Area 1 : Introducing PACE tranforming procurement
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PACE is a business transformation company specializing in procurement processes to achieve cost efficiency and effectiveness. With a robust team of professionals, they provide advisory services and work closely with clients to improve sourcing and supply chain management through various methodologies, including diagnostic assessments and opportunity explorations. Their expertise spans multiple industries and categories, offering tailored solutions designed to enhance operational performance and generate significant savings.
Area 1 : Introducing PACE tranforming procurement
- 1. P A C E Partners in Accelerated Cost Efficiency Bringing Expertise in Transforming Procurement Processes to Achieve Best-In-Class on Cost and Efficiency Metrices
- 2. PACE – The Name Signifies an Urgency to Drive Desirable Impact and Help It’s Patrons to Transform Their Processes in the Area of Sourcing and Procurement… We are a young and aspiring Business Transformation Company established by Professionals having 25+ years of rich experience We bring with us… Deep Knowledge and Expertise across Sourcing and Supply Chain for Direct as well as Indirect categories Advisory Services to Transform Source to Procure Cycle Credentials to work closely with the client stakeholders and help deliver sustainable impact on the processes and cost lines, working through change management and implementation challenges Unlike any other Consulting Company, our specialty lies in crossing the line together OUR SOURCING AND SUPPLY CHAIN SERVICES # Diagnostic or Opportunity Assessment # Supplier Site assessment # Requisition Management # Category Research & RFx Management # Supplier Segmentation # MIS and Dashboarding # Negotiation Strategy & eSourcing # Supplier Performance Management # Contract Management OUR NURTURING GROUNDS* Ajay Garg Experience : 25+ Years Companies Served Clients Served ALMA MATER Now taken over by Mahindras * The listing is not exhaustive
- 3. Your P artners in A ccelerated C ost E fficiency Who We Are… Your trusted advisors whose aim is to ensure that we succeed together in our quest to achieve best-in-class through our standard and customized offerings in the area of cost and process efficiency Our endeavour shall be to provide assistance in finding the area that needs focus and/or those specific area where you already know there are opportunities to improve, and accordingly, our approach shall be two fold – First to give you a flavour of our entire suite of offerings Second to run a concerted diagnostic project spanning across 4~6 weeks to study the As-Is processes and find specific areas of interventions where our plug-in and proven To-Be processes shall help you achieve your objectives We are not consultants; We believe in crossing the line together and hence shall closely work with your procurement teams to deliver results along the journey Stakeholders’ time is too precious, You are already stretched, You know your manufacturing process better than us Then why put so much time and efforts on non-core processes? Outsource !!!
- 4. We Service Clients on Strategic Sourcing and Supply Chain Initiatives to Drive Cost and Process Efficiency… Diagnostic, Process Re- engineering, Data Analysis Diagnostic, Process Re- engineering, Data Analysis RFx Management & Transactional Procurement RFx Management & Transactional Procurement Supplier Perf. ManagementSupplier Perf. Management Control / Compliance Thru’ MIS/Dashboards Control / Compliance Thru’ MIS/Dashboards Data Analysis & Opportunity Assessment Study of As-Is Processes, Assess Gaps and Recommend To-Be Processes Category Positioning and Prioritization to Maximize Benefits through Strategic Sourcing MDM : Item Master Harmonization MDM : Creation and Maintenance of Vendor Master ABC Inventory Analysis Vendor Development Supplier Site Assessments on Quality Systems Supplier Qualification for specific business needs Process Improvements through Kaizens at Supplier end RFx Management Cost Analysis Negotiation Strategy – Shop/ Leverage/ Partner/ Manage Risk Global sourcing through our supplier research and pre-qualification through structured RFI and Minimum Qualification Criteria Quick Least Price Discovery through On- line Auctions Award Recommendation Req to PO Dashboards to provide Performance against Cost Benchmarks Delivery and Quality Performance of Suppliers Trend Analysis and Monitoring Templates for - Rejections Costs Inventory CAPA Maintenance & Breakdowns
