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Compliance& SPMContractingOpportunity

Identification

The Spend Management Process

CategoryStrategy

Negotiation

Better visibility into your company’s spend across divisions, business units, and categories of spend helps to identify and prioritize savings opportunities.

59.23%

7.34%

29.65%

3.38% 0.40%

Direct Indirect Capital Non-Sourceable Other

Spend By Commodity

Opportunity Identification

Better visibility into your company’s spend across divisions, business units, and categories of spend helps to identify and prioritize savings opportunities. (Cont’d)

Bottleneck

Non-Critical

Strategic

Leverage

LOW HIGHSPEND

LOW

HIG

HSU

PPLY

RIS

K

Bldg/Constr Matls

Telecom

MRO

Office Supply/EquipFacility

Operations

Facilities

Opportunity Identification

Packaging$126MM

477+

Sales& Mktg$45MM

33+

$24MM328+

$20MM398+

MROFreight$90MM

576+

$70MM621+ IT

$100MM295+

$71MM238+

$12MM119+

$48MM76+

$28MM400+

We’ll help you with: Data cleansing, classification Reporting tools written for sourcing professionals Opportunity assessment & guidance on finding &

prioritizing opportunities

Better visibility into your company’s spend across divisions, business units, and categories of spend helps to identify and prioritize savings opportunities. (Cont’d)

Opportunity Identification

Opportunity Identification

Opportunity Identification

Companies with best-in-class spend analysismore than double spend under management,and are 2-4 times faster at running each event1.

1 Spend Analysis: Transforming Data into Value, The Aberdeen Group, 2009

FinalizeCategoryStrategy

Category strategies align activities to business goals and streamline sourcing processes to avoid mistakes and re-work.

GoalsTeam SelectionData and RequirementsCommunication Strategy

Market ConditionsCost DriversPricing Models/KPIsSupplier Discovery

Market ApproachTotal Cost ModelEvaluation ModelStakeholder Buy-In

Category Strategy

InternalAnalysis

ExternalAnalysis

Category strategies align activities to business goals and streamline sourcing processes to avoid mistakes and re-work. (Cont’d)

We’ll help you with: Identifying & defining team roles and internal

communications programs Requirements definition and baseline prep Category & process expertise Process management tools

Category Strategy

According to AMR Research, sourcing organizations who align their sourcing strategy to business strategy:

You can increase savings and reduce cycle times with an effective category strategy.

1 Reaching Sourcing Excellence Series, AMR Research, 2009-2010

Category Strategy

Enjoyexecutive-levelawareness and

support oftheir activities 1

Are seen as havinga positive impacton the business

Reduce cycle timesby half or more

Save 30%more money

Price

Incumbency –Supply Risk

Inventory

Timing

Traditional Sourcing / Strategic Sourcing

PriceIncumbency/RiskInventoryTiming/Other

CollaborativeSourcing

EventVolume

Event Complexity

Take advantage of the right tools and expertise for each of your events to get the best results in every category.

Collaborative Sourcing /Highly Custom

Negotiations

Negotiations

Take advantage of the right tools and expertise for each of your events to get the best results in every category. (Cont’d)

We’ll help you with: Managed services Sourcing templates Highly customized events Supplier support Embedded resources

Traditional Sourcing ApproachesSqueezing Supplier Margins

Competition-reliant

Collaborative SourcingBuyers AND Suppliers Win

Synergy-focused

Incremental Savings for Buyer

The entire spectrum of sourcing approaches, from auctions to sophisticated custom collaborative sourcing events all play a role in a mature sourcing organization.

Negotiations

The old battleground The new, shared objective{

Suppliercosts

Suppliercosts

Buyersavings

Buyersavings

Suppliermargin

Suppliermargin

Choosing the right approach for each category can yield an additional 12-15% savings over taking a standard approach to each category1.

1 Sourcing Innovation, 2010

Negotiations

Negotiating contracts and capturingkey performance metrics are crucialto initiating a supplier agreementand ongoing tracking.

Contracting

Negotiating contracts and capturing key performance metrics are crucial to initiating a supplier agreement and ongoing tracking. (Cont’d)

We’ll help you with: Templates Negotiation guidance Contract loading?

Contracting

Organizations that use contract management accelerate contract negotiation cycles and are better prepared to approach contract renewals.

1 Preserve, Protect, and Defend with Contract Lifecycle Management, AMR Research, 2008

Contracting

Supplier performance management gives procurement professionals information to proactively manage supplier performance trends.

Build Performance Strategyand Objectives

Through Collaboration

Establish a Sustainable ProgramEnabled by Process Automation

Maximize ROIon Supplier Relationships

While Controlling Risk

SPM

Map SupplierStrategies

TrackPerformance

Define MetricsManage

ContinuousImprovement

EstablishObjectives

SPM

Among other benefits, an SPM programhelps to protect brand integrity, avoidshipment delays and stockouts, andensure the financial viabilityof key vendors1.

1 Supplier Performance And Risk Are Top Of Mind— Can Software Solutions Help?, Forrester, 2009

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