Purchasing Management Workshop Grand Hotel, Waterloo, Belgium October 11 th and 12 th 2005.

Purchasing Management Workshop

Grand Hotel, Waterloo, BelgiumOctober 11th and 12th 2005

Oriflame Purchasing Management WorkshopModule 1 – Introduction, Six Dimensions, Status, SWOT Task

• Introductions• Purpose• Workbook• Purchasing Six Dimensions / Challenges• Status• SWOT Task

2005-10-11 Oriflame Purchasing Management Workshop3

Purchasing Workshop Module 1

© The Delos Partnership 2005

Purpose of the Workshop

Individual & Purchasing Team Improvement• Provide education on Strategic Purchasing to the Oriflame Purchasing Management team,

in order to support career development plans and team skill levels & effectiveness.

• Identify Oriflame Purchasing improvement opportunities, ensuring they are aligned with the Oriflame business strategy and priorities.

• Develop the learning interactively in the workshop, so that there is ownership & applicability both internally within Oriflame and externally with Oriflame suppliers.

Oriflame Business Improvement • Further improve Oriflame supply side profit and cash, respecting AQSCI (Supply, Quality &

Regulatory, Service, Cost and Innovation) principles, thereby increasing Purchasing credibility and reputation with Oriflame Leadership, Employees, Customers, Suppliers and Stakeholders.




Attendees

• Edwin Koehler

• Maggie Taverna

• Luca Nanni

• Bruno Bastin

• Bernard Hensenne

• Francoise Beaujean

• Julien Bellanger

• Robert Connolly

• Brian Rolfe (To be confirmed)

Purchasing Management Workshop – October 11/12th 2005




Agenda

October 11th 2005 Session

Time Module Who

0830 – 1000 1. Introductions, Purpose, Workbook, 6 Dimensions, Challenges, Check List

Paul, Edwin & All

1015 – 1115 2. Oriflame Business and Purchasing Cost (P&L) and Cash (Balance Sheet)

Edwin, Paul & All

1130 – 1230

3. Current and Improved Source Planning and Supplier Management Process. Six Sigma / Lean

Paul & All

1330 – 1430 4. Purchasing / Sourcing / Project Team Development

Paul & All

1445 – Close 5. Data Gathering, RFI, RFP, Market Evaluation, Supplier Scorecards

Paul & All

October 12th 2005 SessionTime Module Who

0830 – 1000

6. Sourcing Strategy & Selection, Standardisation, Leverage, e Auction

Paul & All

1015 – 1130

7. Negotiation skills & practice. Agreement formation and implementation.

All

1145 – 1230

8. Cebal Case Study and how to improve current and future year (s) results. Sales & Marketing Strategies.

Edwin, Paul & All

1330 – 1430 9. Supplier Management, and Benefits Tracking.

Paul, Edwin & All

1430 – Close

10. Oriflame Purchasing Management Plans. Slide / Workbook review

Edwin, Paul & All




Workshop Presenter

Paul Warrick – The Delos Partnership Limited

Through global purchasing leadership roles with ICI PLC, Elementis PLC, Lonza AG, Crown Cork & Seal and Georgia Pacific, Paul has acquired substantial Strategic Purchasing, Supply Chain and Business expertise and has a career track record of delivering outstanding supply side value Improvement.

He has complete spend category and project management expertise and has recently led major supply sideimprovement projects on Strategic Sourcing of Raw Materials with volumes in excess of 500,000 tonnes, Inventory Reduction, Global Logistics & E Commerce.

Paul wrote the Delos Procurement Masterclass, containing all of the leading edge procurement & supply tools and techniques, which has been delivered to numerous blue chip businesses. The Masterclass is based on both first hand global Purchasing experiences in the Chemicals, Packaging, Paper, Coatings, Biopharmaceuticals, Adhesives & Metal industries and the Delos approach. This recognises that the drive towards effective procurement will only be achieved through engagement of all of the people across the functions – from Sales & Marketing providing accurate forecasts, to Development innovating in a way that is integrated within an effective global Procurement Strategy, to working closely with Operations, Supply Chain and Finance to ensure P&L spending and Balance Sheet cash & assets are optimized.

Paul has a chemistry & polymer science degree, is Six Sigma and World Class Manufacturing trained and has worked with most of the big five and leading procurement consultants. Procurement support and advice has been delivered to manufacturing, service and consumer companies.




Workbook

• Oriflame data used in the workshop can be found in the excel workbook.

• The Workbook also contains spreadsheets that can be customised for individual or team use.

• Feedback on workbook improvements and further development is required from each delegate.




