Jonas Olsson - Volativolati.se/backnet/media_archive/original/26f5a107b... · Be Proactive and try...
Transcript of Jonas Olsson - Volativolati.se/backnet/media_archive/original/26f5a107b... · Be Proactive and try...
Jonas Olsson
A world leader in engineered polymer solutionsGroup profile*)
Founded in 1905 by Henry Dunker
Annual sales:
about SEK 30 billion
~ € 3 billion, $ 3.29 billion
Employing about 21,500 people in
44 countries worldwide
~ 100 manufacturing facilities
Average site = 210 FTE
2016-05-23 TRELLEBORG GROUP3
Seal
2016-05-23 TRELLEBORG GROUP4
Chemical Resistant Seals
Facade Seals
Airframe Seals
5000
Damp
2016-05-23 TRELLEBORG GROUP5
Floating Slab
Track Bearings
Industrial antivibration
Infrastructure
Construction Bearings
Protect
2016-05-23 TRELLEBORG GROUP6
Ocean Current Protection
Elastopipe
Sprinkler System
Low Soil
Compacting Tires
6/17/2015 TRELLEBORG GROUP7
Going forward…
We focus on growing all our businesses
We strive for Excellence in all our operations; Sales, Manufacturing,
Purchasing and Working Capital
Purpose with today’s session
Describe the most used modern purchasing
tools.
Share ideas on how you can react on new
customer behaviors.
Give you my view on how you should
interact with purchasing.
Purchasing vs sales
Sales: Postive words like, growth, business acceleration, etc
Purchasing: Negative words like, saving, limitations, slow moving etc.
10 16/10 2013
Purchasing spend vs Sales
540 € 680 €
190 €
370 €
250 €
145 €
60 € 75 €
- €
200 €
400 €
600 €
800 €
1,000 €
1,200 €
1,400 €
1,600 €
Purchasing Salaries Profit
Depreciation/Capex
External compounds
Metal Components
Traded goods
Indirect material
Raw material
60% 28% 8%
Purchasing represent ~60% of our business (quite normal in any business)
Purchasing Excellence Board
Trelleborg Coated
Systems
■ Johan Wijk
Chair
■ Jonas OlssonTrelleborg Industrial
Solutions
■ Mathias Löwenberg
Trelleborg Sealing Solutions
Tewfik Mansour
Ton Roosenboom
Trelleborg Wheel
Systems
■ Pio Gizzi
Trelleborg Offshore
& Construction
■ Chris Kelsal
■ Luke Rogers
■ Arthur van Hamel
(rotating)
Sponsors
■ Peter Nilsson CEO
■ Ulf Berghult CFO
Establish BA support to drive Excellence
Quality – Procure
correct quality
Delivery, service
& CR – Obtain
desired level
Cost – Continuous
Improvement &
cash flow
People
1
2
3
4
Purchasing KPIs
Secure Customer
satisfaction
Ensure
productivity and
low inventory
Improve profit and
cash flow
Attract, retain &
develop
Objective
Quality – Procure
correct quality
Delivery, service
& CR – Obtain
desired level
Cost – Continuous
Improvement &
cash flow
People
1
2
3
4
Purchasing KPIs
Secure Customer
satisfaction
Ensure
productivity and
low inventory
Improve profit and
cash flow
Attract, retain &
develop
Objective
2012-12-06 TRELLEBORG GROUP16
The Value Chain for __________________(CCV training)
Objectives
Purchasing R&D Production FinanceSales/
Marketing
KPIs
Challenges
Wider
goals
Functions
Agenda
Introduction
The Purchasing Chessboard
Purchasing Strategies (“Krajlic matrix”)
Modern purchasing tools and how to respond to them
Purchasing Behaviors
The Purchasing Chessboard – 64 methods
Invention on
demand
Core-cost
analysis
Vertical
integration
Bottleneck
management
Sourcing
community
Procurement
outsourcing
Compliance
management
Demand
reduction
Leverage
innovation
network
Design for
sourcing
Intelligent
deal
structure
Political
framework
management
Buying
consortia
Mega
supplier
strategy
Closed loop
spend
management
Contract
management
Functionality
assessment
Product
teardown
Composite
benchmark
Product
benchmark
Cost-data
mining
Master data
management
Supplier
consoli-
dation
Bundling
across
product lines
Specification
assessment
Design for
manufacture
Process
benchmark
Complexity
reduction
Standardi-
zation
Spend
transparency
Bundling
across
generations
Bundling
across sites
Value chain
reconfigu-
ration
Supplier
tiering
Collaborative
capacity
management
Visible
