sample business review abc company &. agenda common goals program metrics –reporting snapshot...
TRANSCRIPT
Sample Business Review
ABC Company
&
AgendaCommon Goals
• Program Metrics– Reporting Snapshot– Product Usage– Service Levels– Ordering Metrics– Accounting Details
• Program Initiatives• Action Plans• What’s New at AOPD
Goals For This Review • Process:
– Review current procurement process and its effectiveness for total cost management in terms of product usage, service levels, ordering metrics and accounting details
• Programs:– Discuss the impact of new AOPD initiatives and
programs available to you
• Opportunities:– Discuss your corporate goals and determine the
ways in which we can help you attain these future action items
• Total Sales– Total expenditure for 2000 was $167,422 Vs $163,197 for 1999, an increase of 2..58%
• Product Usage– 48% were Contract items– 52% were Non-Contract items– 5% were Recycled products– 22% were Miscellaneous products
• Service Levels– 98.8% fill rate YTD– 97.9% fill rate Last Year – Return Rate is below the AOPD average
• Ordering Metrics– Average Order Size is $112, up from last year which was $97– 47% of Orders are placed via SmartTel– 31% of Orders are placed via EDI– 22% of Orders are placed via Customer Service
• Accounting Details – Average length of time for accounts payable– Invoice details
Reporting Snapshot
OBSERVATION:52% of the ABC Company’s purchases were comprised of Non-Contract items.
Product UsageContract Vs Non-Contract Item Analysis
4840 38
5260 62
0
10
20
3040
50
6070
80
90100
% Contract Items % Non-Contract Items
Your AverageAOPD AverageIndustry Average
Misc.11%
Computer Acces.12%
Toners / Ink11%
Furniture13%Electronics
10%
Recycled9%
Writing Supplies13%
Calendars2%
Paper Products19%
1999 Total Purchases: $163,197.00
Product Usage
OBSERVATION:Purchases from Paper Products in 1999 accounted for 19% of the ABC Company’s total items.
Purchase Analysis
2000 Total Purchases: $167,422.00
Product Usage
OBSERVATION:Purchases from Paper Products in 2000 accounted for 23% of the ABC Company’s total items, an increase of 3% from 1999.
Purchase AnalysisMisc.10%
Computer Acces.11%
Toners / Ink10%
Furniture13%Electronics
10%
Recycled9%
Writing Supplies12%
Calendars2%
Paper Products23%
OPPORTUNITY
Increase savings to ABC Company by moving high-usage, Non-Contract items to the Contract and deleting low usage Contract items
ACTION PLAN
Review Non-Contract Product usage and pricing, and identify items to move to the Contract
Review Contract Product usage and identify items to remove from Contract
Move and delete approved items to Contract
Product UsageContract Vs Non-Contract Item Analysis
Product Usage
Proposed Contract Changes
Slow-Moving or Inactive Proprietary Items
Product Usage
OBSERVATIONThe above listed items ordered less than 3x per month and are considered slow moving
ACTION PLANIdentify specific action plan per item
• Increase awareness of product• Remove from inventory• Select in-stock alternate product
Customer Quantity Dollar Value UsageItem Number AOPD Description Unit On-Hand of Inventory (Dates) Frequency
P100 123666 Form, 3 Part EA 150 $7,500 10 2
Product UsageEnvironmental and Diversity ProductsOBSERVATION
Recycled products account for 8% of the ABC Company’s purchases during 2000. Total Recycled Sales = $8,127.29.
OPPORTUNITYAOPD can support corporate Recycling and MWBE initiatives by assisting in increasing company-wide product purchases
ACTION PLAN AOPD to provide a listing of SKUs and descriptions of recycled and MWBE supplies
offered, and evaluate opportunities to move items to contract Schedule a Productivity Fair featuring key suppliers of these products Communicate information on these products to end-users
Product UsageRecycled Toners
OPPORTUNITY
Transition current toner items to recycled toner cartridges, to provide increase in recycled product purchases and cost savings to the ABC Company.
ACTION PLAN Review product samples for Data Products and Electronic Labeling
Technologies (ELT) toner cartridges. Test samples at headquarter location Review cost analysis Introduce new toner program to end users, highlighting cost and
environmental advantages
97.6
97.8
98
98.2
98.4
98.6
% O
rder
s F
illed
LastYear
YTD
Service Levels
OBSERVATION:In 1999, AOPD achieved a 97.9% fill rate verses 98.5% for 2000, a significant improvement.
Fill Rates
Service Levels
OPPORTUNITY
Maintain the ABC Company’s high fill rates while continuing to improve towards the company goal of 100%.
