roy anderson evp procurement services metaprocure 470-514-3640 randerson@metaprocure.com skills you...

Roy AndersonEVP Procurement ServicesMetaProcure470-514-3640randerson@metaprocure.com

Skills You Need to Drive Value to Your CFO

MetaProcure

Led by former Fortune 50 Procurement Officers and Executives

Certified Minority Business Enterprise

2

Procurement Transformation and Leadership in the following areas:

Leverage our experience to drive your success

Diversity Management

Programs

Strategic Sourcing

Source to Pay

Solutions

Independent Contractors

CFO Top Priority: Save Money

Save money without compromising service or quality.

Stay within the purchasing guidelines.

Capture savingsGenerated by eProcurement and re-direct to student programs, instead of leaving the extra money in department budgets to be spent elsewhere.

Establish savings goalsRelated to the pursuit of costs savings across all commodities

3

CFO Top Priority: Create Value

Do more with less

Illustrating our value as a departmentIn terms of cost savings, value generation, etc.

Look for Efficiencies across the board

Look for creative funding opportunities to fund projects

4

What is the Largest Challenge You Face?

Lack of Resources especially in terms of Personnel

Meetings

No budgetFor spend analysis software, etc.

No time/staff to compile information on our own.

Not enough funding or support to maintain what have; buildings, parking lots, roads and grounds.

Manage the daily grind while strategizing the new approach, which will effectively create savings.

5

What is the Largest Challenge You Face?

Getting the detailed data we needThen getting it into a format that we can make timely decisions and create useful reporting based on this information.

What types of reporting others are doing.

Boil down the rhetoric to know where my cost savings lie

Create value for end users so they utilize ProcurementEnd users think it is faster to order and pay by Pro-card

Until we prove there are advantages to routing orders through Procurement

6

What is the Largest Challenge You Face?

Accomplish savings

without alienating departments

7

Changing Income Statement

8

2000 2015

Net Sales $100,000 $100,000

Cost of Goods Sold $20,000 $35,000

Gross Profit (Loss) $80,000 $65,000

Employee Benefit, TAXES, WAGES $45,000 $25,000SGA $5,000 $5,000SUPPLIERS $10,000 $15,000 Total Expenses $60,000 $45,000

Net Operating Income $20,000 $20,000

Other Income

Year

Revenue

Cost of Goods Sold

Expenses

Income Statement

Supplier30%

Employee50%

2000

Supplier50%

Employee30%

2015

IT BPOHR Payroll, RPOCall CentersCustomer ServiceWeb DesignAccountingContract ManufacturingData EntryR&D

AdvertisingFacilities ManagementCreativeEngineering Mail RoomLegal ServicesSalesWarehouseLogistics

YOU MATTER

The University Imperative

10

After Sweet Briar College made its closure statement Mark Cuban tweeted

"This is just the beginning of the college implosion.”

Sweet Briar survived with a $12M infusion of cash from Alumni

5.3/yr.

Figures from a Different Perspective

11

1980 1990 2000 2010 20120

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

Degree-granting institutions

1980 1990 2000 2010 2012 Inc/decade

Degree-granting institutions 3,231 3,559 4,182 4,599 4,706 456

https://nces.ed.gov/fastfacts/display.asp?id=84

National Center for Education Statistics

The Mark Cuban Fix

12

Student Loans $1,351,868,086,916Credit Cards $882,600,000,000Auto Loans $750,000,000,000

CURRENT STUDENT LOAN DEBT IN THE UNITED STATES

collegedebt.com

Congress to cap student loans, the money's not available to universities"

"They have to either raise student aid or lower tuition”

or …… Radically lower expenses

or……. Fundamentally change the delivery of education

www.businessinsider.com/mark-cuban-sweet-briar-college-college-debt-bubble-crisis-2015-3

The $1 University Class

Evidence of a Poor Contract

Energy

Global Population uses 16 terawatts of electricity

That is the amount of energy our Sun delivers to the Earth

Every 88 minutes

5000 times more energy than we use

Abundance the future is better than you think

Energy

Solar energy costs have dropped 50% in the past year

What happens when it drops 99.99999%

When we have so much energy

It is unlimited

Abundance the future is better than you think

Transportation Fuel Costs Car Industry DynamicsDriverless cars (taxi’s, parking lots, not needed)Cost of PolicingSpace travel becomes cost effectiveVirtual classroomsMORE

PEOPLE ARE AFRAID OF

CHANGE

Mind Sets that block change

Not made here

Winner takes all

Not in my job description

Why are you making “waves”

Wait, That is MY JOB

17

Moat Builders

Moat builders

18

EMBRACE CHANGE

Change is a Given

BlockbusterTWALehmanDigital EquipmentChryslerWang LabsCompaq ComputerEnronKodakBear SternsRadio ShackTrump Resorts

Understand Their Point of View

Old School Thinking

Help Finance Help You Create Value!Pierre Mitchell Chief Research Officer Spend Matters (Azul Partners)

“Finance has a better relationship with top management and is seen as an asset where Procurement is seen as a necessary evil (stepchild) that everyone hides from and wishes would disappear. Finance could actually be the enforcer and get policy compliance and support.”