process
organization
RFI / RFP
process
Supplier
market
intelligence
Make or buy
Global
sourcing
Revenue
sharing
Sustain-
ability
management
Virtual
inventory
management
Vendor-
managed
inventory
Expressive
bidding
Reverse
auctions
Bestshoring
LCC
sourcing
Profit
sharing
Project-
based
partnership
Total life
cycle
concept
Supplier
development
Total cost of
ownership
Price
benchmark
Cost-
regression
analysis
Cost-based
price
modeling
Strategic
alliance
Value-based
sourcing
Collaborative
cost
reduction
Supplier
fitness
program
Leverage
market
imbalances
Unbundled
prices
Factor-cost
analysis
Linear
performance
pricing
8
7
2
1
6
5
4
3
B HA GFEDC
High
Supply
power
Low
Low HighDemand power
By AT Kearney
Agenda
Introduction
The Purchasing Chessboard
Purchasing Strategies (“Krajlic matrix”)
Modern purchasing tools and how to respond to them
Purchasing Behaviors
High $$$$$
Low $
Competition
High
Leverage
Shop Manage Risk
Partner
Low
The Krajlic Matrix
Different strategies requires fundamentally
different purchasing approaches and tools
High $$$$$
Low $
Competition
High
Leverage
Shop Manage Risk
Partner
Low
Sales price
goes down
Sales price
goes up
Everyone strives to become partners
to maximize profit
The Kraljic matrix from a supplier perspective
Many
alternat
-ives
Unique
product
/service
Supplier bargain power
Low
High
Vo
lum
e
Unique high
volume high
margin
partner•All supplier’s strive
to increase volumes
and margins to
become an
indispensible
partner or “solution
provider”.
•To bundle, offer add-
ons and complete
“solutions” are
example of common
tactics.
The new Brand Platform builds on a stronger
positioning and value promise to customers
We seal, damp and protect critical applications in demanding environments
Our innovative engineered solutions accelerate performance
for our customers in a sustainable way
Upgrading our role and contribution
to become even more strategically
relevant to customers
Product Supplier
Solution Provider
Business Accelerator
25 TRELLEBORG GROUP
BA TRELLEBORG OFFSHORE & CONSTRUCTION26
Trelleborg Marine Systems:
We offer a complete port / vessel solution advanced engineering for safety and efficiency
Volati
2012-12-06 TRELLEBORG GROUP27
High
Low
Difficulty of obtaining supply
Low High
Imp
ac
t o
n p
rod
uc
t va
lue
/ p
roc
es
s
ec
on
om
ics
Leverage
Shop Manage Risk
Partner
All this to secure that we are our customers first
choice!
Topdelivery
Top Quality
5 S
Excellence
Branding
Ease ofdoing
business
Innovative
Solutions
Digital /Apps
Topdelivery
Top Quality
5 S
Excellence
Branding
Ease ofdoing
business
Innovative
Solutions
Digital /Apps
High
Low
Difficulty of obtaining supply
Low High
Imp
ac
t o
n p
rod
uc
t va
lue
/ p
roc
es
s
ec
on
om
ics
Leverage
Shop Manage Risk
Partner
All this to secure that we are our customers first
choice!
Topdelivery
Top Quality
5 S
Excellence
Branding
Ease ofdoing
business
Innovative
Solutions
Digital / apps
Who wants to be where at
the customer side?
High
Low
High
Leverage
Shop Manage Risk
Partner
Low
• Purchasing
• Budget owners
• Sales
• Production
• R&D
Imp
ac
t o
n p
rod
uc
t va
lue
/ p
roc
es
s
ec
on
om
ics
Competition
Different strategies requires fundamentally
different purchasing approaches and tools
High
Low
High
Leverage
Shop Manage Risk
Partner
Low
Imp
ac
t o
n p
rod
uc
t va
lue
/ p
roc
es
s
ec
on
om
ics
• Supplier days
• Challenge specifications
• Design-to-Cost
• Supplier workshops
• Clean sheeting/should
costing
• Total Cost of Ownership
(TCO)
• Supplier development
• Internal workshops
• Raise-the-Stakes meetings
• Professional RFQ incl. price points
and modifiers
• Transparent, iterative and fact
based feedback
• Total Cost of Ownership (TCO)
• Rapid repricing
• Consolidation Competition
We want to have as many suppliers as
long as possible in the process
17 15 13
4
2
RFQ response
RFQ send out
Contracted
Initial long-list
After 3rd price
feedback
Try to keep all in the
game!