ACTION PLAN
Monitor Fill Rates and benchmark against current AOPD averages
2 3.5 41.4 3 4
02468
101214161820
1999 2000
Your AverageAOPD AverageIndustry Average
Service Levels - Returns
OBSERVATION: ABC Company shows a trend of a below average rate of return on all items.
Service Levels
OPPORTUNITY
Work to reduce the % of returns through process and product education
ACTION PLAN Communicate specific return procedures and appropriate
return paperwork, to all the ABC Company locations Increase knowledge of products to end users by holding
on-site productivity fairs On-going tracking and root cause analysis by AOPD
Root Causes of Returns
Average Order Size
Ordering Metrics
OBSERVATION:Average order is a significant driver of profitability for both AOPD and our customers. By consolidating orders customers can save by reducing labor hours spent on the following:
* Placing Orders * Distributing products to either stock room or associates
* Receiving Orders * Paying Invoice
Average OrderYear Amount1999 $972000 $112
AOPD Goal $150
Ordering Metrics
OPPORTUNITY
The average order size has been identified as one of the key drivers in saving process costs for our customers
ACTION PLAN
Significant savings can be realized and saved if orders are consolidated and are above $150
Develop end-user communications plan that educates the ABC Company’s associates on the importance of consolidating orders and their role in the overall success of the AOPD Program
Average Order Size
Customer Service29%
SmartTel33%
SmartNet16%
SmartLynx6%
EDI10%
SmartReq6%
AOPD Ordering Processing Costs
Phone 3.76 Fax 1.04ECom 0.06
Ordering MetricsOrdering Methods
OBSERVATION:The ABC Company places 22% of their orders via phone and fax. Shifting orders from customer service to online ordering procedures can reduce the customer cost for processing by 80% per order.
Ordering MetricsOrdering Methods
OPPORTUNITY
Moving Customer Service Orders to Electronic Commerce ordering procedures would save the ABC Company time and money.
ACTION PLAN
Introduce AOPD E Commerce to Key Decision Makers at your Company highlighting end-user benefits and process savings
If approved, set Implementation Timeline
OBSERVATIONAnalysis of overall account receivable patterns shows that ABC Company is remitting payment in 13 days
OPPORTUNITYMonthly billing and departmental breakdowns would give the ABC Company more information and control over purchasing procedures.
ACTION PLAN Continue to insure correct billing to maintain accounts payable time period Schedule meeting with Accounts payable to discuss advantages of monthly billing and
departmental breakdowns
Accounting Details
SmartChoices
OPPORTUNITY Order from your Telephone, on the WEB, by
Custom Requisition Form or by EDI Decrease the cost for producing orders enabling
AOPD to drive down contract prices
ACTION PLAN Set up meeting to demonstrate SmartChoices Set Implementation Timeline
Program Initiatives
National Account Coverage
OPPORTUNITY Consolidate all locations of the the ABC Company
’s supply purchases in order to streamline purchasing processes, consolidate payments and drive down costs through product unification.
ACTION PLAN Set up meeting with decision makers to introduce
AOPD and set timeline for implementation.
Program Initiatives
Summary of Action Plans
Subject Action Plan Timeline
Non-Contract High Usage Items
Modify contract to reflect approved adds / deletes and report savings at next review.
Slow – Moving and / or Inactive Proprietary Items
Review each item and apply specific action plan to increase user awareness of product
Remove from inventory or select in-stock alternative
Recycled Toner Program
Review product samples for Data Products and Electronic Labeling Technologies toner
Test samples at headquarter location
Review cost analysis
Introduce new toner program to end users
Environmental & Diversity Products
- Evaluate Recycled & MWBE products to move to Contract
- Schedule Product Fair
- Distribute information with Recycled & MWBE information
Fill Rate on Non-Contract Items
- Monitor and benchmark against current FSI averages
- Include result in next Business Review
Reduce % of Returns - Schedule Product Fair to increase end user product knowledge
- Continue to track root causes of returms
Customer Service -
Summary of Action Plans Subject Action Plan Timeline
Increase Average Order Size/Elimination of Small Orders
- Educate end users on importance of consolidating orders through training sessions and literature distribution
- Institute $5 surcharge on orders below $10
Continue process of moving all locations towards E commerce ordering
- Present Electronic Commerce to Key Clariant decision makers
- If approved, implement enduser
Delivery -
Accounting or Billing Changes to be Made
-
Summary of Potential Savings
Miscellaneous items to contract with new pricing
Modifications to Proprietary Items
Recycled Toner Program Transitioning Fax orders to
SmartNet (average number of orders/year x $.98)
Total Potential Savings
$XX,XXX.XX
$XX,XXX.XX
$XX,XXX.XX
$XX,XXX.XX
$XX,XXX.XX
Awards
What’s New at AOPD
Committed to Our Partnership with ABC
Company