- 5. Our Sourcing expertise covers a broad spectrum of Direct and… Automotive FMCG Pharma Banking Hospitality Tools HVAC Others •Stampings •Forgings •Castings •Rubber Items •Plastic Items •Electricals •Proprietary Items •Assemblies •Machined Parts •Foundry chemicals •Pipes and Tubes •Fasteners •Raw Material like Skimmed Milk, Butter, Cocoa powder, Choco flakes, Edible oil, Dry fruits, Pulses, Calcium Propionate, Soda lime •Consumables like Activated carbon, Cartridge filters •Packaging Material like cartons- corrugated plastic & paper, polythene packs, crowns, caps, pre-forms, paper bags •Herbs •Spices •Honey •Medicines •Syrups •AgNO3 •Ethyl Alcohol •ATM Machines, •Safety vaults •General print •Encrypted print •Stationery •Computers •Signages •Kiosks •Advertising •Juices •CCTV Cameras •LCD TV •LED Lights •Champagne •Gases – Nitrogen, CO2, Argon, O2 •Marketing prints •Janitorial services •Furniture Removalist •Hand tools •Torque wrench •Simple machines •Cutting tools •Blades •Hobbs •Broaches •Jigs / Fixtures •Pumps •Motors •Air Handling Units •Fan Coil Units •Al Ducting •Piping •Chillers •Valves •Refrigerant •Coils •Packaging equipment •Cleaning Equipment •Forklifts •Utilities •Metals •Plastics •Electronics •Others
- 6. Indirect categories.. MRO & Capex Logistics Packaging Services Travel Marketing IT/ Telecom Others • Chemicals and lubes • Hardware • Industrial machinery • Safety supplies • Electrical supplies • Pipes, valves and fittings • OEM spare parts • Repair & Maint. services • Tools and Fixtures • Material Handling Equipment • Primary Transportation • Secondary Transportation • Ocean freight • Air freight • 3PL/ Warehouse • Corrugated Boxes • Pallets • Stretch/ shrink wrap • Plastic bottles • Poly bags • Paper bags • Labels • Temp staffing • Office supplies • Janitorial services • Security services • Facilities management • Professional services • Waste disposal • Relocation • Printing & Complimentary goods • Air travel • Hotels • Rental cars • Agency • Others • Media Print • Point of Sale – Banners/Posters, Signages, Gate Arches, Promotional goods, Corporate Gifts, Gift packs, Creative services • Displays • IT hardware & consumables • IT software • Telecom hardware • Packaging equipment • Cleaning Equipment • Forklifts • Utilities • Renewable Energy • Electronics • Other materials, metals, plastics
- 7. Diagnostic / Opportunity Assessment – Our Methodology and Time lines… Remote offsite preparation (including initial data analysis) Key Activities Onsite* Quick data analysis & high level opportunity assessment On site kick off ~2 Weeks Receive Spend Data Identify gaps in data & conduct analytics Freeze initial hypothesis Interviews with key stakeholders – Leadership, Sourcing , Procurement Validate data & conduct high level analysis Interviews with team members / work force – Understanding, S2P systems and organization’s work culture Initial findings and data shall be used to build the hypothesis Validate findings Synthesize learning’s Interim Report Out Offsite Report Out Cover any interviews missed out Synthesize learning's Offsite Build Final presentation with - “As-IS & To Be” process map Sourcing savings opportunity / potential – Category Wave Plan Recommendations & improvement roadmap Technology recommendations Overall ROI business case We are here Validate opportunity with client Synthesis and prepare report out Synthesis and preparation of report out Validate opportunity Consolidate and synthesize findings Interviews with key stakeholders and data analysis 1 week TBD 1 week *Onsite effort assumes 4 hours of daily presence at client’s premise with 5 days working (Monday through Friday) Approximate 100 man-hours (including onsite presence) shall be put to complete the assessment. The timelines are indicative and may change depending upon various business factors. Any delay (attributable to internal challenges) in excess of one week w.r.t. estimated timelines shall be charged extra
