Delivering Third Party Cost Reduction With Aggreko Through True Procurement As A Service

1. 1
Nick Ford

2. Agenda for today
 New models for procurement
 The Odesma delivery model
 Harnessing people , technology &
process improvements for successful
procurement transformation
 Case study
 Summary and Q&A

3. Business demands on procurement teams – client viewpoint
Global Procurement Team Business Needs
Fears
Reduced profitability
and lower share price
Non-compliant
behaviour
Needs
Delivered at the lowest cost
Ethical sourcing
Wants
Value for money
Realised savings that
positively impact the
P&L
Experience
Category expertise
Strategic sourcing skills
Global market insights
Technology and tools
Features
Savings that can be re-invested into customer
growth strategies
Commercial integrity
Risk management
Sustainability
Compliance
Benefits
Spend analytics
Market intelligence
Collaborative approach with
stakeholders
Protection of brand &
reputation
Supplier leverage
Governance
Indirect Procurement: Co-creating value for the business at the lowest cost

4. Cost Reduc on of
>13% of spend
Efficiency HighLow
EffecvenessofDelivery
Low
High
> 3.5% of spend 0.5% – 0.75% of spend
Cost Reduc on of
2 – 3% of spend
CHESHIRE CAT GRAPHENE
WHITE ELEPHANT ROWING BOAT
A heavyweight func on, lots of staff,
manual processes and clear business
contribu on
Ultra efficient, delivers compe ve
advantage through impressive cost and
supplier management
An expensive func on rela ve to business
contribu on, low savings returned and no
direct correla on to bo om line
Low cost organisa on, delivers minimal
return, marginal impact on business
performance
New models for procurement – the dilemma
Cost Reduc on of
>13% of spend
Efficiency HighLow
EffecvenessofDelivery
Low
High
> 3.5% of spend 0.5% – 0.75% of spend
Cost Reduc on of
2 – 3% of spend
CHESHIRE CAT GRAPHENE
WHITE ELEPHANT ROWING BOAT
A heavyweight func on, lots of staff,
manual processes and clear business
contribu on
Ultra efficient, delivers compe ve
advantage through impressive cost and
supplier management
An expensive func on rela ve to business
contribu on, low savings returned and no
direct correla on to bo om line
Low cost organisa on, delivers minimal
return, marginal impact on business
performance
PAAS/In
House
Combination
Stakeholder
Procurement
In-house
Procurement
Consulting/
In House
Combination Procurement
Outsourcing

5. What we do
 A highly experienced management team who
will focus on your business outcomes
 Your business…our expertise
 We provide access to the best talent that is
available to you when it is required.
 Faster delivery, scheduled SME support
 Deploying market leading, easy to use
technologies
 A lean delivery model assuring efficient use
of resources
 Fewer continuous overheads
 Lower than market cost at c1% of spend
managed; driving a high return on
investment
 Our current rolling RoI across all clients is
greater than 20:1
Odesma offers true Procurement as a Service,
bringing together leading subject matter expertise,
technology, governance and leadership in a way
that is tailored to the needs and maturity of your
business.

6. Our customers, references and citations
Odesma has been awarded the prestigious Chartered Institute of
Purchasing & Supply Annual Award.
- Best procurement consultancy project of the year
 Aggreko plc, (the $2bn leader in power and rental solutions) during 2015 instigated a global
transformation program targeted at restructuring their business whilst reducing the overall
cost of operations (£80m by 2017). Third party cost savings through procurement excellence
comprised a significant element of this target (confidential), the supplier spend in the scope of
this project was c$600m.
 We were engaged to provide expert support to deliver savings, skills and technologies with the
aim of developing momentum for the procurement excellence program, and significantly
improving the standard of procurement capability in Aggreko.
 In a 12 month period, the project has delivered its part of the publicly stated £80m cash saving
target for 2016/17 delivering c 10 – 15% savings from the cost base under a quick win
program. This has been achieved by completing over 300 sourcing initiatives and has delivered
a ROI in excess of 20:1.
 For Brambles, (the $6bn leader in palletisation), Odesma are currently managing over $500m
of indirect spend across a number of global categories over an 18 month programme.
 This is focused on improving third party value for money through savings delivery
 The programme also encompasses the delivery of market leading procurement technologies,
process improvement as well as skills transfer and enhancement of the existing Brambles
global procurement team

7. Technology Optimisation
Trained & Skilled Embedded
Teams
Procurement Operating Model &
Process Transformation
 Measure, Benchmark and
Optimise Processes
 System gap analysis
 Implementation & change
management in line with the
business strategy
 Full engagement with the
business stakeholders
 Training academy supporting up
skilling program
 Expertise to fill gaps where
necessary
 Leading edge procurement
Infrastructure
 Self service e-sourcing and
innovation tools
 Benefits tracking, capture and
dashboards
 Increase Revenue
 Improve ROI
 Manage Risk & Capital
 Ensure Compliance
 Optimize Supply Chain
 Reduce Costs
Business Outcomes
Harnessing people and technologies to deliver transformation

