#SIGfall19

Lululemon

Michael van KeulenGlobal Procurement Director

Lululemon Goes All-In

On Transformation

with Coupa

Lululemon Goes All-In On Transformation With Coupa

FEATURING

Procurement Director l Global Procurement

Michael van Keulen

Procurement Transformation

Table of Contents

L U L U L E M O N A T H L E T I C A0 1

C A T E G O R Y M A N A G E M E N T

0 2

S T R A T E G I C S O U R C I N G

0 3

D I G I T I Z A T I O N

0 4

0 50 5

P R O C U R E M E N T T R A N S F O R M A T I O N

N E X T S T E P S0 6

Then

Founded by Chip Wilson in Vancouver, Canada in 1998, lululemon is a yoga-inspired, technical athletic apparel company for

women and men. What started as a design studio by day and yoga studio by night soon became a standalone store in November

of 2000 on West 4th Avenue in Vancouver’s Kitsilano neighborhood.

Now

Publicly traded company with market cap of $22B operating, $3B in sales, 400+ stores in over 20 countries and 14,000 employees.

24%

Total revenue growth

$3.3B

Revenue

48%*

Adjusted EPS growth

90%*

GAAPEPS growth

45%

Ecommcomp

Significant growth in 2018

20182015

$2.9B

$1.9B$1.9B 321Stores*321Stores*

349Stores*

*company-operated lululemon stores

Supporting Rapid Growth in North America

20182015

$360M

$135M

Building Processes to Support Emerging Markets

ANZ

31Stores

ASIA

4StoresEMEA

7Stores

ANZ

36Stores

ASIA

34StoresEMEA

21Stores

+40% CAGR

lululemon in 2021

Procurement Transformation

Procurement at lululemon has Transformed

2016 2017

201

9

202

0CHANGE STABALIZE SUSTAIN & GROW

introduce

strategic

sourcing

foundations &

deliver

significant

financial savings

embed strategic

sourcing to

become second

nature and to

delivery value.

deliver

companywide

programs.

LEVEL I

Transaction Mastery

LEVEL II

Sourcing Factory

LEVEL III

Proactive Category

Management

LEVEL IV

Innovators

introduce category strategy tools &

execute proactive category

management

Ordering & invoice processes

Basic sourcing practices

Spend analytics

Strategic

sourcing

Contract management

Supplier management

Category strategy development

Category & demand management

Core Principles

▪ Fact based decision making using real analytics

▪ True competitive process

▪ Provide options to leadership

▪ Close collaboration with all stakeholders

▪ Transparency and engagement

▪ Demand planning and risk mitigation

▪ Create value—savings as outcome NOT goal!

Category Management

.

Defining Category ManagementCategory Management is a methodical approach to extract sustainable value from distinct categories of third party spend

It’s the methodology and mindset we apply to everything we do in Procurement!

1 2 3 4

Strategy & PlanningSupplier

Collaboration

Lifecycle Risk

Management

Business Partner

Collaboration

• Procurement Vision

• Business Alignment

• Category Roadmap

• Internal Resource

Planning

• Market Analytics and

Insights

• Benefits Tracking

• Strategic Sourcing

• Buying Channel

Optimization

• Supplier

Performance

Management

• Supplier

Development

• Supplier

Collaboration

(e.g. joint

partnerships)

• Contract Creation &

Negotiation

• Contract Lifecycle

Management

• Ongoing Third Party

Risk Management

• Category

Enablement

• Process

Improvement

• Demand

Management

• Specification

Rationalization

Strategic Sourcing

Strategic Sourcing 1 of 10 Procurement Capabilities

10.0 procurement technology

9.0 procurement organization

2.0 spend

analytics

5.0 procure to

pay process

4.0 strategic sourcing

target value transact manage and sustain

3.0 category

strategy

6.0 supplier

management

8.0 contract

management

7.0 category

management

1.0 procurement strategy and governance

Procurement Capability ModelProcurement Capability Model

7 Step Strategic Sourcing Process to Maximize Value

assess

opportunity &

collect data

develop baseline

& define

requirements

develop sourcing

strategy

Approval review # 1

execute sourcing

event

negotiate terms

& make

recommendation

award contract

implement &

monitor

1

2

3

4

5

6

7

Approval gate review # 2

lululemon’s strategic sourcing process

project management and stakeholder communication/management0

Procurement Digitization

Achieving a Maturity Breakthrough with Technology Procurement organizations are continuing to grow through a series of transformational step

changes, each delivering more business value as capabilities are built and efficiency is released.

Level I

Level II

Level III

Level IVValue Created by Procurement(% of Spend)

0% to 3%

3% to 8%

8% to 12%

12% to 15%

Taking Procurement past this

point requires business buy-in,

alignment, and technology

Level I

Affiliated & TransactionalLevel II

Engaged & Co-ordinatedLevel III

Collaborative & High PerformingLevel IV

Value Chain Excellence

• Focus on tactical purchasing on a re-active

basis

• Primary role as a buyer / contract admin

• Some consolidation of vendors in focus

areas

• Highly manual process with limited

supporting technology

• Category management in key spend areas

/ top suppliers

• Streamlined basic transactional

procurement processes

• Focus on cost savings but limited tracking

• Some efficiency driven by eProcurement

technologies

• Wide range of category management

levers utilized to fully leverage spend

• Spend channels customized to unique

requirements

• eProcurement technologies are

streamlined and integrated

• Begin to leverage self-serve and

automation tools

• Procurement relationships with business

and supplier are collaborative

• Strong alignment and active supporter of

BU strategy – from planning to execution

• Efficiency and automation of transactional

process allows Procurement to become

strategic partner

• Procurement and Supply Chain seen as

value driver for the organization

• Attention to risk management

Process

1. Select System Integrator (SI) first

2. With SI develop current—future state blueprint

3. Develop procurement strategy

4. Select solution that best meets business requirements

5. Create cross-functional Project Group and Executive Steering Committee

6. Alignment roles & responsibilities

Selection Criteria

▪ Total Cost of Ownership

▪ User Experience (especially P2P)

▪ IT Architecture

▪ Implementation approach

▪ Scalability (global)

▪ Touchless processing

▪ Compliance (SSAE-16)

Next Steps

▪ Replace legacy expense platform with Coupa Expense

▪ Go global…

▪ Implement P-Cards

▪ Explore Coupa Pay/V-Pay

▪ Dynamic discounting/SCF

Lessons Learned

Lessons Learned

▪ Create governance model

▪ Engage with stakeholders across multiple departments/levels

▪ Celebrate early wins!

▪ Define “what success looks like”

▪ Start with non-sensitive categories

▪ Ensure spend is contractually available

▪ Training & development

▪ Determine resource requirements

BE BOLD!!!

Q&A

Thank you!

#SIGfall19

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