Every supplier can
contribute – even if not
selected e.g., competition,
cost saving ideas Suppliers decide to leave
based on our guidance
Here is where we want
suppliers to leave based on
facts (ABCD-letters)
Final decision
Trade-off with softer
parameters
RFQs comes with a professional
cover memo
If we are professional we get professional responses
from the suppliers
The more price points and price
modifiers we use the better results
we obtain
Price points
▪ Definition ▪ The price you ask from the supplier
for a product/service or part of a
product/service
▪ Typical unit ▪ USD per piece or activity
▪ Examples ▪ Tooling cost
▪ Production start-up cost
▪ Unit cost
▪ Cost of Hose
▪ Cost of Fitting
▪ Cost of xxx
▪ Comments ▪ Changes in “harder requirements”
e.g., alternative solution, other
material would normally be
handled by price points i.e., two
alternatives are prices
▪ Typical
savings
▪ >15+% on total cost
Excercise
Warrenty
3 year contract
The more price points and price
modifiers we use the better results
we obtain
Price points Price modifiers
▪ Definition ▪ The price you ask from the supplier
for a product/service or part of a
product/service
▪ Price modifiers are changes in
“soft requirements” that we
separate out from the base price in
order to make a fact based
decision
▪ Typical unit ▪ USD per piece or activity ▪ % on total cost
▪ Examples ▪ Tooling cost
▪ Production start-up cost
▪ Unit cost
▪ Cost of Hose
▪ Cost of Fitting
▪ Cost of xxx
▪ Rebate/Increase for longer/shorter
duration
▪ Rebate/Increase for longer/shorter
lead times
▪ Rebate/Increase for longer/shorter
payment terms
▪ Comments ▪ Changes in “harder requirements”
e.g., alternative solution, other
material would normally be
handled by price points i.e., two
alternatives are prices
▪ Not using the unit % on total cost
will likely result in time consuming
and difficult analytical work
▪ Typical
savings
▪ >15+% on total cost
▪ <5% on total cost
Best-of-Best (BoB) methodology Best offer
Tooling cost (1 year)
(USD/tool)
Set-up cost
(USD/order)
Unit cost
(USD/piece)
Additional treatment
(USD/piece)
Cash rebate 15 days
(%)
Volume
Total
1
100
100 000
50 000
N/A
N/A
Supplier 1
50 000
150
15
3
1.5%
1,689,275
Supplier 2
70 000
Included
18
Included
0
1 870 000
Supplier 3
47 000
100
13
5
0
1 607 000
BoB
47 000
0
13
0
1.5%
1 326 795
More volume 25 000 5% 2% 2,5% 5%
Page 1 Page 2
General price feedback
(1st and 2nd price round)
How to create even more…..
Raising-The-Stakes meeting
1. Background to us and what we are doing
2. Purpose with this RFQ
3. Explanation of the sent out RFQ
4. Q&A session
2012-12-06 TRELLEBORG GROUP41
Position our self as an
attractive partner
Align with the suppliers
on high aspirations
Clarify the sent out
material
CEOCPO Purchaser
Raising-The-Stakes meeting: Illustration for another company (Company car tender) – 1/2
Description of this RFQ
• Conducted 17th of June – contracts signed 9 weeks later
• 41 companies where invited, 36 companies participated
• The suppliers had not experienced anything like it before, but where highly impressed
• CEO and CPO participated and had their contributions to the meeting even though
meeting was headed by category lead
Why start an RFQ or change supplier?
1.Quality issues
2.Quality issues
3.Quality issues
4.Delivery issues
5.Delivery issues
6.Huge price difference vs market
1.Effects customers Sales
2.Effects customers Sales
3.Effects customers Sales
4.Effects customers Production
5.Effects customers Production
6.Effects customers Purchasing
Why start an RFQ or change supplier?
What can sales do?
Be Proactive and try to avoid RFQ process
Extend current agreement
Give away price increases or part of it (Customer ”save” 2 % or xxx
€ in less increase)
Give away 3 year and 3 % per year in common R&D work to take
out cost.