8. Re-engineering processes to create ways of working
Team Ways
of Working
Team Ways
of Working
Connecting SOPs

9. Case Study

10. An overview of the transformation program
Procurement Excellence
Improving competitiveness by reducing overall supplier
spend, including:
 Leveraging global reach
to form world-wide supplier partnerships, allowing the negotiation of
better prices and better service from our suppliers
 Reducing number of suppliers
making the supply chain more efficient
 Changing procurement systems
having access to real time data for supplier management, benefit
tracking and to introduce e-sourcing tools
 Building purchasing team capability
enabling teams to negotiate more effectively and build strategic
supplier partnerships

11. Implementing a new operating model for procurement
Program Management Team
Global Category Team
Provalido/MarketDojo
D&B/Smartcube
Best practice eSourcing & benefits
tracking tools
Data Analysis & Market Insight tools
Manufacturing
Procurement
Business
Procurement
Regional/Local
Teams
EMEA/NAM/AsiaP
ac

12. Governance via a Category Review Board structure
CATEGORY REVIEW BOARDS
BUSINESS
SPONSORS
BUSINESS
SPONSORS
BUSINESS
SPONSORS
REGIONAL/
BUSINESS
PROCUREMENT
TEAMS
EUR
REGIONAL/
BUSINESS
PROCUREMENT
TEAMS
MEA
REGIONAL /
BUSINESS
PROCUREMENT
TEAMS
AMERICAS
CATEGORY LEAD,
PROCUREMENT
NOMINEES &
STAKEHOLDERS
CORE TEAM
MEMBERS
(PROCUREMENT &
BUSINESS)
PROCUREMENT PROGRAM AND PROJECTS
PROCUREMENT SPONSOR
BUSINESS
SPONSORS
REGIONAL
/BUSINESS
PROCUREMENT
TEAMSS
PACIFIC

13. Create sourcing programs
Upload projects as
live initiatives
Customer Approval
Performance and
Program Management
Savings Reporting &
Tracking
Create governing
dashboards
Savings forecast &
delivered
Linking governance with performance management

14. Change management and program structure has been key to the
success of the procurement transformation
Clear delivery process
Clear reporting process
Dedicated resources
Supply market specialists
Alignment of personal
and project objectives
Senior sponsorship
Cascaded to all levels
Clear communications
Cover all stakeholders
Programme management
Clear delivery process
Clear reporting process
Dedicated resources
Supply market specialists
Sustainable improvement
Alignment of personal
and project objectives
Senior sponsorship
Cascaded to all levels
Programme management
Clear project vision

15.  In 2014/15 they had a significant spend with a very decentralised supply base across
64 locations supported by logistics coordinators with significant purchase order
volume
 There were no formal contract arrangements – PSL’s/Frameworks/Engagement
arrangements
 Mainly spot buying on the day to support sales and operations
 The criteria when choosing a broker or carrier was not defined i.e. relationship, price,
service performance and the cost plus pricing model did not drive an aggressive
freight negotiation process
 There was no standard process for freight quotations inside the business i.e. some
may allocate work to certain suppliers while others may carry out quotations with
multiple vendors
 Pricing benchmark did not exist
“Signature project” – US Freight

16. Please provide 1
500kW Machine
first thing
tomorrow
Let me check
that we have one
available and call
you back
We have one
available I will
make sure it is
there first thing
in the am
Can you get me 1
500kW machine to
Dallas first thing
tomorrow from
Houston
Absolutely will be
$xk
Awesome thanks
for that can you
make sure I receive
the invoice in 24 to
48 hours
Broker
The freight and sales process prior to the program was a
“worst case” scenario
The previous freight landscape

17. Time
CostOfFreightperMile
Today Year 1 Year 2 Year 3 Year 4
Range
Of
Spot
Market
The spot market is the price of the route at that time
in the industry when delivery is almost immediate
eTendering
Move away from spot buying to rapid e-tendering
The new strategy

18.  Maximised savings through
increased competition using
eTenders and centralisation in
national logistics
Status – Implemented
 Develop logistics pricing
methodology for sales to increase
profit margin
Status – Implemented
 Engage with the business to deliver
savings in local logistics
Status - Ongoing
3 months eTender pilot
National eTender Results over 12 months
The results
 Ran over 1400 bids/tenders this year
 Savings range was staggering – had big
impact on freight bill in North America
 Invested in team to now manage national
logistics centrally and solution
implemented
 Built up freight data base which is now
used in sales costing and budgeting
 Completely changed the Op Model for
freight within region
 Ran over 250 bids with sales/ops support
 Reduced baseline cost/mile significantly
 Large savings over the 3 months period
 Built the business case – exec sponsor

19. Procurement freight leads to customer success
In addition, they have now completely transformed their freight business
through to their end customers
Transition to the National Team
 National Loads > 250 miles~
 ~10,000 Transactions per year
 Primarily trades, large events, MR
To remain at Local Area Logistics
 Local Loads < 250 miles
 ~35,000 Transactions per year
 Primarily customer deliveries

20. The key learning’s from the procurement transformation
program
 Executive level sponsorship
 Gaining the involvement and trust of internal stakeholders
 Well defined governance structure and project plan
 Clear leadership roles, objectives and performance targets
 Use of strategic sourcing processes and analysis tools
 Cross-functional team with global/national delivery skills
 Tailored approach that emphasises enhanced value delivery
 Selecting partners with the right cultural ‘fit’
 An external and internal Communications plan

21. 21
Thank you - Questions