- 8. Sample Findings in the Diagnostic Report Out
- 9. Initiatives: Implement an e-Sourcing tool for best price discovery and competitive bidding I Periodic Spend Data Enrichment & Analytics to increase Spend Visibility and Spend Under Management Category managers for select categories to increase negotiation rigor Develop preferred suppliers list by category. Formalize process to incorporate supplier discovery, qualification and on-boarding to drive competition for additional savings Implement KPI’s / metrics to measure and report Sourcing effectiveness Ease of ImplementationLow Low High Impact High Wave 1 Savings Rs zz MM* Wave 2 Savings Rs yy MM* Wave 3 Savings Rs xx MM* S1 S2 S3 S4 S5 S6 Pallets: 21 MM Forklifts: 8 MM R&M (Spares,CNC): 26 MM Cabs & Transport: 14 MM Facilities Mgmt: 33 MM Telecom: 11 MM IT (Peripherals): 19 MM HR Services: 4 MM Office Supplies: 5 MM Prof Svcs: 24 MM Energy & Utilities: 1 MM Promo Goods: 17 MM Temp Labor: 16 MM POS: 178 MM Pr Merchandise: 22 MM Event Mgmt: 44 MM Print Mat: 40 MM Mkt. Equip: 26 MM Hotels: 15 MM Travel Services: 8 MM Quick Hits Wave I Wave II Wave III * Annualized Savings Sourcing Execution Plan Summary…
- 10. Sample Case for Tactical Buying Shared Service Centre (1/2) Time Share of Indirect Procurement SME 50% POs transmitted through manual processes 3000 Average PO productivity PA Requisition PO creation Goods Receipt 70% of Bandwidth on Transactional Work 3-4 days 15- 30 days • Low Negotiation Rigour • Mostly spot buying • Transactional / Strategic effort – Same set of ppl • Manual transmission of POs • 60% of cases supplier follow up by business • Poor discipline in PO delivery date follow ups and PO ackns • On-time delivery is not a SPM guideline 17% POs are amended more than once 28% PO penetration Overall FTE Utilization ~ 66% 30% 70% Some Stats…
- 11. All Rights Reserved 2016 Our 9-Step Sourcing Process delivers… Supplier Management First Round Quote Event Identification Data Collection Event Launch RFQ Development Supplier search Sign-off RFQ Review and Release Event Award Decision Meet client stakeholders to get buy-in Collect and validate data Determine historic spend and estimated future spend/usage Set out the goals, scope, process and timeline for project Identify key stakeholders Develop supplier communication plan Sign off on data, specifications and historic price Develop customized RFQ Create lotting strategy Develop bid format Determine ceiling and reserve price Supplier training (in case of online reverse auction) Coordinate Q&A between suppliers and buyers Buyer makes a final go/no-go decision per Lot based on feedback from supplier Create second shortlist of suppliers based on RFIs and Quotes received Negotiation with supplier Offline / online Event administration through third party Collection of Lot Value Calculation Sheet from all the suppliers who participated in negotiation process Stakeholders/buyers and Project Leader evaluates suppliers and makes award decision Establish criteria for selecting new suppliers Create first shortlist based on broad criteria Develop Request for Information containing (I) Vendor Registration Questionnaire (ii) Item specific Questionnaire Buyer signs off – a) RFQ documents b) Potential suppliers RFQ is sent to potential suppliersEvent Identification Event Launch RFQ Development Sign-off Sign-off