Give away 2% on Price (Purchasing Love a quick way out)
If in the process
Try to ”fix” the selection criteria (TCO)
Fill out as little as possible
Demand feedback
Ignore ”BoB” ask about best supplier
The Purchasing process
Process time
Pro
fit im
pa
ct
Need analysis
Supply market analysis
Correct specification
Request for quotation
Bid evaluation
Negotiation
Contract follow up
Sales people wants
to jump here directly
Modern
purchasingOld fashion
purchasing
With this result
Shop suppliers
High
Low
High
Leverage
Shop Manage Risk
Partner
Low
Imp
ac
t o
n p
rod
uc
t va
lue
/ p
roc
es
s
ec
on
om
ics
• Rapid repricing
• Consolidation
• Raise-the-Stakes meetings
• Professional RFQ incl. price points
and modifiers
• Transparent, iterative and fact
based feedback
• Total Cost of Ownership (TCO)
• Internal workshops
• Supplier days
• Challenge specifications
• Design-to-Cost
• Supplier workshops
• Clean sheeting/should
costing
• Total Cost of Ownership
(TCO)
• Supplier development
Competition
Spend and supplier base
2012-12-06 TRELLEBORG GROUP48
€27,446
€54,051
€11,675
€0€0
€10,000
€20,000
€30,000
€40,000
€50,000
€60,000
Partner Leverage Shop Risk
Value
19
348
1463
40
200
400
600
800
1000
1200
1400
1600
Partner Leverage Shop Risk
# Suppliers
Rapid repricingExample of purchasing approaches and tools primarily suitable
High
Low
High
Leverage
Shop Manage Risk
Partner
Low
Imp
ac
t o
n p
rod
uc
t va
lue
/ p
roc
es
s
ec
on
om
ics
• Rapid repricing• Consolidation
• Raise-the-Stakes meetings
• Professional RFQ incl. price points
and modifiers
• Transparent, iterative and fact
based feedback
• Total Cost of Ownership (TCO)
• Internal workshops
• Supplier days
• Challenge
specifications
• Design-to-Cost
• Supplier workshops
• Clean sheeting/should
costing
• Total Cost of
Ownership (TCO)
• Supplier development
Competition
Example of a well prepared rapid
repricing letter
Start with a compliment
We already asked for it
Justification
Gentle threat
Example of a rapid repricing letter -
Background and approach Letter
• Conducted by: Joakim Hansson,
Purchasing Manager, Trelleborg Sealing
Profiles
• Approach:
Letter sent out to 361 suppliers (See
letter to the right)
Total spend for these 361 supplier EUR
~5,4 Million
Average payment terms today 29 days
• Realized savings
299 suppliers (83%) changed to 60
days
Average increase of 31 days for a
spend of EUR 3,4 Million (63%)
• Risks
Right person not received letter
Consequences some interest invoices
caused by delayed payment from those
who haven´t got the letter.
Different strategies requires fundamentally
different purchasing approaches and tools
High $$$$$
Low $
Competition
High
Leverage
Shop Manage Risk
Partner
Low
Purchasing has
“ALL”power
Purchaising has
“NO” power
Supplier daysExample of purchasing approaches and tools primarily suitable
High
Low
High
Leverage
Shop Manage Risk
Partner
Low
Imp
ac
t o
n p
rod
uc
t va
lue
/ p
roc
es
s
ec
on
om
ics
• Rapid repricing
• Consolidation
• Raise-the-Stakes meetings
• Professional RFQ incl. price points
and modifiers
• Transparent, iterative and fact
based feedback
• Total Cost of Ownership (TCO)
• Internal workshops
• Supplier days• Challenge specifications
• Design-to-Cost
• Supplier workshops
• Clean sheeting/should
costing
• Total Cost of Ownership
(TCO)
• Supplier development
Competition
Supplier days
Typical
purpose?
Whom to
invite?
Participants
form our
side?
Timing and
duration?
Inform – Share information to e.g., find joint interest
and/or create a credible threat
Communicate targets – Leveraging the peer pressure
to communicate targets and expectations
Selected key suppliers (e.g., top 10-20 most
important suppliers)
Primarily partners, but also leverage suppliers pending
on purpose
Management team – To underline the importance of
the day it’s beneficial to have as senior participation as
possible (for parts of the day)
Purchasing and subject experts – To contribute with
expertise and facts in different areas
Normally conducted on a yearly basis and/or at the
launch of new projects/programs
Duration from 2 hours + lunch to full day + dinner
Sometimes CUSTOMERS ask for
contribution / money
Supplier workshops Example of purchasing approaches and tools primarily suitable
High
Low
High
Leverage
Shop Manage Risk
Partner
Low
Imp
ac
t o
n p
rod
uc
t va
lue
/ p
roc
es
s
ec
on
om
ics
• Rapid repricing
• Consolidation
• Raise-the-Stakes meetings
• Professional RFQ incl. price points
and modifiers
• Transparent, iterative and fact
based feedback
• Total Cost of Ownership (TCO)
• Internal workshops
• Supplier days
• Challenge
specifications• Design-to-Cost
• Supplier workshops• Clean sheeting/should
costing
• Total Cost of Ownership
(TCO)
• Supplier development
Competition
Challenge specifications: Where manufacturing and
purchasing excellence come together
Giant leap from clean sheet
modeling excise to suppliers’ quotes
Trelleborg’s competitors are using
different products – like we can do
the same
Difficult to change products
Leverage Partner
Shop Manage risk
Low HighDifficulty of obtaining supply
Low
High
Imp
ac
t o
n p
rod
uc
t va
lue
/
pro
ce
ss
ec
on
om
ics
Challenge specifications can be
applied in a range of situations
Introduction (~15 min) Our perspective (~15 min)
Workshop (~45 min) Summary of ideas (afterwards)
Client specific (not shared due to confidentiality)
• Why a focus area, e.g.
