PROCUREMENT LEADERS FORUM 2012 - CHICAGO

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Reinventing the supply chain function at KCP&L to improve total shareholder return

Supply chain organizations have long struggled to demonstrate their core value as a strategic partner to the business.  All too often supply chain activities are focused on short-term cost-cutting measures, often without a focus on how to sustain long-term value for the organization.  Yet a robust supply chain capability is critical to not only finding savings, but also to gaining a competitive advantage for the organization as a whole.  In this presentation, KPMG and KCP&L will share their experience in transforming supply chain organizations and gaining early support and buy-in of management through a rigorous business case that quantifies bottom-line value contribution for shareholders.

Using the economic value added management system to diagnostically maximize value in the procurement chain: SCVA – Supplier and customer value added

Value Based Management (VBM) focuses decisions on the key drivers of shareholder value.  Perhaps surprisingly, the principal engine that drives value is not the accounting model’s bottom-line, net profit after tax -- and this will be explained in detail -- but rather, there are two measures of performance that can be used interchangeably.  The first is Free Cash Flow (FCF).  The second is Economic Value Added (EVA®).  FCF was developed first back in 1969.  EVA was developed in the mid 1980s.   EVA is much preferred to FCF, because it can be used for a variety of other decisions in the firm other than just measuring performance. 

We will point out why EVA as a measure of performance is much more superior than FCF, and that FCF should be deemphasized.  We will provide a basis for focusing EVA on the procurement process and how to measure the incremental performance that comes of an implementation of this type of VBM system.

Chairman’s opening

Enabling growth. For, with and through the business: A view from the CPO at Johnson & Johnson

In this session, Hans Melotte will discuss how the Procurement agenda at Johnson & Johnson is focusing on “Enabling Growth.”  The present and future business opportunities for Johnson & Johnson require its procurement function to play a different and broader mission in connecting with a strategic supplier base and shaping a growth agenda. 

Hans will also discuss his operating philosophy of working “For, With and Through the Business,” as a key means to ensure  focus, and an appropriate balance of priorities and driving results.

Hans was appointed CPO of Johnson & Johnson in December 2010 and brings to his role extensive experience in various functional areas and geographies.  In 2010, he was also honored as the “Procurement Leader of the Year” by the Procurement Leaders Network.

Networking break

Accelerating procurement’s performance to increase shareholder value

Many companies are recognizing the value that procurement and supply chain can deliver them. But this is only half the battle - procurement needs to maximize this recognition, communicate and define itself effectively and identify the levers that can be used to make the function a trusted business partner. Driving shareholder value is, then, a vital challenge for the modern professional and this session will help executives take the initiative by looking at where the opportunities lie and how best to take advantage:

• Creating top-line value and impact through optimizing the supply chain
• Increasing free cash flows and improving the availability of working capital to stakeholders
• Implementing  supplier innovation and initiating improvements
• Continuing to look for savings across the function, beyond the low-hanging fruit
• Developing operational effectiveness and skill sets to improve procurement’s alignment with business

Kimberly-Clark: Transformational journey drives value and fuels global growth

The pressure to fund innovation and growth has never been greater, but finding the next generation of cost savings can be challenging. During this session, Cynthia Dautrich, Global Procurement Officer from Kimberly-Clark will share her perspective on how today’s Procurement leaders must align early on and closely with their business partners to apply expertise, market intelligence and the right tools/technology to drive value that can fuel innovation and renewed growth.  

Networking lunch

Integration with suppliers across the value chain

Due to the volatile economic environment that continues to characterize markets around the world, it is more crucial than ever for procurement to be fully integrated with its key suppliers. Part of this is segmenting the supply base and striking the right relationship with suppliers, whether it be collaboration or a cost savings push. Procurement’s challenge here is to marry strategic thinking and alignment with the wider business with precise and effective processes and precepts that are at the heart of good supplier management.   

In this session Ton Geurts, CPO AkzoNobel will identify:

• Key elements for a successful management of your supply base
• The key areas of  buyer-supplier relationship which must be addressed to work together in a partnership
• How to empower your suppliers to drive innovation
• How to create value beyond procurement
• How to be prepared for the future – looking ahead and identifying new trends affecting buyer-supplier relationship

 “The new procurement”: A transformational approach to drive margin and fuel global growth

The pressure to fund innovation and growth has never been greater, but finding the next generation of cost savings can be challenging. During this session, we will share an elevated standard of excellence which we call “The New Procurement” which details how leaders can harness the power of their spending to fuel enterprise growth and deliver measurable earnings impact.  No longer the sole responsibility of procurement managers and specialists, The New Procurement has been elevated to the C-suite because of its ability to unlock savings to drive innovation and fuel growth, therefore changing the way organizations view indirect procurement.  Along with supporting strategic goals, delivering more value, and mitigating risk, The New Procurement is a direct path to help companies recoup lost profitability and fuel growth.

Attendees will learn about the principles of “The New Procurement” and how leaders are using the principles to not only overcome internal skepticism, but align their organization’s strategies and behaviors to the business’s strategy to make their procurement function an indispensable partner for growth. 

• Addressing 100% of spend globally

• Supporting sustainability

• Applying real-time market intelligence

• Continuously delivering realized value

• Enabling agility and mitigating risk

• Fueling growth

Procurement is from Pluto; Stakeholders are from Saturn

Procurement professionals really need to ask the following question: “How can Procurement better connect with stakeholders and understand their needs in order to deliver exceptional value?” It is essential that we as Procurement professionals stop talking to stakeholders about just saving money. If we want to have better stakeholder relationships, we should start listening to them and determine how we can help them to succeed in a more simple, faster, trusted, and risk-managed fashion. This session will provide those key insights on how procurement professionals can get on the same page with stakeholders and improve these relationships for maximum value. 