“Budgets, control investment priorities, and is the basis for profitability.

Future Think

23

Help Finance Help You Create Value!Pierre Mitchell Chief Research Officer Spend Matters (Azul Partners)

That partner, equipped with a clear understanding of the value of moving non-core process to suppliers, and using supplier capabilities to the fullest is the fastest way to drive faster market response, lower cost & risk, and improve LOB performance.”

Yogi Berra

“Baseball is 90 percent mental. The other half is physical.”

24

The CFO’s Input

Galagher Jeff, CFO for Walmart’s US eCommerce business of the World’s largest company.

Responsible for driving insights, growth strategies, and financial stewardship for Walmart’s fast-growing eCommerce organization.

https://ieondemand.com/divisions/cfo/events/274/presentations/strategic-finance-the-benefits-of-integrated-finance-and-strategy?mkt_tok=3RkMMJWWfF9wsRonsqTOc%2B%2FhmjTEU5z16u0uXa6%2Bi5x41El3fuXBP2XqjvpVQcNkNL7LRw8FHZNpywVWM8TIKdQQt9l1IAzmCmk%3D

25

CFO Role

26

Alignment of Metrics to Strategy

Measure:

#1 Did we meet their Goals?

Savings

Compliance

Customer Enthusiasm for our results?

CFO Role

27

Partner with the Business

Take the lead on BIG initiatives

CFO Role

28

Challenge the Status Quo

Data Driven Decisions

29

-- 81 unique records; 57 different rates

-- Range: $50 - $140/hr.

-- Rate Card: $75/hr

-- 25% of $5.5M spend is at $60/hr. and lower

Data Analyst – Expert: Bill Rates

$75./hr rate card

Optimization - Labor Strategy

……………. More common distribution ____________ Actual distribution

Potential Opportunity: Alter spend distribution and reduce cost by $285,000 (4.1%)

$ .864M

$2.2M

$2.7M

$1M

Hire

Off shore

Contract Labor

Financial Services Example

CFO Summary

31

Need a seat at the table

Be famous for business value

Solve business problems

Have the right talent

Simplify

CFO Summary

32

Need a seat at the table

Be famous for business value

Solve business problems

Have the right talent

Simplify BUT……….

WE HAVE TO ELIMINATE

THE TRANSACTIONAL

TO DO THE STRATEGIC

GALAGHER JEFF, CFO FOR WALMART’S US ECOMMERCE

HOW

"Not everything that is faced can be changed.

But nothing can be changed until it is faced."      - James Baldwin

35

Wireless Laptop on the Beach in Maui

36

JOB DESCRIPTIONS

It’s About the People

38

“Innovation has nothing to do with how many R&D dollars you have. When Apple came up with the Mac, IBM was spending at least 100 times more on R&D.

It’s not about money. It’s about the people you have,

how you’re led, and how much you get it.” [Fortune, Nov. 9, 1998]

Top 10 Skills in 2015

Kay Bayen (kbayen@eipm.org) is people development adviser at the European Institute of Purchasing Management, based in Archand, France

39

Lower Impact- Negotiation- Cost Management- Transaction Process

Rising Impact- Strategic Thinking- Team Work- Market Knowledge- TCO- Influencing- Change Management

How We Measure Procurement Value

Last Century

Corporate Executive Board 2013 The Evolution of Procurement Performance.pdf

Last Decade

Current Effort

Next Generation

The Transformation Roadmap

More

than

a Q

uarte

rly R

evie

w

Embed

ded V

alue,

cro

ss fu

nctio

nal g

oals

Based

on b

usines

s im

perat

ives

The Ta

ble

Embed

ded in

LOB pla

ns

Long t

erm busin

ess plan

s

Decision Point

Supplie

r Risk

Manag

ement

Supplie

r Innova

tion

Supplie

r Colla

boration

Strate

gic So

urcing

RFP Purchas

e Ord

er

Invoice

3 years 2.5 years 2 years 1.5 Years 1 year 180 days 90 days 30 days 30 days late

Pre A

P Gro

up

Tran

sact

ional

Tea

m

Three

bids

and a

buy

Seven

ste

p pro

cess

The transactional space The next generation strategic spaceInternal Team Focus

Want to Change the World? Start with a City

Cities are the level of society that will address many of the economic, social and environmental challenges facing the world today

42

Bruce Katz, VP and Director, Metropolitan Policy Program at The Brookings Institution

DetroitTake risks. Solve problems.

Simultaneously build a career … 

and rebuild a city

Attributes of Out Performers

They focus on improving enterprise success, not just procurement performance.

