Building an IndirectStrategic Sourcing TeamDaniele Gorla, Director, Supply Chain, Strategic SourcingDecember 2015
PRIVATE & CONFIDENTIAL
• Who are we? - Overview of Shaw
• How did we get here? - The Supply Chain Management Journey at Shaw
• Indirect Procurement - Value, Challenges and Opportunities
• Building an Indirect Strategic Sourcing Team
• PEOPLE
• TOOLS
• PROCESSES
A successful journey begins with a visionA successful journey begins with a vision
2
Overview of Shaw Communications Inc.
Consumer Business Network
Services Media Business Infrastructure
Services
3
Overview of Shaw Communications Inc.Consumer
Internet Television Phone Satellit
e
• 1.8M Customers
• +250 Mbps
• +65K Shaw GO WiFi Access Points
• 1.1M Customers
• Customer Segmentation
• 1.8M Customers
• NGV and Comcast partnership
• TVE Strategy
• 820K Customers
• 210 HD Channels
4
• National fibre-optic backbone network providing data networking, video, voice and Internet services to North American businesses
• Growth opportunity and focus in F16
Overview of Shaw Communications Inc.Business Network Services
5
Overview of Shaw Communications Inc.Media• Conventional television network reaches almost 100% of
Canadians
6
Overview of Shaw Communications Inc.Media
• Strong portfolio of specialty networks focused around lifestyle/drama and women's category
7
Overview of Shaw Communications Inc.Business Infrastructure Services
Portland2
ft.
2 facilities50k sq.
ft.
Minneapolis1 facility
ft.
1 facility43k sq.
ft. Denver5
ft.
5 facilities 196k sq.
ft.
Dallas & Austin8
ft.
8 facilities 140k sq.
ft.
Salt Lake City7
ft.
7 facilities 101k sq.
ft.Las Vegas
3
ft.
3 facilities 58k sq.
ft.Phoenix
1 facility
ft.
1 facility 42k sq.
ft.
1 data centre1 market
20091999 2012 20142005
5 data centres2 markets
16 data centres 5 markets
23 data centres 5 markets
27 data centres 8 markets
How did we get here? Our Supply Chain Management Journey at Shaw
How did we get here? Our Supply Chain Management Journey at Shaw
Strategic Sourcing
Forecasting & Demand Management
PurchasingWarehousing & Distribution
8
Our Strategic Sourcing Structure at Shaw
9
Technology & Services
Network & Carrier
Customer Technologies
Corporate Goods & Services
What is Indirect Spend?
10
• Indirect spend consists of all materials and services that businesses need in order to operate
http://takesupplychain.com/2014/01/4-key-strategies-wrangling-indirect-spend/
The Value of Indirect $pend
11
• Estimates are that even a 5% reduction in indirect spend can translate to a 1%-3% impact on the bottom line
Why Indirect Spend Management is Such a Challenge?
12
• Diversity of goods and services
• Quantity and variety of suppliers
• Number of internal stakeholders
• Multiple purchasing channels
• Fragmented supply chain
• Lack of meaningful data
Highly Complex Area to Manage
13
• Low dollar, high volumes
• Consist of more “maverick” spend
• Lack of measured savings
• Difficult to evaluate
• Considered less strategic
Opportunities
14
“Sometimes when I consider what tremendous consequences come from little things, I am tempted to think there are no little things”
Bruce Fairchild Barton, American author
Although challenging, the potential impact on the business makes managing indirect spend worth the effort.
Process
People
Tools
PEOPLE TOOLS PROCESS
What do we need?
People
PEOPLE
We are redefining what it means to be a Procurement Professional
Today’s Procurement Professional needs to be versatile
17
• salesperson
• storyteller
• strategic thinker
• listener
• value creator
• analysis-driven decision maker
• change agent
• thought leader
• visionary
Partnership Best in Class Agile Adaptive
How do we get the most out of our teams while creating opportunities for growth?
18
Holistic Corporate Mindset
Internal Talent
Leveraging and
Development
Collaborative External
Partnerships
Retention
19
Performance Leadership Inventory
Annual Employee
Engagement Surveys
Training
Talent Management
Heat Map
Performance Development
Plan
Performance Leadership Inventory
20
• Key projects/business initiatives that directly link to role mandates accountabilities and metrics
• Ladder up and align to your functional team commitments and ultimately to the organization
• Have clear measures of success that are:
üSpecificüMeasurableüAchievableüRelevantüTime-bound
we need to do;
Commitments are the “What”
we need to do; Leadership
Gaps are the “How”
we make it happen.
Engagement – What is it?
21
Engagement is a measure of an employee’s emotional and intellectual commitment to an organization.
Three behaviours characterize
engaged employees –
measured by 6 questions
They say great things about the organization
They plan on staying with the organization
They put in extra effort to help the organization succeed
22
• Set of skills divided into four categories
• Core Behaviours
• Business Management
• Supply Chain Specific
• Technical Skills
• Specific set of target scores per role
• With slight modifications, it addresses all roles in Sourcing and Ops
Heat Map
Visual of Bench Strength
23
Actual measure of Supply Chain skillset
Development plans
Targeted training
Raising skillsets across the board
Talent ManagementProcess to Select High Potentials
Current Perfor-mance
FeedsPerfor-mance Trend
Feeds Potential Talent Rating
Green = High Potential
Blue = Valued contributor
Black = Plateau
Red = Manage Closely
Three Critical Elements
Track record of performance over
the past 12 months
Track record of performance over
3-5 years
Are they WILLING and ABLE?
