Sample Business Review ABC Company &. Agenda Common Goals Program Metrics –Reporting Snapshot –Product Usage –Service Levels –Ordering Metrics –Accounting.

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