Establishing a successful bridge between the physical and financial supply chain

Transcription

1 Establishing a successful bridge between the physical and financial supply chain DAVID L LOSEBY MCIOB, MAPM, FCMI, MSc, FCIPS, MIoD GROUP PROCUREMENT DIRECTOR

2 Agenda Who is Arriva? The procurement Perspective Some considerations The target model Risk factors (to be considered) The business approach And finally.. Q&A

3 Making decisions that matter

4 To put things in context, let s see what Arriva looks like today Arriva is a very different looking business today to what it was even 10 years ago. +2.2bn Passenger journeys a year 14 Countries 55,000 Employees 760 Train sets 19,500 Buses 175 Trams / metro 500 Ambulances 4

5 To ensure that Arriva remains Successful, it has a strategy for growth Sustainable growth is key to the future of this business. What sets Arriva apart is that it has acquired unrivalled knowledge of transport markets across Europe. This makes us valuable to clients and passengers, and helps us deliver our strategy. 5

6 Arriva is committed to responsible procurement Responsible procurement is the management of environmental, social and economic impacts, and the encouragement of good governance practices, throughout the lifecycle of goods and services. A cradle to grave approach. Competitive supply, good supplier relationships, working together effectively, and embedding responsible procurement practices in our supply chains are crucial. Our aim is that the principles of responsible procurement are intrinsic to all our sourcing processes, including supplier selection and relationship development, and help us make informed and balanced decisions about the products and services we buy. 6

7 United Nations principles are at the heart of responsible procurement Arriva s responsible procurement procedures have as their foundation the United Nations Global Compact s ten principles. Compliance with these ten principles is required for a responsible supply chain. All suppliers wishing to do business with Arriva will have to comply with these principles as a minimum standard, as well as comply with local law. The principles are built upon four main themes: human rights, labour, environment and anti-corruption. 7

8 A procurement perspective for competitive advantage What s the Strategic objective? Overview of current Situation Defining Target Model going forward Criteria for the Proposed approach Key considerations Appendices Strategic objective: Optimise Operating Model Target: Optimise the management of our assets Initiative: XXXX Programme please note that the views reflected here are not related to Arriva but are drawn from many years of personal experience in other private companies and in the banking sector

9 Strategic intent Be very clear why you are doing this Is this for a specific duration/project Who owns it Clear roles and responsibilities from the outset Establish your evaluation criteria up front, not part way down the track! What external factors are at play What events would change the decision to continue/stop/increase? How attractive are you! (and your invoices) Current banking relationship - status

10 It is more than just a process

11 You have probably heard this, but.. Skills and resources are still not in place (HSBC 5-click survey) Market growth high (EU business innovation observatory case study 24)

12 You have probably heard this, but.. It is truly Global Supply chains are getting more complex

13 A quick look at the world from Procurement. SCF is not the only game in town If SCF, then ensure you have the right analysis tools & criteria. Look at the total cost not just the on paper benefits. Alignment with the companies objectives key to success, amongst others; Risk Improving working capital Solution needs to be competitive business case driven Cultural impact in the supply chain late payment culture Understand the REAL reasons for SCF! Clarity on the advantages/disadvantages Ensure the move to SCF is not misunderstood Business impact within P2P, etc. Ensure the legal landscape is covered off. Maintaining Supply, Quality & Service a key imperative

14 Considerations = Multiple factors. Finance partner Trust Software Skills & resources Benefits Risk

15 KEY CONSIDERATIONS.. Its not just about the money; Reputation Risk Long term Knowledge/skills Etc.

16 Key stages to the approach & you! A phased approach that is supported by the business as a whole. Sponsored by the CEO. Executive team owns it and is rewarded by its success in the collective Underpins the companies objectives Do you have the skills to; Scope Evaluate Coordinate Facilitate Implement Management (ongoing) Do you have an effective communication plan internal/external Knowledge transfer What don t you know & be honest!

17 TARGET MODEL

18 TARGET MODEL Target model Integrated into current processes Impact internally minimal All parties have clear roles and responsibilities SLA s in place or modify existing ones Robust supplier assessment programme to demonstrate supply chain reliability (low risk) Cash flow used to positive advantage Benefits tracker/delivery model in place Clear plan of maintain, extend or reduce Future proof the plan COMMUNICATION

19 RISK - Have you considered internal and external factors? GOVERNANCE POLICIES & PROCEDURES SUPPLY CHAIN RISK + FRAUD WORLD EVENTS CONFLICT CUSTOMS ERP? Progress to a integrated programme 19

20 RISK FACTORS - 1

21 RISK FACTORS - 2

22 A PROPOSED APPROACH THAT IS RIGHT FOR BUSINESS.

23 Make sure your business is ready! Define what we need clearly and succinctly Gather what we need once Partner with the business & suppliers to gather the information Demonstrate how we need to act and process information in the future Show people why we need it Make it KISS Be consistent in approach Listen and engage with ALL parties 23

24 Degree of support ENGAGEMENT building commitment to New ways of working Deliver the promise (I can see/feel, hear the benefits of this change) Accelerate Adoption (I feel well supported and confident) Acceptance Commitment Stakeholder Engagement Systems Communications Kick-off phases processes Detailed design Updates Establish Contact (I know nothing!) Address Concerns (I am reassured that this will work for me) Develop Understanding (I know WHY it is happening) Build Awareness (I ve been told what s happening) Secure Support (I support this change) Where are you now? Awareness Understanding Support Involvement Commitment Time

25 And Finally Don t make assumptions they are dangerous Continuous monitoring of all key factors Allow enough time to implement not a quick fix Ensure positive communication throughout Bigger and higher credit ratings get better finance; SME > corporate = circa 750 basis points! Place the risk where it can best be managed! Segmentation of where SCF takes place; Pre-export Inventory Post export Multi-stage, etc. Don t outsource a problem! Some great case studies, e.g. Phillips (2009/10), etc. Build in some flexibility to use your own or other reserves

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27 EVERBODY NEEDS CASH!