This webinar will look at 2 case studies that bring to life the reality and factual nature of improved business outcomes that have been masterly performed by procurement colleagues. We talk about ‘new value’ and sometimes it’s hard to visualize or imagine yourself in the picture of delivering these new value elements. Case studies make it real and in many cases much better understood. Craig’s practical experiences bring these hard-to-visualize outcomes to life. As he often does, he has a new procurement tool to show us that will turn someone else’s case study into your reality.

1. UNLOCKING INVISIBLE VALUE
Where price was a lower level consideration

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Welcome to the webinar

3. Craig Lardner
FCIPS
1994 Director of Procurement Australia and New Zealand for BOC
1997 CPO Chief Procurement Officer (Global) The BOC Group, based in London. 10 years.
Next 5 years in FMCG...George Weston Foods as Director of Procurement
Spent $5,000 per minute, non stop, for 20 Years
2011 formed Procurement Advisory Services
2012 Commissioned to the Australian NSW Government as advisor
Fellow of CIPS …the Chartered Institute of Procurement and Supply
Appointed to the global CIPS Congress …member’s choice, 3 year term
2013 Interim Managing Director of CIPS Australasia
2014 Global President CIPS
2015 Returned to Congress to complete the 3 year term
2016 Appointed to The Board
Australia, New Zealand and other international clients across private and public sector

4. KEEP CALM
I'M FROM
PROCUREMENT

5. Understanding customer requirements …aka…’Business needs’

6. • Price-Cost-Value…some clear distinctions between these 3
• Where is the non-price, pot of gold hiding?
• Pot of Gold Case study #1… where ‘Sales’ said thanks to ‘Procurement’
• Pot of Gold Case study #2… where The CIO and users team said thanks to
‘Procurement’
• Meet a new type of BRAT
• What’s the big take-away from these two case studies
Unlocking invisible value: Where price was a lower level consideration

7. Delivering and measuring added-value
Pop quiz…The Trifecta 2 real examples to prove
there is more to life than price

8. A pop-quiz…The Trifecta…who wins?
Believe that cost and value are inside Price?
Option A
Believe that price and cost are inside Value?
Option B
PRICE VALUE
COST VALUE PRICECOST

9. The ‘S Curve’ – a supplier relationship philosophy
• local SM Solution
• conventional
• leveraging what
currently exists
• reduction of suppliers
• success is ‘savings
driven’
• purchasing in isolation
of businesses process
• commodity not
account management
• thinking ‘price not
cost’
• proactive not reactive
• cross-business teams
• longer terms
arrangements
• focus on ‘total cost
of ownership
• to share & develop
joint process
ownership mentality
• shared learning
• shared outcomes
• suppliers begin to see
incremental benefit
from the arrangements
• full ‘partnership’
• long term
• shared vision
• shared risks &
rewards in agreements
• lowest total cost
• capitalising on core
competencies
• mutually agreed
performance matrix
• security of supply
• mutually beneficial
• integrated systems &
business processes
STAGE 1 STAGE 2 STAGE 3
Change in
Behaviours
Required
Incremental Benefit
When you are selling…
are you selling in
stage 1,2 or 3?
Is the customer buying
in stage 1,2 or 3?
You don’t know?...
then you are guessing
(Not Reccomended)
Supplier
Optimisation
Standardisation/
Simplification
Joint Product/
Service Dev
+5% +10 - 20% +15 - 35%

10. www.dailynews.com
In an unbelievable set of events we
can confirm a Sales & Marketing
Director has received a result from
a sourcing project that witnesses
say bought about a world first
moment.
The Marketing chief was heard to
say ‘thank you’ to the procurement
team, who worked on an important
sourcing project with members of
the Sales & Marketing team and
the result was seen by many as
unprecedented.
A WORLD FIRST!
A Sales & Marketing Director has said "thank-you" to Procurement
THE DAILY NEWSTHE WORLD’S FAVOURITE NEWSPAPER - Since 1879
Our usual well informed source
was quoted as saying..
“I been told that the outcome
of the deal is what the Sales &
Marketing Director was hoping
for and as well as that, is right
in line with the requirements of
the Sales team”
Apparently the term ‘business
needs’ is behind this success
story.
We have a special center page
lift-out to mark this historic
event

11. The conversation with the Sales & Marketing Director
& the Sales team members…
Our unit looks like the competitors…
if we don’t look different, all we
have is a commodity
The world price of resin is rising
so our plastic cost is killing us. It’s
becoming an expensive give-away
We have a lot of double handling,
receive, unpack, insert soap pouch,
then re pack..
We could make some design
improvements to the model but
its not our IP
Hand Soap Dispensers

12. $500,000 spend
30,000 units
p.a-give away 100 units per day
Not our design
Was a ‘me-too’ design
Price is climbing
(a you-need-to-buy- from-me supplier)
It’s their IP
$250,000 spend
Same volume
Our design…with their help
Is a unique design
Price fixed for term and changes capped
It’s our IP
New models
Liquid soap to foam
Direct to our states not via our DC
Pre fill pouch at dispenser factory

13. www.dailynews.com
After the unbelievable set of
events earlier this week, we can
now confirm a CIO has received
a result from a sourcing project
that witnesses say had the CIO
(almost) speechless.
The CIO was heard to say ‘thank
you’ to the procurement team
who worked on an important
sourcing project with the IT and
user team and the result was
seen as having all the hallmarks
of the big news from earlier this
week
It’s been a big week for Procurement …First it was a Marketing
Director …now a CIO sends in a ‘thank you’ to Procurement
THE DAILY NEWSTHE WORLD’S FAVOURITE NEWSPAPER - Since 1879
A well informed source was
quoted as saying…
“I’ve been told that the outcome
of the deal is what the CIO was
hoping for, and as well as that,
is right in line with the
requirements of the business
unit that will use the application”
Apparently the term ‘business
needs’ has surfaced yet again,
as the key ingredient that stands
these deals out from the usual
outcomes.

14. The conversation with the CIO & the user team members…
We have lots of branches, we can’t
see each others stock levels in
real time
Formulas used to calculate the
stock we need are wrong…we
need algorithms in the software
Can we override the stock order
forecast. Supplier ‘specials’
come along that we want to take
advantage of
Forecasting needs to take account of
our BOMs otherwise dead stock will
always be wrong

15. What does the
user need the
solution to do
Why do they
need that
How does the
business benefit
(payback)
Priority
(deal-breakers V’s
Nice-to-have’s)
How good is what
we already have
How good does it
have to be
How different &
better does the
solution need to be
Our score of each
suppliers solution to
‘fit’ business needs
The person we
want to hear
say ‘thank you’
and… because you are a
forward-looking procurement
professional, you will ask about
the future ‘possible’ needs

16. Unlocking invisible value:
Where price was a lower level consideration
We can finish
where we started
Price-Cost-Value…some clear distinctions between these 3
…’value’ is the biggest bang for our buck
Where is the non-price, pot of gold hiding?
…it’s hiding in the S-Curve (…hint …look in Level 3)
Pot of Gold Case study #1…where ‘Sales’ said thanks to
‘Procurement’…the sign of a good day
Pot of Gold Case study #2…where The CIO and IT team said
thanks to ‘Procurement’ …2nd sign of a good day
What’s the big take-away from these two case studies…
• Always Always establish the business needs
• Pick the (few) special suppliers for level 3
• Devote a little more time upfront, saves lots of time later
• Objective, data-driven decisions (not all BRATS are bad)
• The littlest, least pretty box just might be the best box
Lesson
Learned

17. Q&A
cg.lardner@bigpond.com | +61 (0) 406 429 668