- 12. Ensuring that category- specific requirements are understood most transparently and comprehensively by suppliers Selected suppliers participate with equal knowledge Market Participants A: Current Suppliers B: Preferred Suppliers C: Our Supplier Database Size Geography Process Quality Capacity References Facilities Site visits Supplier Profiles Other... Review & ApproveSCREEN D: Research RFQ CUSTOMER WE Project overview, Spend and Business Opportunity Negotiation Methodology Customer specific requirements – Service Levels – KPIs Customer Specific Commercial Terms Share of Business Terms of Supply Cost Break-ups Delivery Locations Specifications Quality Terms Installation, after sales Warranty …TCO Reduction thru’ Total Cost RFQ Development; Bringing Category Expertise and Pre-qualified Market Participants… S U P P L I E R P R E Q U A L I F I C A T I O N T O T A L C O S T R F Q
- 13. • Spend Aggregation across locations & channels • Improve negotiation rigor - Price benchmarking, Long term contracts • Write RFx to select best in class suppliers • Negotiate on E-Sourcing platforms and e-Auctions • Enhance Category Management Expertise • Define RFQ Clauses/SLAs clearly on TCO basis • Leverage cross functional synergies • Increase Spend Under Management through process and policy measures • Increase PO penetration • Catalogs / Service master • Category Playbooks, Internal SLAs • Org Structures S O U R C I N G MAIN THEME INITIATIVES Cost Out Impact over 6~12 months Sourcing Funnel Spend $ …To Drive End-to-End Process Rigor and Compliance
- 14. Process Rigor Quality Systems / Training Change Management Policy / Performance Focus Area for M:S2G in CY 2014... Ongoing Supplier Performance Management • Environment • Quality • Cost • Delivery • Response • Innovation - Purchase Policy - On-going Performance - New Product Devlpmnt - CxO Dashboards / MIS - Communication plans - Compliance - R&R Granular Influence on Source 2 Procure Process to Impact Processes, Systems, Policies and Dashboard Metrices… Category Research Spend Prioritization Operational Flow Assistance Inventory Analysis / Optimization Employee Motivation 5S Kaizens KANBAN Fixing MRP Parameters On-line Negotiations LCCS - 9-step Sourcing Process • Supplier research • Supplier Qualification • RFx Management • Analysis of Quotations • Negotiations • Award Scenarios • Supplier On-boarding • Sample Development • Pilot Supplies - - Preparing for Q-Audits - - Statistical Q-Controls - WI / PDIR / QA / RCA / C-SAT
- 15. …To Deliver a Measurable Output in Shortest Possible Time Opportunity Assessment and Spend Analysis - Business Impact - Supply Industry Competitiveness - Savings Potential - Ease of Implementation - Category Positioning - Category Prioritization Supplier Research and Assessment - Capability Questionnaire - Evaluation Parameters and Weights - Site Visits - Customer Reference Checks - Supplier Score - Supplier Site Assessment Report - Recommendations RFx Management - Writing a TCO RFP/Q - Cost Breakdown Sheet Development - Handling Supplier Queries - Collection of Quotations/ Proposals Analysis of Techno- Commercial Offers - Comparative Charts and - Award Scenarios - Recommendations - Potential Savings Project Management - Supplier Performance Management - Implementation Plan - Purchase Orders as per SOPs Themes Methodology Output - Scorecard and SLA Dashboard - Plan V/s Actual charts - TAT & Accuracy Measurement
- 16. Success can be ascertained through… Businesses to prioritize time to provide active interface in – •Project Timeline Agreement •Data Collection – Spend and Specifications •RFx Sign-Offs •Finalization of Negotiation Strategy •Award of Business and Implementation BUYER INTERFACE Strong Commitment and Drive from the Senior Management to monitor progress with respect to project timelines Communication and Change Management through people’ involvement at various levels Structures Review Process STRONG GOVERNANCE STRUCTURE We are One Team - Identify champions for each Project to work with Us ONE TEAM: PROJECT OWNER IDENTIFICATION