Large cost
Fragmented supplier base
Lack of strategy
Environmental aspect of essence
Important to end customer
• Decision at senior mgt level to review strategy and optimize category
~1%
~1%
~0–10%
Unit price (market +
supplier markup)
Specification (e.g. type
of power portfolio)
Admin
~10–20%Energy efficiency (i.e.
reduce consumption)
Ease of implementation
Savings
potential
High
= 4
Low
= 0 Difficult
= 0
Easy
= 4
Medium
= 2
Medium
= 2
3) …
1) …
2) …
4) …
5) …
6) …
7) …
Key output
• 50+ savings ideas generated (4
participants)
• Strategy confirmed and new ideas added
• Strengthened collaboration with supplier
Example of supplier workshop
YOU SHOULD THINK !
Ideally you should run customer
workshops without purchasing
Total Cost of Ownership (TCO)Example of purchasing approaches and tools primarily suitable
High
Low
High
Leverage
Shop Manage Risk
Partner
Low
Imp
ac
t o
n p
rod
uc
t va
lue
/ p
roc
es
s
ec
on
om
ics
• Rapid repricing
• Consolidation
• Raise-the-Stakes meetings
• Professional RFQ incl. price points
and modifiers
• Transparent, iterative and fact
based feedback
• Total Cost of Ownership
(TCO)
• Internal workshops
• Supplier days
• Challenge specifications
• Design-to-Cost
• Supplier workshops
• Clean sheeting/should
costing
• Total Cost of
Ownership (TCO)• Supplier development
Competition
Purchasing cost is only
one part of TCO
Minimize
TCO of
commo-
dity
Reduce external
costs
Reduce total
internal business
costs
Reduce joint
supplier/
company/customer
life-cycle costs
Purchase
cost
Transportation
Inventory
carrying
costs
Purchasing
administration
Warehousing
R&D
qualifications
Expediting
Production
capacity
Warranty
Factory
yield / scrap
Running
cost /
lifetime
Example – Trelleborg TCO comparing
two alternatives
TSR 10 vs. CV60; EUR/kg compound
TCO 3,70
Process cost 0,40
Other material 1,00
Natural rubber cost 2,30
3,60
0,20
0,95
2,45
TSR*10 CV**60
* Technical Standard Rubber (TSR)
** Constant Viscosity (CV)
2 step mixing 1 step mixing
Agenda
Introduction
The Purchasing Chessboard
Purchasing Strategies (“Krajlic matrix”)
Modern purchasing tools and how to respond to them
Purchasing Behaviors
Hierarchy
1. Sales
2. Production
3. R & D
4. Finance / Budget owner
5. Purchasing
Kraljic wish
1. Partner
2. Partner
3. Partner
4. Partner / Leverage
5. Leverage
How strong is purchasing internally ?
Different strategies requires fundamentally
different purchasing approaches and tools
High $$$$$
Low $
Competition
High
Leverage
Shop Manage Risk
Partner
Low
Purchasing has
“ALL”power
Purchaising has
“NO” power
Business and
personal needs
2012-12-06 TRELLEBORG GROUP66
Business
needsPersonal
needs
Wants
Different Risk! (CCV training)
Business risk
Personal risk
What is in it for the buyer/R&D/sales ?
■ Success
■ Innovations
■ Trouble free supply
■ Bonus (KPI’s)
■ Fun, enjoyment
How to do a purchaser look good
in a price increase
■ Talk about cost avoidance
■ We will stop production/article
■ Many small increases much better than 1 large
■ Savings – kickback better than lower net pricing
■ Time saving
■ Do the ”internal” presentation for the buyer.
Why change supplier ?
1. Quality issues
2. Quality issues
3. Quality issues
4. Delivery issues
5. Delivery issues
6. Huge price difference vs market
Don’t make someone look bad !
Todays key learning
RFQ incl BoB, give out as little as possible
Rapid Re-pricing if needed give away 100 €
Food chain, don't be afraid of the buyer, ignore
them as much as possible.
What's in it for me
Make life easy