1 Supply & Procurement – Integration & Leadership

2

33

44

Cost, Cash & Spend – Management & Control

Process & Tools – Awareness & Use

Strategic Sourcing – Process & Capability

55 Negotiation & Agreements – Skills & Type

66 Supplier Management – Relationships & Results

Six Procurement Dimensions

SRM SRM

DEALMAKINGDEALMAKING

STRATEGIC SOURCINGSTRATEGIC SOURCING

PROCESS & TOOLSPROCESS & TOOLS

COST, CASH & SPENDCOST, CASH & SPEND

LEADERSHIP & PEOPLE LEADERSHIP & PEOPLE




Challenges

• Inflation Up – Oil & Energy, Asia Demand, Market Consolidation

• Global Supply Chains – Asia Outsourcing by Europe & US

• Customer Expectations – RFTQ100%OTIF, Faster, Cheaper

• Shareholder Demands – More Profit, Higher Dividends

• Excess Inventories – Slow Moving / Obsolescence

The Cost, Cash, Supply Chain & Inventory Challenge




Purchasing – Check List

Leadership & People – Key Areas • Purchasing Vision and Strategy – integrated with the Business• Internal customer / business “Buy – In”• Purchasing Capability & Management System

Cost, Cash & Spend Focus – Key Areas • Focus on all key spend categories & suppliers• P&L, Balance Sheet and Expense coverage• Inflation (Cost) & Project Management

Process & Tools – Key Areas • Integration with the ERP system / report• P2P• Sales Process (demand/forecast) understanding / management




Purchasing – Check List

Strategic Sourcing – Key Areas• Managed supply risk on key strategic / critical products & services• Innovation (New Product/New Source) Project involvement• Standardisation / Dual Sourcing + Leverage

Dealmaking – Key Areas• Complete Agreement coverage (CDA to Supply/Service Level)• Negotiation excellence• Clear terms, price lists and optimised invoice / payment

Supplier Management / Benefits Tracking – Key Areas• Complete supplier mapping / management• Self Monitoring suppliers (RFTQ100%OTIF) & Finance integrated savings

system• Strategic Supplier partnerships




• No evidence of valuable supplier partners in each business / region / plant

• No evidence of Supplier Management / Low RFTQ & OTIF

• Supply problems

• No evidence of agreements / price lists

• High Supply side inventories

• No recognition of the importance of Strategic Sourcing

• Limited bargaining power (sole source & size)

• No Standard Sourcing Process

• No Shared Service Centre / P2P system.

• Focus on Price / Cost only

• Uncompetitive prime materials pricing

• No clear Leadership – No Goals/Focus –Poor People – Not Lean!

Low Capability Purchasing Example




Workshop – Breakout Session

• Costs Reduced • Fragmented Supply Base • Supply problems • No Standardization of Products or Services • No understanding of / support for Central Purchasing • Internal battles and politics • Supplier Quality improvements • Service improvements • High Emergency Transport Costs • Excess Stocks • Innovation & Plants doing their own thing

You have been asked make a 10’ presentation to the Oriflame Board on Purchasing What went well – Where are the problems – Where are the opportunities ?




Workshop Task – Guide

SRM SRM

DEALMAKINGDEALMAKING

STRATEGIC SOURCINGSTRATEGIC SOURCING

PROCESS & TOOLSPROCESS & TOOLS

COST, CASH & SPENDCOST, CASH & SPEND

LEADERSHIP & PEOPLE LEADERSHIP & PEOPLE

Service

Cost

Innovation

Quality/Regulatory

Assurance of Supply

Use either / both the 6 Dimensions or AQSCI Pyramid in the presentation




DELOS PROCUREMENT MASTERCLASSDELOS PROCUREMENT MASTERCLASSPublic Course Public Course –– OverviewOverviewDELOS PROCUREMENT ASSESSMENT DELOS PROCUREMENT ASSESSMENT Defines Defines current procurement capability & valuable current procurement capability & valuable improvement opportunities on improvement opportunities on Spend, Assets and Cash FlowSpend, Assets and Cash Flow

Delos Procurement Assessment




Procurement – Value Gap AnalysisProcurement – Value Gap AnalysisThe Delos Partnership has assessed procurement capability and the value gap in businesses ranging from large multinationals through to S.M.E.'s, across all of the spend & territory map and in many market segments. Procurement is now firmly established as an essential part of Supply Chain and plays a vital role in global sourcing, supplier relationship and cost management strategies. We assess the capability of business procurement and how effective the business is in leveraging its cost and spend on behalf of its customers to support of the business vision, strategies and goals. We assess performance against the six dimensions of Procurement which cover leadership and people, internal and external customer performance, how spend & cost is managed, process capability, strategic sourcing, leverage, dealmaking and supplier relationship management. This provides an independent and quantitative measure of how much year on year net total value improvement is being delivered versus agreed goals & benchmarks and improvement opportunities in business profit , cash and service.

Benchmark Bronze Silver Silver

Gilt Gold Platinum Score

Leadership and People (Procurement Management System)

Cost, Cash and Spend

Process and Tools

Strategic Sourcing

Dealmaking

Supplier Relationship and Results Management

Bronze = Entry levelSilver = DevelopingSilver Gilt = CompetentGold = AdvancedPlatinum = Expert

Journey to Purchasing Excellence




Purchasing Assessment Results

0

1

2

3

4

5Business & Customer Partnering

Benchmarking

Cost & Cash Management

Currency Management

Risk Management

Sourcing Strategy

Leverage Tools & Techniques

Dealmaking

Supplier Performance Management

Results Tracking




Questions ?

Purchasing Management Workshop Grand Hotel, Waterloo, Belgium October 11 th and 12 th 2005.

Documents

purchasing workshop

purchasing credibility

oriflame supply

management workshop

oriflame leadership

management team

oriflame suppliers

oriflame business improvement