They engage with stakeholders to understand and anticipate their needs and values.

They embrace progressive procurement practices and tools to drive results.

Transforming procurement to drive the enterprise agendaIBM Institute for Business Value 2014

Supplier View of Your Company

A lesson from a Sales Manager

Profits

Partnership, Drive innovation, Best people, ideas and practices

Loss

Action: Grow or Eliminate

High

Low

Customers WorstBest

Sub Standard Profitability

Action: Reduce Services

Fair and Reasonable ProfitsLow cost customer, Innovation enginePrimed for growthPartner to Drive TCO Target Profitability

The ROI Payoff

NAEP PROCUREMENT VALUE CREATION SURVEY

NAEP VALUE CREATION SURVEY

Total respondents: 40+ institutions

In 2014, Procurement groups with

eProcurement implementations,

generated an average savings rate of 12x their annual budget

Spend Under Management increased by more than 50%

46%

71%

BENEFITS OF AN ePROCUREMENT SOLUTIONS

Savings as a percent of spend under management tripled

P-Card spend as a percent of managed spend reduced by

~50%

11%

22%

Savings as a percent of Budget increased almost

four-fold

2%

5.6%

3.1x

11.7x

VALUE CREATION CHART

SAVINGS RATE

1% 2% 3% 3.4% 4% 5% 6% 7% 8% 10% 15% 22%

% OF MANAGED

SPEND

100%$10,0

00 $20,0

00 $30,0

00 $34,0

00 $40,0

00 $50,0

00 $60,0

00 $70,0

00 $80,00

0 $100,0

00 $150,0

00 $220,00

0

95%$9,50

0 $19,0

00 $28,5

00 $32,3

00 $38,0

00 $47,5

00 $57,0

00 $66,5

00 $76,00

0 $95,00

0 $142,5

00 $209,00

0

90%$9,00

0 $18,0

00 $27,0

00 $30,6

00 $36,0

00 $45,0

00 $54,0

00 $63,0

00 $72,00

0 $90,00

0 $135,0

00 $198,00

0

80%$8,00

0 $16,0

00 $24,0

00 $27,2

00 $32,0

00 $40,0

00 $48,0

00 $56,0

00 $64,00

0 $80,00

0 $120,0

00 $176,00

0

70%$7,00

0 $14,0

00 $21,0

00 $23,8

00 $28,0

00 $35,0

00 $42,0

00 $49,0

00 $56,00

0 $70,00

0 $105,0

00 $154,00

0

65%$6,46

0 $12,9

20 $19,3

80 $21,9

64 $25,8

40 $32,3

00 $38,7

60 $45,2

20 $51,68

0 $64,60

0 $96,90

0 $142,12

0

60%$6,00

0 $12,0

00 $18,0

00 $20,4

00 $24,0

00 $30,0

00 $36,0

00 $42,0

00 $48,00

0 $60,00

0 $90,00

0 $132,00

0

53%$5,30

0 $10,6

00 $15,9

00 $18,0

20 $21,2

00 $26,5

00 $31,8

00 $37,1

00 $42,40

0 $53,00

0 $79,50

0 $116,60

0

50%$5,00

0 $10,0

00 $15,0

00 $17,0

00 $20,0

00 $25,0

00 $30,0

00 $35,0

00 $40,00

0 $50,00

0 $75,00

0 $110,00

0

40%$4,00

0 $8,00

0 $12,0

00 $13,6

00 $16,0

00 $20,0

00 $24,0

00 $28,0

00 $32,00

0 $40,00

0 $60,00

0 $88,000

30%$3,00

0 $6,00

0 $9,00

0 $10,2

00 $12,0

00 $15,0

00 $18,0

00 $21,0

00 $24,00

0 $30,00

0 $45,00

0 $66,000

20%$2,00

0 $4,00

0 $6,00

0 $6,80

0 $8,00

0 $10,0

00 $12,0

00 $14,0

00 $16,00

0 $20,00

0 $30,00

0 $44,000

10%$1,00

0 $2,00

0 $3,00

0 $3,40

0 $4,00

0 $5,00

0 $6,00

0 $7,00

0 $8,000 $10,00

0 $15,00

0 $22,000

Average (Managers, Savers

Followers

)

Chart based on $1MM of Total Spend

Ardent Partners Market Average

MP Actual Performance

$80,000

University Survey Average

Average for

Leaders

$45,220

MetaProcure

Led by former Fortune 50 Procurement Officers and Executives

Certified Minority Business Enterprise

50

Procurement Transformation and Leadership in the following areas:

Leverage our experience to drive your success

Diversity Management

Programs

Strategic Sourcing

Source to Pay

Solutions

Independent Contractors

Questions?

Roy AndersonEVP Procurement ServicesMetaProcure470-514-3640randerson@metaprocure.com