Changeover

Influencing shareholder value and the CPO’s role

The role of a CPO has moved beyond simply delivering cost reductions and supplier rationalization to being an integral part of how an organization delivers value to its customers and shareholders. CPOs must ensure that procurement engages strongly with business units to allow a comprehensive understanding of business needs and encourage the development of shared targets, which are aligned to revenue, cost, cash flow, profitability and brand.

This session will look at all aspects which have to be taken into account by CPOs.

• Optimizing third party involvement in value and supply chains
• Positioning procurement to be an important and valuable competence
• Focusing on total cost rather than the basic savings
• Managing and mitigating supply related risk
• Incorporating into strategy elements such as supplier diversity
• Helping suppliers to be a source of innovation for the business

Demand management - going beyond traditional “across-the-board” budget cuts

Commodity inflation and the anemic economic recovery continue to create enormous cost pressures across the business world.  To counter these pressures in this challenging economic environment, senior management expects greater focus on overhead costs to maintain profitability. 

At Kellogg Company the Global Procurement Group is helping lead this effort by focusing on Demand Management.  Going beyond traditional “across-the-board” budget cuts, partnering with Finance and identifying stakeholder ‘needs’ as opposed to ‘wants’, Procurement has developed a program to re-evaluate budget allocations based on business value.  Kellogg embarked on this journey last year and will share its experience in reducing overhead growth through demand management.

Raising the bar: supplier qualification improves performance

BP’s Supplier Qualification program is part of the company’s effort to address risk in the wake of the 2010 Deepwater Horizon accident. Suppliers and contractors play large roles in all aspects of BP’s operations. Ryan and Sean will discuss (a) how the company has worked to identify specific supplier risks, (b) how multiple functions now work together to assess the quality and technical capabilities of equipment suppliers and contractors, and (c) how BP uses the findings to reduce risk and support efforts to source from globally competitive suppliers.

Key points for discussion will include:

• Rationale for supplier qualification
• Related risk reduction initiatives such as quality control and supplier performance management
• How to focus risk reduction efforts on a manageable number of suppliers
• How to ensure the information is acted upon across disparate sites and functions

Networking break

Building a post-merger greenfield procurement organization

Building a post-merger greenfield procurement organization presents a unique opportunity. Recruiting, developing and retaining "A - team" procurement talent is at the heart of the success of a modern procurement organization. Procurement has evolved significantly as a professional function over the past decade, and much of it is further accelerated by the macroeconomic environment in recent years. Post-merger, the expectations by corporations are high and so is the visibility of performance by procurement. CPOs must have the people agenda as a key priority to ensure that they have the right combination of people, process and technology capability in place.

This session will discuss the key ingredients that CPOs have to consider when building a greenfield organization. How to establish stakeholder engagement with a view to create shareholder value by pursuing a well directed agenda:

• Mapping out a Greenfield roadmap - principal ingredients
• Putting a stake in the ground - setting expectations
• Positioning procurement as a credible business partner
• Success drivers, competency model and career map
• Onboarding talent - creating a productive team
• Delivering while building - leveraging outside resource
• Measuring success

Driving spend under management into the CFO suite uplifting business outcomes

Jack will discuss spend under management approaches to uplift savings to breakthrough levels within the enterprise.  In this presentation Jack will cover: 

• The definition of Spend Under Management considered the tightest in the market today and deployed by “best in class” sourcing/procurement operations.
• The 5 measurements of Spend Under Management.
• How to integrate sourcing/ procurement success to financial business outcomes of EPS, Operating Profit and Cash Flow
• How to integrate sourcing/procurement into Business Units and P&L’s to uplift savings
• How to uplift Spend Under Management to “Best in Class Performance”  by uplifting the technology and on-shoring outsourcing  model of low dollar and non- strategic spend
• Deploying the sourcing/procurement Maturity Ranking Model to measure advancements in satisfying internal customers

IQNavigator’s three step program to operationalizing SOW contracts –How to simplify sourcing, create killer contracts and govern to great results

Buying and managing services (rather than "goods") presents complex challenges for even the most mature procurement programs. When outsourcing to consultants and professional services firms (legal, marketing, etc.), the success of the project is often determined by the initial process and governance of sourcing, creating, and managing the Statement of Work contract itself. Join IQNavigator to hear real-world guidelines to better operationalize SOW contracts and actually, finally find a way to always "get what you pay for."

Changeover

Our end-of-day informal roundtable sessions provide delegates with a relaxed environment to discuss best practice and innovation in key topic areas.  Groups will be hosted by leading specialists in each field.

Table 1
Discovering the facts upon marketing spend - delivering efficiencies and accountabilities which are sustainable 

Mike Jessop Managing Director MJJ Consulting

Table 2
Supplier Relationship Management – top tips to building closer collaboration with your suppliers

Ton Geurts CPO AkzoNobel
Geoff Pollak VP purchasing North America and VP purchasing global food preservation Electrolux major appliances

Table 3
Working hand in hand with the business - increasing internal collaboration with all key business parties

Hans Melotte VP & CPO Johnson & Johnson

Table 4
Measuring procurement’s performance – how to deliver tangible results

Caroline Booth CPO TD Bank Group

Table 5
Global sourcing – the challenges in today’s quickly changing environment

Ashish Bharara VP sourcing home and hardlines Walmart

Chairman’s review