Process
PROCESS
Process
26
• Classification of Spend Data
• Spend Tree
• Category & Supplier Segmentation
• Category Strategies
• Identification of Cost Savings Opportunities
• Monitoring Systems
27
Business Area
The Spend CubeDisparateData Sources
Oracle
AP feed
Input from categories-resulting in “supplier rules”
Data Mapping/Categorization
Category 1
Category 2
Category 3
Supplier Dimension
• Need to clean out data that doesn’t reflect true suppliers
Company Codes
§ Provides visibility into business hierarchy
Category Dimension
§ Organizes expenditures into sourceable commodity buckets
Classification of Spend Data
28
Corporate Goods & Services Spend TreeCorporate Goods & Services Spend Tree
Level 1
Level 2
Corporate Goods & Services
Office Supplies ServicesMROFinance MarketingHuman
ResourcesCorporate
Travel FleetFacilitiesFreight,
Courier, MailTelephone-
Communications
29
Corporate Goods & Services Spend TreeCorporate Goods & Services Spend Tree
Level 2
Level 3
Marketing
Digital Marketing
Promotional Products
Human ResourcesAdvertising Market
ResearchAgencyDirect
Marketing
The Accuracy Myth
“I have talked to a lot of different companies about this issue and often the mistake people make is in thinking that the data they get from their archives and ERP systems has to be perfect, they can’t do any analysis and can’t hold a sourcing event.
Nothing could be further from the truth. It’s true that data enrichment and data cleansing are never ending tasks, but one of the things I stress to people is that they are not doing spend analysis to create pretty charts or to impress people. They are doing spend analysis because they want to see where the money is going and they want to run sourcing events and leverage spend among fewer suppliers and get savingsfor their company, and they can do that even with relatively poor data.”
Jim Polak, PPG’s Director of General Purchasing, PPG (2000-2009)
30
Category and Supplier Segmentation
31
In addition to spend, categories should be classified according to strategic importance, allowing prioritization of sourcing efforts
Methodology:
• Category Segmentation Methodology
– Assess L2 and L3 categories in terms of Supply Risk/Complexity and Business Impact
– Result is a priority map to guide sourcing efforts and develop roadmap • Supplier Segmentation Methodology
– Assessment tool takes into account spend and rates the supplier based on additional weighted business impact levers:
• Supplier integral to business performance, do we have alternatives• Impact on profitability and quality• Value add to finished product / service• Impact on availability of substitutes
Supplier Segmentation
32
Series1
Series2Series3
Series4Series5
Series6Series7 Series8
Series9
Series10
Series11
Series12
Series13
Series14
Series15
Series16Series17
Series18
Series19
Series20
Series21Series22
Series23Series24
Series25
Series26Series27
Series28
Series29
Series32Series33
Series34
Series35
Series36Series37Series38
Series390
1
2
3
4
5
6
7
8
9
10
0 1 2 3 4 5 6 7 8 9 10
Supp
lier S
pend
Business Impact
Risk Management Segmentation Model
Tier 1
Tier 2
Tier 3
Tier 4
Best Value Analysis
Area Examples of leading practice Potential/Proposed/Approach to implementation
• Reduce consumption
• Eliminate need
• Find alternative ways of meeting needs
• Policy changes
• Benchmarking usage and consumption across comparable organizations
• Select a partner(s) with a global footprint providing access to on shore/off shore resources and subject matter experts
• Implement a new program for Shaw as a whole for all S.I. services
• Consolidate spend
• Common specification
• Collaboration with other Shaw businesses
• A key component of this strategy is to consolidate spend across all Shaw businesses in Canada
• Improve specification
• Detailed specifications
• Lower cost specification (own brand?)