- 17. Our Category Research Brings in a Lot of Opportunities to Save Monies and Generate Working Capital… A research based approach to gain knowledge around the key cost drivers of the procurement category is always recommended as a preparation to any negotiation exercise The research would necessarily entail the study of – Market fragmentation of suppliers – Is it a niche market with very few key players or there are many suppliers in different geographies? Demand-Supply landscape to get to the low cost geography – Knowledge of net importer or net exporter country and/or region helps to exploit the regions that are likely to give savings Trends of the past and future forecasted growth – CAGR% throws a great deal of light in knowing where the market is headed Global Inventory Reserves – helps in knowing if it’s a buyer’s market or supplier’s market – it is also tied to the demand-supply analysis Top players globally and locally and their focus areas; Promises made to the stakeholders in the AGMs; Balance sheets of top players to gain valuable insights Mergers and/or Acquisitions in the recent times or likely speculations in near future to open up saving opportunities Latest developments where we get options to replace higher cost element with a lower cost element without compromising on the quality; Mostly addressed through Value Engineering/ Value Analysis
- 18. Sample Case Studies for Some of the Direct and Indirect Categories
- 19. YOUR VISION IS OUR MISSION ! THANK YOU +91 981 868 6704CONTACT US ajay.garg@s2p-pace.com https://www.linkedin.com/in/ajay-garg-s2p-pace/
- 20. Annexures
- 21. Commercial Model… - Dedicated effort and activity based fee - Committed Client Site Presence - Agreed SLAs - Fixed fee depending upon the man-hours put - Mainly applicable to selected Improvement Themes FIXED FEE (PER MAN DAYS) - In addition to partial cost compensation, additional milestone based fee chargeable - Need based Client Site Presence For eg., In addition to manpower costs, an agreed lump sum fee shall kick in as and when assigned dollar value savings is achieved. Another alternative could be a fee charged as a percentage of project spend HYBRID FEE STRUCTURE - Shared gains as a percentage of identified savings - Client Site presence not mandatory - Resources may not be dedicated OUTCOME BASED FEE
- 22. Know Your Partner: AJAY GARG B. E. (Mech.), from Delhi College of Engineering, Delhi * Sourcing and SCM Expert * Team Leader in Client Facing Roles Work Experience of 25+ years Assistant Vice President and Head of Procurement Operations at Genpact India to lead Operations in S2P domain Program Lead at Accenture to support S2P engagements for Automotive, CPG, Banking, Hospitality and Retail Client industries Sourcing and Supply Chain Module Head for Forgings, Stampings, Rubber, Plastic and Casting Parts at Case New Holland Sourcing and Launch Team Manager for Cielo and Matiz (Stamping parts) at Daewoo Motors India Ltd Domain Expertise - Strategic Sourcing - Supply Chain Management - Master Data Management - Process Re-engineering / Transformations - Spend Analytics / Solution Development / Opportunity Assessment / Diagnostics Led Source to Procure Programs at various Clients to Impact Direct and Indirect Categories through cost deflation and process efficiency initiatives: Some of the clients assisted in their Sourcing journey – a) HSBC – Negotiation and Contracting for Indirect categories through an outsourced CoE for their global operations in 32+ countries b) Punjab Tractors (Now wholly owned by Mahindras) - Direct categories' sourcing c) Tata Motors across their manufacturing units at Pune, Jamshedpur, Lucknow, Pantnagar and Bangkok - Direct categories' sourcing d) Al Futtaim Motors, Dubai, UAE - Direct and Indirect categories' sourcing e) Britannia Industries - Direct and Indirect categories' sourcing f) PepsiCo India Holdings Pvt Ltd - Indirect categories' sourcing g) Crown Melbourne and Perth, Australia - Direct and Indirect categories' sourcing h) Commonwealth Bank of Australia – Direct and Indirect categories’ sourcing Execution and Team Leader for S2P Operations – -Provided direction to the team on Sourcing Projects, Category Insights, Global Sourcing, Negotiation Skills, Sourcing Best Practices, Supplier Management and RFx Management. -Led Sourcing Projects in direct and indirect categories -Lead Solution Architect to Complex Purchasing Challenges through a detailed diagnostic and customized solution