructure Costs/ Transaction Costs
Procurement StrategyProcurement Strategy
Poor Service
Information
r Mar
gin
Poor ServiceHigh Cost
of Is
sues
Specification
s. H
ighe
r
ntifi
catio
n o
Performance
d C
ost v
s
Poor ServiceLow Cost
Iden Performance
Measurement
Red
uce
Sustainable Cost Savings
Procurement Best Practice
How do Procurement Functions create Procurement Strategy…
• Focus on Core Business
• Improve Quality of I f ti
Business Strategy• Correct
product/service
• Improve Quality of I f ti
Dept. Strategy• Assess current
supplier base
• Set Out Performance C it i
Identify Suppliers• Review Specifications
• Provide Management Information
Internal Tactics• Improve internally and
externally
• Better information flow
Communications
Information
• Reduce Cost Year on Year
• Streamline Decision Making
Information
•Reduce Number of Suppliers
•Reduce Processing Time
Criteria
• Allocate Resources• Identify Appropriate
Budget Allocation• Better access to global
information
Making Processing Time
•Identify Cost at Source
• Continuous quality improvement
The Light at the End of the Tunnel!The Light at the End of the Tunnel!
• Structure and Objectivity– Category Management– Category Management
– Supplier Management
• Global Requirements
• Non Core RequirementsNon Core Requirements– CSR Agendas
k d b l b l b l• Risk, Auditability, Stability, Sustainability
What can Suppliers do
1. Categorise procurement functions
2. Embrace Category and Supplier Management
3. Contribute to the process
4. Tools for suppliers
5. Dos and Don’ts
Categorise the procurement functions
• Review Procurement in light of maturity chart• Who’s at the meeting• Who reads the proposals• Are they looking at reducing invoices, CSR Reporty g g p• Who will manage the contract• What issues do they discuss ; cost, volume, y ; , ,specification
• How will value be measured • What language do they use about Risk, Contingency, Added Value
OpportunitiesOpportunities
• Category Management– Visibility– Visibility
– Structure
• Supplier Management– Platform for measurement
– Platform for stakeholder management
Contribute to the processContribute to the process
• Identify ways to help move the procurement function across the maturity chartSh d t di f t h ll• Show an understanding of procurement challenges
• Need for short term savings – Deliver short term benefitsDeliver short term benefits
• Corporate unwillingness to partner with suppliers– Build trust with stakeholders
• Lack of understanding of procurement in client organisations– Demonstrate value of ongoing engagement in supplier management
process Develop communicationsprocess. Develop communications
• Risk in Supply Chain– Demonstrate risk avoidance
Dos and Don’tsDos and Don ts
Do Don’t
Li t t Cli t T ll hi h t hListen to Client Tell him what you have
Use an Executive Summary Abuse an Executive Summary
Provide Solutions Sell your productProvide Solutions Sell your product
Account Manager to attend Sales people attend
Show Trust Start Tender with Confidentiality Clause
Show relevant CSR evidence Engage in Corporate Boasting
Identify stakeholders Pigeon hole stakeholders
Know why you are there Just Tell them you value the business
Tips for Sales Professionals when Engaging with Procurement
Your goals are to win new clients, sell more to existing clients, be retained or increase ‘stickiness’, t t i Th bj ti t il fli t ith th b ’ bj ti
1. Gauge the capability of the procurement function
protect margin. These objectives may not necessarily conflict with the buyer’s objectives
2. Identify the key stakeholders, don’t circumvent procurement
3. Understand how the procurement function organises spend, categories
4 See your business through the client’s eyes - understand your category spend 4. See your business through the client s eyes - understand your category spend relative to other categories, complexity, importance to the business
5. Engage procurement – understand sourcing strategy for your category.
6 Heighten your profile by providing objective strategic guidance such as market 6. Heighten your profile by providing objective, strategic guidance such as market intelligence, product developments.
7. Help to shape the prospect’s category strategy. They often need your help!
8 Listen and understand the problem they are trying to address8. Listen and understand the problem they are trying to address
9. Provide value - understand the prospect’s total cost structure for the model. Make those improvements if necessary
10 In tenders engage and answer the questions be creative and do not provide 10. In tenders, engage and answer the questions, be creative and do not provide marketing fluff
11. Implementation is key – do not let the wheels fall off at the first hurdle
12 Management - do not forget the client after the contract is signed – expect
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12. Management do not forget the client after the contract is signed expect improvements, value, risk mitigation over the life of the contract.
Tool: Procurement Capability Framework
Client 1 Client 2 Prospect 1 Prospect 2
1. Procurement Strategy
2. Total Cost Focus
3. Category & Supplier Mgmt
4. Stakeholders
5. Organisation (Skills, Structure)
6. Policy & Governance
7. Processes & System
22
QuestionsQuestions