• Optimal service level
• Quantify spend volumes
• Value for Money – cost vs benefits
• Ensure all master agreements contain approved SLAs
• Track our spend with the preferred vendors
• Bring value and best practices to Shaw by engaging a partner who understands our needs
• Establish detailed rate cards to enable more accurate labour requests
• Re-structure relationships
• Develop strong relationships with key vendors
• Introduce vendor development programmes
• Review / establish service level agreements
• Introduce routine vendor monitoring and reporting
• Establish incentivized contracts
• Engaging in a partnership with preferred vendors
• Conduct quarterly vendor/business reviews
• Review potential for risk/reward model
• Conduct RFX to select one or more preferred vendors who will provide all S.I. Services to Shaw as a Preferred Partner
• Increase competition
• Price / performance benchmarking
• E- Auction
• Cost driver analysis
• Price harmonization
Category Strategy-System Integration Services
33
Implementation Plans
Monitoring Systems
34
• Annual Roadmaps
• Cost Savings Strategies
• Value Creation Forms
• Single Source of Truth (Savings Tracker)
• Supply Chain Balanced Scorecard
Cost Reduction Cost Avoidance Value Enhancement
Corporate Metrics
Focus to Deliver Initiatives
Supply Chain F'16 Balanced Scorecard Corporate Vision
EBITDA FCF Measurable KPI TargetCustomer Experienc
e
Leading Technolog
y
Customer Profitabi
lity
Operational
Efficient
Inspired & Engaged Employees
Continuously develop people, processes and
tools
Health & Safety
Employee Engagement
Process and Tools Metrics
Utilize facts and data to maximize
supplier/ stakeholderrelationships/ mitigate
risks
Addressable Spend Covered by Category Strategies
Meet Opex Budgets
Strategic Supplier Reviews
Supplier On Time Performance
Quality-Baselining CPE Defects
Supply Chain Balanced Scorecard
Corporate
Focus to Deliver Initiatives
Supply Chain F'16 Balanced Corporate Vision
EBITDA FCF Measurable KPI TargetCustomer Experienc
Leading Technolog
Customer Profitabi
OperationEfficient
Inspired Engaged
Employees
Strategically drive cost while increasing total
Cost Savings/ Avoidance
Redeployment Production to Demand
(CPE)
Non-CPE Inventory
(NDC/CES Oracle
CPE Inventory Value
Satellite Inventory Value Optimization
Non-CPE Inventory Value Optimization
LEAN - Maturity tracker
LEAN - Maturity tracker
Supply Chain Balanced Scorecard
Shaw Strategic Focus F16 Corporate MetricsOur Customers
and Viewers
Our Customers
and Viewers
Leading Network and Content Experience
Leading Network and Content Experience
Exceptional
Customer &
Viewer Experienc
es
Exceptional
Customer &
Viewer Experienc
es
Leading Technolog
y
Leading Technolog
y
Customer Profitabi
lity
Customer Profitabi
lity
Operational
Efficiency
Operational
Efficiency
You Won’t Miss a ThingYou Won’t Miss a Thing
Supply Chain Vision - We deliver sustainable value enabled by world-class people and processes in collaboration
with our business partners
Supply Chain Vision - We deliver sustainable value enabled by world-class people and processes in collaboration
with our business partners
Inspired & Engaged
Employees
Inspired & Engaged
Employees
Inspired & Engaged
Employees
Inspired & Engaged
Employees
Free Cash Flow
EBITDA
Supply Chain Balanced Scorecard
Individual Commitments, Development Plans, and PLI’s
Connecting the Dots
Tools
TOOLS
Tools
39
Opportunities by Business Value vs. Cost/Complexity
Opportunities by Business Value vs. Cost/Complexity
High
Low
Low
• Contract Authoring• Savings automation• Services Procurement
• Enhance visibility into Spend Data• Sourcing Workflow Approvals (Sharepoint?)• Contract Workflow Approvals• Easier Access to Contracts• Searchable Contracts
• Reduce Manual Invoice Processing• Reduce Cheque Issuance• One-Stop Purchasing• Automate RFx• Catalogues with Contract Pricing• Improve PO Data for Spend Analytics• Control Non-Catalogue Spend• Early Payment Discounts• Integration of Contracts/PO’s/Invoices• Increase Electronic Invoicing• Insight into PO Fulfillment
High
Cost/Complexity
Busin
ess V
alue
• Low: Little impact to organization and/or $ cost to implement (less complex)
• High: Large impact to organization and/or $ cost to implement (more complex)
Cost
• High: Meets defined goals
• Low: Partially meets defined goals or working towards goals
Business Value
LEAN
DEMAND MANAGEMENT
REGIONAL ALIGNMENT
ONE VOICE
CATEGORY MANAGEMENT
SUPPLIER RELATIONSHIP
TOOLS
SHAW
COMPETITIVE
ADVANTAGE
+
SUSTAINABLE
VALUE
DELIVER
PROCESS
FOCUS
PEOPLE, PROCESSES & TOOLS
PRIORITIZE
SIMPLIFY
STANDARDIZE
DEVELOP
STRATEGIC
SOURCING
OPERATIONAL
SUPPLY CHAIN
Change Management
42
Supply Chain
Celebrating our Successes
Celebrating our Successes
Looking Ahead…
Thank you!
Resources
45
• Indirect Procurement Optimization – Unlocking areas of savings and value creation, EY experience
• The Procurement Organization of the Future, Planning for Growth, Managing Talent and Improving Supplier Collaboration, An Emptoris and ProcureCon White Paper
• The Indirect Spend, Dare to Strategize by KellyOCG Outsourcing and Consulting Group
• Four Key Strategies for Wrangling your Indirect Spend by Take Supply Chain
• http://www.ey.com/Publication/vwLUAssets/EY-Indirect-Spend-Thought-Leadership/$FILE/
• EY-Indirect-Spend-Thought-Leadership.pdf
• http://www.ey.com/Publication/vwLUAssets/EY-Indirect-Spend-Thought-Leadership/$FILE/EY-Indirect-Spend-Thought-Leadership.pdf
• For more information about Shaw, please visit www.Shaw.ca
• For more information about ViaWest, please visit http://www.viawest.com/